When is the timing for determining taxable income from prize-winning for personal income tax in Vietnam?

When is the timing for determining taxable income from prize-winning for personal income tax in Vietnam?

Based on Clause 3, Article 15 of Circular 111/2013/TT-BTC stipulating the timing for determining taxable income for personal income tax from prize-winning for resident individuals as follows:

Basis for Tax Calculation for Income from Prize-Winning

The basis for tax calculation for income from prize-winning is taxable income and tax rate.

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3. Timing for Determining Taxable Income

The timing for determining taxable income for income from prize-winning is when the organization or individual pays the prize to the winner.

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Additionally, Clause 3, Article 23 of Circular 111/2013/TT-BTC stipulates the timing for determining taxable income for personal income tax from prize-winning for non-resident individuals as follows:

For income from prize-winning, inheritance, gifts

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3. Timing for Determining Taxable Income

a) For income from prize-winning: the timing for determining taxable income is when organizations or individuals in Vietnam pay the prize to the non-resident individual.

b) For income from inheritance: the timing for determining taxable income is when the individual registers the ownership or use right of the asset in Vietnam.

c) For income from receiving gifts: the timing for determining taxable income is when the individual registers the ownership or use right of the asset in Vietnam.

Therefore, the timing for determining personal income tax for income from prize-winning for both resident and non-resident individuals is when the organization or individual pays the prize to the winner.

When is the timing for determining taxable income from prize-winning for personal income tax in Vietnam? (Image from Internet)

What incomes form prize-winning are taxable in Vietnam?

According to regulations in Clause 6, Article 2 of Circular 111/2013/TT-BTC, taxable income from prize-winning includes amounts or in-kind values that individuals receive in the following forms:

- Lottery winnings paid by lottery companies.

- Prizes from promotions when participating in the purchase of goods and services as prescribed by the Commercial Law.

- Prizes from gambling, betting forms permitted by law.

- Prizes from games, contests with prizes, and other forms of winning organized by economic organizations, administrative agencies, unions, and other organizations and individuals.

How to calculate personal income tax on prize-winning in Vietnam?

[1] For resident individuals:

Based on Article 15 of Circular 111/2013/TT-BTC amended by Article 18 of Circular 92/2015/TT-BTC, the formula for calculating personal income tax from prize-winning for resident individuals is:

Personal Income Tax Payable from Prize-Winning = Taxable Income x Tax Rate 10%

Where:

* Taxable income from prize-winning is defined as follows:

- Taxable income from prize-winning is the value of the prize exceeding 10 million VND that the taxpayer receives each time they win, regardless of how many times they receive the prize.

- If a prize has multiple winners, the taxable income is divided among the recipients. The prize-winner must provide legal evidence. If no legal evidence is provided, the prize-winning income is attributed to one individual. If an individual wins multiple prizes in a single event, the taxable income is calculated on the total value of the prizes.

- Taxable income for certain prize-winning games is specified as follows:

+ For lottery winnings, the income is the total value of the prize exceeding 10 million VND on one lottery ticket received in one draw, without deducting any costs.

+ For prize-winning promotions in kind, the income is the market value of the promotional product exceeding 10 million VND at the time of receiving the prize, without deducting any costs.

+ For winnings in gambling, betting forms, the income is the total prize value exceeding 10 million VND received by the participant, without deducting any costs.

[2] For non-resident individuals:

According to Article 23 of Circular 111/2013/TT-BTC, the formula for calculating personal income tax from prize-winning for non-resident individuals is:

Personal Income Tax Payable from Prize-Winning = Taxable Income x Tax Rate 10%

Where:

* Taxable income from prize-winning for non-resident individuals is defined as the value of the prize exceeding 10 million VND for each time winning in Vietnam.

- Prize-winning income for non-resident individuals is determined as for resident individuals as guided in Clause 1, Article 15 of Circular 111/2013/TT-BTC.