Vietnam: Is personal income tax applied to income from international beauty pageant prizes?

Vietnam: Is personal income tax applied to income from international beauty pageant prizes?

Based on Article 1 of Circular 111/2013/TT-BTC as amended by Article 2 of Circular 119/2014/TT-BTC, the regulations on taxpayers are as follows:

Taxpayers

Taxpayers are Vietnamese residents and non-Vietnamese residents as prescribed in Article 2 of the Personal Income Tax Law, Article 2 of Decree No. 65/2013/ND-CP dated June 27, 2013, by the Government of Vietnam detailing several articles of the Personal Income Tax Law and the Law amending and supplementing several articles of the Personal Income Tax Law (hereinafter referred to as Decree No. 65/2013/ND-CP), having taxable income as prescribed in Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP.

The scope of determination of taxable income for taxpayers is as follows:

For Vietnamese residents, taxable income is the income generated both inside and outside the territory of Vietnam, regardless of where the income is paid;

For individuals who are citizens of countries or territories that have signed Agreements with Vietnam on avoiding double taxation and preventing tax evasion on income taxes and are residing in Vietnam, personal income tax obligations are calculated from the month of arrival in Vietnam in case the individual first comes to Vietnam until the end of the labor contract and departure from Vietnam (calculated in full months) without having to carry out consular confirmation procedures to avoid double taxation following the Agreement on avoiding double taxation between two countries.

For non-Vietnamese residents, taxable income is the income generated in Vietnam, regardless of where it is paid and received.

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Additionally, point đ, clause 6, Article 2 of Circular 111/2013/TT-BTC provides regulations on taxable personal income as follows:

Taxable Income

Under the provisions of Article 3 of the Personal Income Tax Law and Article 3 of Decree No. 65/2013/ND-CP, taxable personal income includes:

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6. Income from prizes

Income from prizes is the cash or objects that an individual receives in the following forms:

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dd) Prizes in games, contests with rewards and other forms of winnings organized by economic organizations, administrative agencies, non-business units, associations, and other organizations or individuals.

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From the above regulations, it can be seen that income from rewards in international beauty pageants is considered taxable personal income.

Is personal income tax applied to income from international beauty pageant prizes? (Image from the Internet)

How to calculate personal income tax from international beauty pageant prizes for Vietnamese residents?

According to Article 15 of Circular 111/2013/TT-BTC, personal income tax from prizes is calculated as follows:

(1) Taxable Income

- Taxable income from winnings is the value of the prize exceeding 10 million VND that the taxpayer receives per each winning event, regardless of how many times the prize is received.

- In the case of a prize with multiple recipients, taxable income is allocated to each prize recipient. The prize winner must present legal evidence. In the absence of legal evidence, winnings are considered for one individual. If an individual wins multiple prizes in one game, taxable income is calculated based on the total value of the prizes.

- For winnings from contests with prizes, taxable income is calculated per each prize event. The prize value is the entire amount exceeding 10 million VND that the player receives, before any deductions.

(2) Tax Rate

The personal income tax rate for prize income is applied according to a flat rate of 10%.

(3) Timing of Taxable Income Determination

The timing of determining taxable income for prize income is when the organization or individual pays the prize to the winner.

(4) Tax Calculation

Personal income tax from winnings is determined using the following formula:

Personal Income Tax Payable = Taxable Income x 10% Tax Rate

What are regulations on the tax period for income from prizes in Vietnam?

According to Article 7 of the Personal Income Tax Law 2007, amended by clause 3 of Article 1 of the Amended Personal Income Tax Law 2012, tax periods are regulated as follows:

Tax Period

1. The tax period for Vietnamese residents is defined as follows:

a) The annual tax period applies to income from business; income from salaries, wages;

b) The tax period per income occurrence applies to income from capital investments; income from capital transfers, except income from securities transfers; income from real estate transfers; income from prize winnings; income from royalties; income from franchising; income from inheritance; income from gifts;

c) The tax period per transfer or annual period applies to income from securities transfers.

2. The tax period for non-Vietnamese residents is determined per income occurrence, applicable to all taxable income.

Thus, the tax period for income from prizes is determined per income occurrence, applicable to both Vietnamese residents and non-Vietnamese residents.