What taxes must be paid when winning the lottery in Vietnam? What are the tax rates?
What taxes must be paid when winning the lottery in Vietnam?
According to Clause 6, Article 3 of the Law on Personal Income Tax 2007, amended by Clause 2, Article 2 of the Amended Law on Tax 2014, taxable income is stipulated as follows:
Taxable Income
Taxable personal income includes the following types of income, except for income exempted as defined in Article 4 of this Law:
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6. Income from winnings, including:
a) Lottery winnings;
b) Winnings from promotional activities;
c) Winnings from betting activities;
d) Winnings from games, competitions, and other forms of winnings.
Income from winnings, including lottery winnings, is taxable income. Thus, when winning the lottery, the winner must pay personal income tax as per regulations.
How much lottery winnings are taxable in Vietnam?
Pursuant to Clause 1, Article 15 of Circular 111/2013/TT-BTC, the basis for tax calculation on income from winnings for resident individuals is stipulated as follows:
Basis for tax calculation on income from winnings
The basis for tax calculation on income from winnings is the taxable income and tax rate.
1. Taxable income
Taxable income from winnings is the value of the prize exceeding VND 10 million that the taxpayer receives from each winning ticket, regardless of the number of times the prize is claimed.
If a prize is won by multiple people, the taxable income is allocated to each prize recipient. The prize winner must present legal evidence. If no legal evidence is presented, the winnings are apportioned to one individual. When an individual wins multiple prizes in one game, the taxable income is the total value of those prizes.
Taxable income for some rewarding games. To be specific:
a) For lottery winnings, it is the entire prize value exceeding VND 10 million on a single lottery ticket received during one draw, without deducting any costs.
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According to Point a, Clause 2, Article 23 of Circular 111/2013/TT-BTC, it is stipulated:
On income from winnings, inheritance, gifts
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2. Taxable income
a) Taxable income from winnings of non-residents is the prize value exceeding VND 10 million per winning occurrence in Vietnam.
Income from winnings of non-residents is determined as for residents as guided in Clause 1, Article 15 of this Circular.
According to the above provisions, the lottery prize amount must exceed VND 10 million on a single ticket in one draw to be subject to personal income tax. Basis for tax calculation:
- Resident individual: Taxable income is the prize value exceeding VND 10 million on a single lottery ticket without deducting any costs.
- Non-resident individual: Calculated similarly to a resident individual.
What are the tax rates on income from lottery winnings in Vietnam?
According to Article 15 of Circular 111/2013/TT-BTC, the personal income tax rate for income from winnings applies according to the Full Tariff with a tax rate of 10%.
The lottery winner must pay personal income tax at a rate of 10% on the portion of the prize value exceeding VND 10 million for each winning ticket in one draw. The calculation is as follows:
Tax payable = (Prize value - VND 10 million) × 10%.
Specific example:
- Winning VND 20 million on 1 ticket:
=> Taxable income = VND 20 million - VND 10 million = VND 10 million.
=> Tax payable = VND 10 million × 10% = VND 1 million.
- Winning VND 9 million on 1 ticket:
=> No tax payable as the value does not exceed VND 10 million.
- Winning multiple tickets (each ticket > VND 10 million): Tax calculated separately for each winning ticket.
Additionally, according to Point g, Clause 1, Article 25 of Circular 111/2013/TT-BTC, it is stipulated:
Tax deduction and tax deduction certificates
1. Tax deduction
Tax deduction is when a paying organization or individual calculates and deducts the tax payable from the income of the taxpayer before paying the income. To be specific:
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g) Income from winnings
The prize-paying organizations have the responsibility to deduct personal income tax before giving the prize to the winning individual. The amount of tax deducted is determined as guided in Article 15 of this Circular.
Lottery companies will deduct tax at the source before awarding the prize, meaning the winner will receive the money after tax deductions.
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