What is the rate of personal income tax on the income from prizes in Vietnam?

What is the rate of personal income tax on the income from prizes in Vietnam?

Based on Clause 2, Article 15 of Circular 111/2013/TT-BTC, the following stipulations apply:

Tax basis for income from winning prizes

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2. The personal income tax rate for income from winning prizes is a flat rate of 10%.

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Thus, the personal income tax on the income from prizes (for residents) is 10%, applied according to the flat tax rate.

What is the rate of personal income tax on the income from prizes in Vietnam? (Image from Internet)

What are bases for calculation of tax on incomes from winning prizes in Vietnam?

Under Clause 1, Article 15 of Circular 111/2013/TT-BTC, amended by Article 18 of Circular 92/2015/TT-BTC, taxable income from winning prizes is the portion of the prize value exceeding 10 million VND that the taxpayer receives per prize, regardless of the number of times they receive the winnings.

If a prize is shared among multiple winners, the taxable income is divided among the recipients. The winners must present legal documents as proof.

In the absence of legal proof, the prize income is considered as belonging to one individual. If an individual wins multiple prizes in one game, the taxable income is calculated based on the total value of all the prizes.

Taxable income for certain prize-winning games:

(1). For lottery winnings, it is the total prize amount exceeding 10 million VND per ticket received in one lottery draw, before any costs are deducted.

(2). For winning promotion items, the taxable amount is the value of the promotional product exceeding 10 million VND, converted to cash based on the market price at the time of receipt, before any costs are deducted.

(3). For winnings from betting, casino, and other games at entertainment centers with prizes:

- For betting winnings, it is the total prize amount exceeding 10 million VND received, before any costs are deducted.

- For casino winnings and other games at entertainment centers with prizes, it is the amount exceeding 10 million VND that the individual receives from winning a game. Specifically:

+ Winnings in a game are the difference between the cash amount the player cashes out and the cash amount they put in during one game.

In cases where winnings are in foreign currency, they should be converted to VND at the exchange rate published by the State Bank effective at the time the income arises.

+ The determination of the cash amount received and spent in one game is as follows:

++ For games with chip-based play (chips, intermediary chips, and slot tokens according to the Ministry of Finance’s financial management regulations for prize games):

+++ The cash amount received (cash out) in one game is the total value of all exchanges of chips/tokens for cash during the game.

+++ The cash amount spent (cash in) in one game is the total value of all exchanges of cash for chips/tokens during the game.

The basis for determining the cash spent and received in a game is the cash exchange receipts for customers (according to the sample accompanying the financial management regulations for prize games of the Ministry of Finance) and other invoices and documents as stipulated by the current accounting laws.

Example: Mr. M, from the time he entered to the time he left the entertainment center with prizes, exchanged money for chips three times with a total value of 500 USD and exchanged chips for money twice with a total value of 700 USD. Based on these exchanges, Mr. M’s winning prizes and taxable income are determined as follows:

winning prizes = 700 USD – 500 USD = 200 USD.

Taxable income = 200 USD × USD/VND exchange rate - 10 million VND

++ For games with cash-based automatic machines:

+++ The cash amount received (cash out) in one game is the total value of the cash withdrawn from the machine when the game ends, minus any accumulated prize (if applicable).

+++ The cash amount spent (cash in) in one game is the total value of all cash inputs into the machine during the game.

Specifically for accumulated prize (jackpot) winnings, periodic prizes for lucky customers, and similar forms, the winning prizes are the total prize value, unadjusted for any costs.

+ If the prize game or casino organization cannot determine the taxable income of individual winners to withhold tax as guided in point c.2, Clause 1, of this Article, they must pay tax on behalf of the winners at a fixed rate on the total amount paid out (cash out). Organizations offering prize games and casinos opting to pay fixed-rate personal income tax must register with the tax authorities and adjust their payout structure to reflect after-tax income, posting it publicly at the prize entertainment center. The fixed tax rate follows the Ministry of Finance's specific guidance.

+ "A game" is defined as follows:

- For games with chip-based play, a game starts when the player enters the prize entertainment center and ends when they leave the center.

- For cash-based automatic machine games, a game starts when the player inputs cash into the machine (key in/cash in) and ends when they withdraw cash from the machine (cash out).

- For accumulated prize (jackpot) winnings, periodic lucky customer prizes, and similar forms, each winning session is considered a separate game.

(4). For winnings from prize games and contests, it is calculated per payout. The taxable prize value is the total prize amount exceeding 10 million VND that the player receives, unadjusted for any costs.

What is the personal income tax rate for non-residents for winning prizes in Vietnam ?

Based on Clause 1, Article 31 of the Personal Income Tax Law 2007, the following stipulations apply:

Tax on income from winnings, inheritance, and gifts

1. Tax on income from winnings, inheritance, and gifts of non-residents is calculated by multiplying the taxable income defined in Clause 2 of this Article by the tax rate of 10%.

2. Taxable income from winnings of non-residents is the portion of the prize value exceeding 10 million VND per prize winning in Vietnam; taxable income from inheritance and gifts is the portion of the asset value exceeding 10 million VND per income occurrence that non-residents receive in Vietnam.

Thus, the personal income tax rate for non-residents on winning prizes is 10%.