What is the Third-Class Labor Order? Is the bonus associated with the Third-Class Labor Order subject to personal income tax in Vietnam?

What is the Third-Class Labor Order of Vietnam?

Pursuant to Article 44 of the Law on Emulation and Commendation 2022, the provisions regarding the Third-Class Labor Order are as follows:

(1) The Third-Class Labor Order is awarded or posthumously awarded to individuals who properly comply with the guidelines of the Communist Party, policies, and laws of the State, and meet one of the following criteria:

- Achieve outstanding exemplary achievements, evaluated during the preliminary or final review of the emulation movement initiated by Ministries, departments, sectors, or provinces with implementation periods of 5 years or more;

- Have inventions or innovations that are applied effectively, have an influential scope, and set examples in one of the areas under the management of Ministries, departments, sectors, provinces, or have outstanding scientific and technological works or exemplary compositions in one of the areas under the management of Ministries, departments, sectors, provinces;

- Have substantial contributions to the socio-economic development of the country, ensuring social welfare, humanitarian charity, application of scientific and technical advancements;

- Achieve outstanding sudden achievements in labor, work, production, business, study, and scientific research or other fields, having an influential scope and set examples in one of the areas under the management of Ministries, departments, sectors, provinces;

- Receive international awards of high standing;

- Have been awarded the "Certificate of Merit by the Prime Minister of the Government of Vietnam" and subsequently continuously for 5 years or more at the time of proposal have been recognized for good performance, during which time they have been recognized for excellent task performance for at least 1 year and have received the title of "Grassroots Emulation Soldier" 3 times;

- Have a long-term contribution process in agencies, organizations, or units.

(2) The Third-Class Labor Order is awarded or posthumously awarded to workers and farmers who properly comply with the guidelines of the Communist Party, policies, and laws of the State, and meet one of the following criteria:

- Meet one of the standards set forth in points a, b, c, d, and đ, clause 1 of Article 44 Law on Emulation and Commendation 2022;

- Workers who have initiatives applied effectively, contribute to training, fostering, and helping colleagues improve skills and expertise acknowledged by Ministries, departments, sectors, provinces;

- Farmers with initiatives applied effectively within the management of Ministries, departments, sectors, provinces, or have effective and stable production models for 3 years or more, assisting many farmers in production development and creating jobs for laborers acknowledged by Ministries, departments, sectors, provinces.

(3) The Third-Class Labor Order is awarded or posthumously awarded to entrepreneurs, intellectuals, scientists who properly comply with the guidelines of the Communist Party, policies, and laws of the State and meet one of the criteria stipulated in points a, b, c, d, and đ, clause 1 of Article 44 Law on Emulation and Commendation 2022.

(4) The Third-Class Labor Order is awarded to collectives with internal unity, properly complying with the guidelines of the Communist Party, policies, and laws of the State, and meet one of the following criteria:

- Achieve sudden outstanding achievements with an influential scope in each field under the management of Ministries, departments, sectors, provinces;

- Have substantial contributions to the socio-economic development of the country, ensure social welfare, humanitarian charity, application of scientific and technical advancements;

- Achieve outstanding achievements, evaluated during the preliminary or final review of the emulation movement initiated by the President, Prime Minister of the Government of Vietnam, or emulation movements initiated by Ministries, departments, sectors, provinces with implementation periods of 5 years or more;

- Have outstanding achievements in serving political tasks of the Communist Party, State;

- Have a development history of 10 years or more, have been awarded the "Certificate of Merit by the Prime Minister of the Government of Vietnam" and subsequently continuously for 5 years or more at the time of proposal are recognized for excellent task completion or achieve the title "Excellent Labor Collective", during which time have been bestowed "Emulation Flag of the Government of Vietnam" once or awarded sectoral emulation flags twice, or awarded a sectoral emulation flag once and a certificate of merit by Ministries, departments, sectors, provinces once, or twice awarded certificates of merit by Ministries, departments, sectors, provinces for collectives not eligible for the emulation flag.

(5) The Third-Class Labor Order is awarded to businesses, other economic organizations that properly comply with the guidelines of the Communist Party, policies, and laws of the State and meet one of the criteria stipulated in clause 4 of this Article.

(6) The Third-Class Labor Order is awarded to individuals, collectives of Vietnamese residing abroad, or foreign individuals and collectives who respect the independence, sovereignty, unity, territorial integrity, laws, and fine customs and traditions of Vietnam and have outstanding contributions to the socio-economic development of the Socialist Republic of Vietnam recognized and proposed by Ministries, departments, sectors, provinces.

What is the Third-Class Labor Order? Is the bonus associated with the Third-Class Labor Order subject to personal income tax in Vietnam? (Image from the Internet)

Is the bonus associated with the Third-Class Labor Order subject to Personal Income Tax in Vietnam?

Based on point e, clause 2, Article 2 of Circular 111/2013/TT-BTC on taxable income from monetary rewards as follows:

Taxable Income

As stipulated in Article 3, the Law on Personal Income Tax and Article 3, Decree No. 65/2013/ND-CP, taxable personal income includes:

...

2. Income from salaries and wages

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e) Rewards in cash or in kind under any form, including stock rewards, excluding the following monetary rewards:

e.1) Monetary rewards accompanying titles awarded by the State, including rewards accompanying emulation titles, commendations as prescribed by law on emulation and commendation, specifically:

e.1.1) Monetary rewards accompanying emulation titles such as National Emulation Fighters; Ministerial, sector, or central organizational emulation fighters; grassroots emulation fighters, Advanced Workers, Progressive Fighters.

e.1.2) Monetary rewards accompanying commendations.

e.1.3) Monetary rewards accompanying titles awarded by the State.

e.1.4) Monetary rewards accompanying awards given by associations, organizations belonging to political organizations, political-social organizations, social organizations, social-professional organizations of central and local levels, conforming to the charter of the organization and in line with the Law on Emulation and Commendation.

e.1.5) Monetary rewards accompanying Ho Chi Minh awards, State awards.

e.1.6) Monetary rewards accompanying Commemorative Medals, Badges.

e.1.7) Monetary rewards accompanying Certificates of Merit, Commendation Certificates.

The authority to decide on commendations, the monetary rewards accompanying emulation titles, commendation forms mentioned above must conform to the Law on Emulation and Commendation.

e.2) Monetary rewards accompanying national awards, international awards recognized by the Government of Vietnam.

e.3) Monetary rewards related to technical innovations, inventions acknowledged by competent State agencies.

e.4) Monetary rewards for discovering and reporting law violations to competent State agencies.

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Therefore, the bonus for the Third-Class Labor Order is the monetary reward accompanying titles awarded by the State as regulated in the Law on Emulation and Commendation 2022. Thus, this bonus is not subject to personal income tax.

What are regulations on personal income tax payer in Vietnam?

Pursuant to Article 2 of the Law on Personal Income Tax 2007, the provisions regarding personal income tax payers are as follows:

- Tax-resident individuals with taxable income arising within and outside the territory of Vietnam.

- Non-tax-resident individuals with taxable income arising within the territory of Vietnam.

Additionally, tax-resident individuals and non-tax-resident individuals are also defined as follows:

- Tax-resident individuals are those who meet one of the following conditions:

+ Have been present in Vietnam for 183 days or more within a calendar year or for 12 consecutive months from the first date of presence in Vietnam;

+ Have a regular place of residence in Vietnam, including registered permanent residence or a leased dwelling for residence in Vietnam under a lease contract with a term.

- Non-tax-resident individuals are those who do not meet the conditions specified in clause 2, Article 2 of the Law on Personal Income Tax 2007.