What taxes are payable on lottery winnings in Vietnam? When do individuals pay taxes in Vietnam?

What taxes are payable on lottery winnings in Vietnam?

Based on Clause 6, Article 3 of the Personal Income Tax Law 2007, as amended by Clause 2, Article 2 of the Law Amending the Tax Laws 2014, taxable personal income (TNCN) is defined as follows:

Taxable Income

Taxable personal income comprises the following categories, excluding tax-exempt income as stipulated in Article 4 of this Law:

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6. Income from winnings, including:

a) Lottery winnings;

b) Prizes from promotional games;

c) Winnings from betting activities;

d) Prizes from games, contests with prizes, and other forms of winnings.

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Thus, income from winnings, including lottery winnings, is subject to personal income tax (TNCN). Therefore, upon winning the lottery, the winner is obligated to pay personal income tax as dictated by regulations.

What taxes are payable on lottery winnings in Vietnam? When do individuals pay taxes in Vietnam? (Image from the Internet)

When do individuals pay taxes in Vietnam?

Pursuant to Clause 1, Article 15 of Circular 111/2013/TT-BTC, the basis for calculating personal income tax on income from winnings for resident individuals is as follows:

Basis for Tax Calculation on Income from Winnings

The basis for tax calculation on income from winnings is taxable income and the tax rate.

1. Taxable Income

Taxable income from winnings is the amount exceeding VND 10 million that the taxpayer receives for each win, regardless of the number of times winnings are received.

If a prize is won by multiple individuals, the taxable income is divided among the recipients. The winners must provide legal documentation of entitlement. Otherwise, the taxable winnings are attributed to one individual. If an individual wins multiple prizes in one game, the taxable income is the total value of all prizes.

Taxable income for certain games with prizes is specified as follows:

a) For lottery winnings, it is the entire amount exceeding VND 10 million per lottery ticket received in one draw, before any deductions.

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According to point a, Clause 2, Article 23 of Circular 111/2013/TT-BTC, the calculation basis for personal income tax on income from winnings for non-resident individuals is as follows:

For Income from Prizes, Inheritances, and Gifts

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2. Taxable Income

a) Taxable income from winnings for non-resident individuals is the amount exceeding VND 10 million per win in Vietnam.

Income from winnings for non-resident individuals is determined similarly to that for resident individuals as outlined in Clause 1, Article 15 of this Circular.

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From the above regulations, it is evident that taxable personal income from lottery winnings is the entire amount exceeding VND 10 million per lottery ticket received in one draw, prior to any deductions.

Thus, only lottery winnings from VND 10 million and above per lottery ticket in one draw are subject to personal income tax.

What is the personal income tax rate for lottery winnings in Vietnam?

Based on Clause 2, Article 15 of Circular 111/2013/TT-BTC, the personal income tax rate for income from winnings, according to the fixed tax rate schedule, is 10%.

The lottery winner must pay personal income tax at a rate of 10% on the value exceeding VND 10 million for each winning ticket in one draw.

The formula for calculating personal income tax is as follows:

Personal Income Tax Payable = (Winning amount - VND 10 million) × 10%.

Additionally, according to point g, Clause 1, Article 25 of Circular 111/2013/TT-BTC, the regulation states:

Tax Deduction and Tax Deduction Certificates

1. Tax Deduction

Tax deduction is the action where the organization or individual paying income deducts the tax amount payable from the taxpayer's income before payment. Specifically:

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g) Income from winnings

The organization responsible for paying the prize must withhold personal income tax before paying out to the winning individual. The amount withheld is determined according to the guidance in Article 15 of this Circular.

The lottery company will deduct the tax before awarding the prize, so the amount the winner receives is net of taxes.

What are responsibilities and rights of lottery participants in Vietnam?

The responsibilities and rights of lottery participants are stipulated in Article 5 of Decree 30/2007/ND-CP as follows:

- Lottery participants must comply with state regulations on lottery business, the participation rules announced by the lottery business enterprise, and fulfill all tax obligations to the state according to legal provisions.

- Lottery participants have the following rights:

+ To be fully paid the value of the prizes won by the lottery business enterprise. In cases where personal reasons (such as illness) prevent direct prize claims, participants may authorize a legal representative to claim the prize;

+ Foreign individuals and overseas Vietnamese residing abroad legally entering Vietnam, upon winning, are allowed to purchase foreign currency and transfer it abroad according to the state's foreign exchange management regulations;

+ To request the lottery business enterprise to keep confidential personal winning information and other related details;

+ To enjoy other legitimate benefits according to participation rules announced by the lottery business enterprise.