What is the First-class Labor Order? Shall bonus accompanying the Certificate of Merit be subject to personal income tax in Vietnam?

What is the First-class Labor Order of Vietnam?

Pursuant to Clause 2, Article 33 of the Law on Emulation and Commendation 2022, the awarded Orders include:

- “Gold Star Order”;

- “Ho Chi Minh Order”;

- “Independence Order” First-class, Second Class, Third Class;

- “Military Exploit Order” First-class, Second Class, Third Class;

- “Labor Order” First-class, Second Class, Third Class;

- “Fatherland Defense Order” First-class, Second Class, Third Class;

- “Victory Order” First-class, Second Class, Third Class;

- “National Unity Order”;

- “Bravery Order”;

- “Friendship Order”.

Additionally, pursuant to Clause 1, Article 42 of the Law on Emulation and Commendation 2022, it is specified as follows:

“First-class Labor Order”

1. The “First-class Labor Order” is awarded or posthumously awarded to individuals who adhere well to the resolutions of the Communist Party, policies, and laws of the State and meet one of the following criteria:

a) Achieving an exceptionally outstanding and sudden accomplishment in labor, work, production, business, studying, and scientific research or another field, with national influence and exemplary status;

b) Receiving a high world award;

c) Possessing an invention or innovation applied with high efficiency, with national influence and exemplary status, or a scientific and technological work or an outstanding State-level work recognized by a competent authority;

d) Making significant contributions to the economic and social development of the country, ensuring social welfare, humanitarian charity, and the application of scientific and technical advances;

đ) Having been awarded the “Second Class Labor Order” and having continuously completed tasks at a good level for five years or more up to the time of proposal for recognition, during which there were three years or more recognized for completing tasks excellently and having received two titles of exemplary soldier at the Ministry, sector, or provincial level;

e) Having a long dedication period in agencies, organizations, or units.

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Thus, it can be seen that the “First-class Labor Order” is awarded or posthumously awarded to individuals who adhere well to the resolutions of the Communist Party, policies, and laws of the State and meet one of the standards as stipulated.

What is the First-class Labor Order? Shall bonus accompanying the Certificate of Merit be subject to personal income tax in Vietnam?

Shall bonus accompanying the Certificate of Merit be subject to personal income tax in Vietnam?

Based on point e, Clause 2, Article 2 of Circular 111/2013/TT-BTC, it is stipulated that bonuses in cash or non-cash under any form, including stock rewards, are considered as one of the income types from wages, salaries subjected to personal income tax that the employee receives from the employer, except for the following bonuses:

[1] Bonuses accompanying titles awarded by the State, including bonuses accompanying emulation titles, forms of commendation under the provisions of the law on emulation and commendation, specifically:

- Bonuses accompanying emulation titles such as National-level Emulation Fighter; Emulation Fighter at Ministry, sectoral, central agency, province, municipality levels; Basic Emulation Fighter, Advanced Labor, Advanced Soldier.- Bonuses accompanying forms of commendation.- Bonuses accompanying titles awarded by the State.- Bonuses accompanying awards conferred by Organizations, Entities under political organizations, socio-political organizations, social organizations, or professional societies at central and local levels in accordance with the charters of those organizations and in compliance with the Law on Emulation and Commendation.

- Bonuses accompanying Ho Chi Minh award, State award.- Bonuses accompanying Orders, Badges.- Bonuses accompanying Certificates of Merit, Merit Certificates.

[2] Bonuses accompanying national awards, international awards recognized by the Government of Vietnam.

[3] Bonuses for technical improvements, inventions, and patents recognized by competent State authorities.

[4] Bonuses for the discovery or reporting of violations of the law to competent State authorities.

Thus, rewards accompanying Certificates of Merit are not subject to personal income tax.

What are the criteria to achieve the First-class Labor Order of Vietnam?

Based on Article 16 of Decree 98/2023/ND-CP, the specific criteria to achieve the First-class Labor Order are stipulated as follows:

- The First-class Labor Order is awarded or posthumously awarded to individuals with a long dedication period in agencies, organizations, or units and who meet one of the following criteria:

+ Recognized as a pre-revolutionary cadre and held one of the positions: Deputy Director General, Deputy Director, Deputy Head of a provincial department or equivalent.

+ Participated continuously in the two wars against the French colonizers, and American imperialists and held one of the positions:

(i) Deputy Head of a Central Party organ, Deputy Minister or equivalent, Deputy Secretary of a provincial, municipal Party Committee directly under the central government, Chairman of the Provincial People's Committee, People's Council of provinces, municipalities directly under the central government, Deputy Chairman of the Central Committee of the Vietnam Fatherland Front, Deputy Head of Central organizations in politics and social sectors.

(ii) Director, member of the Standing Committee of the Provincial Party, People's Committee, Chairman of the Provincial Fatherland Front of provinces or municipalities directly under central management for 10 years or more.

+ Participated continuously in the resistance against the American imperialists or in the construction and defense of the Fatherland, having held one of the positions:

(i) Minister or equivalent;

(ii) Deputy Minister or equivalent for 5 years or more;

(iii) Director General and equivalent from 8 to under 10 years;

(iv) Deputy Director General and equivalent from 10 to under 15 years;

(v) Director and equivalent for 15 years or more.

- The First-class Labor Order is awarded or posthumously awarded to individuals who adhere well to the resolutions of the Communist Party, policies, and laws of the State, authorized to participate in cultural, sports, tourism, education and training, science and technology activities or other fields, achieving world first prize or world gold Order.