What is Pi Network? Is income from buying and selling Pi Network virtual currency subject to PIT in Vietnam?
What is Pi Network?
Pi Network is a cryptocurrency project developed by a group of former Stanford University students. The project was launched on March 14, 2019, with the goal of creating a cryptocurrency that can be mined directly on mobile phones without consuming as much resources as Bitcoin or Ethereum.
Pi Network can be considered a virtual currency (digital asset) but is not yet a complete cryptocurrency because it cannot be officially traded and lacks a transparent blockchain like Bitcoin or Ethereum.
*How Pi Network works:
- Users download the Pi Network application on their phones and press the "mine" button daily to receive Pi.
- The mining process does not consume many device resources but mainly relies on the level of interaction and user network.
What is Pi Network? Is income from buying and selling Pi Network virtual currency subject to PIT in Vietnam? (Image from the Internet)
Is Pi Network virtual currency a legal means of payment in Vietnam?
Currently, there are no legal regulations governing types of electronic money or virtual assets.
However, based on Clause 2, Article 17 of the Law on the State Bank of Vietnam 2010, which provides for the issuance of paper money and coins as follows:
Issuance of paper money and coins
- The State Bank is the sole agency responsible for issuing paper money and coins of the Socialist Republic of Vietnam.
- Paper money and coins issued by the State Bank are legal means of payment in the territory of the Socialist Republic of Vietnam.
- The State Bank ensures the supply of sufficient quantity and structure of paper money and coin for the economy.
- Paper money and coins issued into circulation are considered "Debt" assets to the economy and are balanced by "Assets" of the State Bank.
At the same time, Official Dispatch 5747/NHNN-PC in 2017 of the State Bank of Vietnam also provides guidance as follows:
Based on the above regulations, virtual currencies in general, and Bitcoin, Litecoin in particular, are not considered currencies and are not legal means of payment under Vietnamese law. The issuance, provision, and use of virtual currencies in general, and Bitcoin, Litecoin in particular (as illegal payment means), as currencies or means of payment are prohibited. Sanctions for handling these acts are stipulated in Decree 96/2014/ND-CP of the Government of Vietnam on penalties for administrative violations in monetary and banking sectors and the Criminal Code 2015 (amended and supplemented). Additionally, regarding investment in virtual currencies, the State Bank of Vietnam has repeatedly warned that such investments pose significant risks to investors.
Through the above regulations, it can be seen that Pi Network virtual currency is not considered currency and is not a legal means of payment under Vietnamese law, and the issuance, provision, and use of virtual currencies in general as currencies or means of payment are prohibited.
Simultaneously, based on Clause 6, Article 26 of Decree 88/2019/ND-CP amended by Point d, Clause 15, Article 1 of Decree 143/2021/ND-CP, which provides for violations of payment activities as follows:
Violations of payment activities
...
- A fine ranging from VND 50,000,000 to VND 100,000,000 shall be imposed for any of the following violations:
...
d) Issuing, providing, or using illegal payment means that have not reached the level of being prosecuted for criminal liability;
...
Therefore, Pi Network virtual currency is not considered currency and is not a legal means of payment under Vietnamese law. Individuals who issue, provide, or use illegal payment means, specifically Pi Network virtual currency, but have not reached the level of being prosecuted for criminal liability, may be fined from VND 50,000,000 to VND 100,000,000.
Note: The above-mentioned fines apply to individuals; fines for organizations are twice the fines for individuals (Point b, Clause 3, Article 3 of Decree 88/2019/ND-CP)
Is income from buying and selling Pi Network virtual currency subject to PIT in Vietnam?
Based on Judgment 22/2017/HC-ST dated September 21, 2017 regarding an appeal against the tax collection decision by the People's Court of Ben Tre Province as follows:
The People's Court of Ben Tre Province noted: Decision No. 714/QD-CCT dated May 12, 2016, of the Head of Department T, based on Official Dispatch No. 4356/BTC-TCT dated April 1, 2016, of the Ministry of Finance, which states: “... the buying and selling of digital currencies is a commercial trading activity; digital currencies are subject to value-added tax and individuals trading in digital currencies are subject to personal income tax...” exceeds the authority to issue according to the Law on the Promulgation of Legal Documents, meaning Official Dispatch No. 4356/BTC-TCT dated April 1, 2016, of the Ministry of Finance exceeds the provisions of the Code, Law, Decree, and Decisions of the Prime Minister of the Government of Vietnam, implicitly acknowledging digital currencies (virtual currencies) as goods to be bought and sold as a commercial trading activity and must be taxed is incorrect, infringing upon the legitimate rights and interests of Mr. C, also affecting the monetary policy management of the State Bank, creating conditions for illegal money transfer, payment, and funding for illicit transactions.
Decision of the People's Court of Ben Tre Province: Accepting Mr. Nguyen Viet C's lawsuit, ruling: to annul Decision No. 714/QD-CCT dated May 12, 2016, of the Head of Department T, which includes the decision to collect VAT and PIT in relation to the online buying and selling of virtual currencies by Mr. C.
In addition, based on Clause 1, Article 3 of the Personal Income Tax Law 2007 amended by Clause 1, Article 2 of the Law amending various Tax Laws 2014 is provided as follows:
Taxable income
Taxable personal income includes the following types of income, except for income exempt from tax as specified in Article 4 of this Law:
- Income from business activities, including:
a) Income from production, business activities of goods, services;
b) Income from independent professional activities of individuals holding a practice license or certificate as prescribed by law.
Income from business as stipulated in this clause does not include income of businesses with revenue not exceeding VND 100 million/year.
...
Simultaneously, based on Official Dispatch 5747/NHNN-PC in 2017 from the State Bank of Vietnam, guidance is as follows:
Based on the above regulations, virtual currencies in general, and Bitcoin, Litecoin in particular, are not considered currencies and are not legal means of payment under Vietnamese law. The issuance, provision, and use of virtual currencies in general, and Bitcoin, Litecoin in particular (as illegal payment means), as currency or means of payment is prohibited. Sanctions for handling these acts are stipulated in Decree 96/2014/ND-CP of the Government of Vietnam on penalties for administrative violations in monetary and banking sectors and the Criminal Code 2015 (amended and supplemented). Additionally, regarding investment in virtual currencies, the State Bank of Vietnam has repeatedly warned that such investments pose significant risks to investors.
Through the above basis, it can be concluded that Pi Network virtual currency is not considered currency and is not a legal means of payment under Vietnamese law, therefore, the buying and selling of Pi Network virtual currency is illegal. As a result, income from buying and selling Pi Network virtual currency is not subject to PIT.
