Why do Vietnamese people give lucky money at the beginning of 2025? Is Vietnamese lucky money given by the employer subject to personal income tax in Vietnam?

Why do Vietnamese people give lucky money at the beginning of 2025?

The Lunar New Year is not only a time for family reunions but also a period for practicing traditional customs deeply imbued with the national cultural identity. Among these, the custom of giving "li xi" during Tet stands out with its beautiful meaning, closely connected to the spiritual life of the Vietnamese.

(1) Origins of the "li xi" custom

The custom of "li xi" (also known as giving lucky money) originates from East Asian cultures, especially China and countries influenced by rice paddy civilizations. According to legend, in ancient times, there was a demon named "Tuy" that would appear on New Year's Eve to disturb children. People placed coins in red envelopes and put them under children's pillows to ward off the demon. Since then, the practice of giving red envelopes has become a symbol of protection and bringing peace to children.

In Vietnam, this custom was imported from China but has been adapted to fit the culture and beliefs of the Vietnamese. "Li xi" is not just for children but has become an act of expressing good wishes among family members and the community.

(2) The "li xi" custom during Tet

"Li xi" usually takes place in the morning of the first day of Tet after the New Year’s greetings to grandparents and parents. Adults prepare red lucky envelopes with a small amount of money inside and give them to children or loved ones. The red color of the envelopes signifies luck, prosperity, and the dispelling of bad fortune.

In addition, young people can also give "li xi" to older adults such as grandparents and parents, accompanied by wishes for health and longevity. This practice is not just an exchange of material goods but also reflects family affection, respect, and filial piety.

(3) Meaning of "li xi"

The custom of "li xi" is not merely about giving money but also encompasses profound meanings:

- Bringing luck and prosperity

Giving "li xi" at the beginning of the year symbolizes wishing the recipient a new year full of luck, prosperity, and success. The money in the red envelope is a symbol of a favorable start, conveying hopes for prosperity in the new year.

- Strengthening familial and community bonds

"Li xi" is a way to strengthen family ties. Elders give to children to wish them good behavior and study success; younger individuals give to grandparents and parents to show gratitude and respect.

- Creating a joyful, positive atmosphere

The act of giving "li xi" is accompanied by good wishes, creating a joyful and happy atmosphere for the new year. Wishes like "All things as wished," "Robust health," "Money flowing like water" are optimistic messages inspiring a hopeful new year.

- Preserving traditional cultural values

The "li xi" custom is an indispensable part of the Lunar New Year, helping generations maintain and pass down valuable cultural values. It is also an opportunity for children to learn to appreciate family sentiments and understand the meaning of giving and receiving.

(4) "Li xi" in Modern Life

In modern life, the "li xi" custom is still preserved and promoted, although it has changed in form. Instead of the small change of the past, nowadays people often place higher denomination money into the envelopes. Additionally, giving "li xi" through electronic money transfer apps is becoming increasingly popular.

Nevertheless, the true value of "li xi" does not lie in the amount of money but in the sentiment, affection, and meaningful wishes conveyed. It remains a beautiful cultural facet that Vietnamese people need to preserve to enrich the nation's identity further.

The "li xi" custom during Tet is not just a mere exchange of material goods but carries significant spiritual meaning. From wishing for luck, prosperity to maintaining family and community relationships, "li xi" is an indispensable part of the traditional New Year festivities.

In 2025, let's continue to preserve and promote this custom as a way to transmit the national cultural values.

Note: Information is for reference purposes only!

Why do Vietnamese people give lucky money at the beginning of 2025?  (Image from the Internet)

Is Vietnamese lucky money given by the employer subject to personal income tax in Vietnam?

According to point e, clause 2, Article 2 of Circular 111/2013/TT-BTC regulations:

Taxable Income Categories

...

2. Income from wages, salaries

Income from wages and salaries includes the income an employee receives from an employer, including:

...

e) Bonuses in cash or not in cash for any form, including stock bonuses, excluding the following bonuses:

e.1) Bonuses attached to the titles awarded by the State, including bonuses attached to commendation titles, commendation forms as stipulated by laws on emulation and commendation, specifically:

e.1.1) Bonuses attached to emulation titles such as National Emulation Soldier; Emulation Soldier of Ministries, sectors, Central organizations, provinces, centrally-run cities; Base Emulation Soldier, Advanced Worker, Advanced Soldier.

e.1.2) Bonuses attached to commendation forms.

e.1.3) Bonuses attached to titles awarded by the State.

e.1.4) Bonuses attached to prizes awarded by Associations, organizations that belong to political organizations, socio-political organizations, social organizations, socio-professional organizations of the central and local levels aligned with the organization's charter and in compliance with the Law on Emulation and Commendation.

e.1.5) Bonuses accompanied by Ho Chi Minh Prize, State Prize.

e.1.6) Bonuses associated with Commemorative Medals, Badges.

e.1.7) Bonuses associated with Certificates of Merit, Certificates of Commendation.

Authority to make decisions regarding commendation, bonus amounts attached to the emulation titles, commendation forms mentioned above must be in accordance with the Law on Emulation and Commendation.

e.2) Bonuses accompanied by national or international prizes recognized by the State of Vietnam.

e.3) Bonuses for technical innovations, inventions, and discoveries recognized by a competent State agency.

e.4) Bonuses for detecting and reporting violations of law to competent State agencies.

....

Thus, the Vietnamese lucky money given by the employer is considered a bonus and does not fall under the bonuses exempt from PIT. Therefore, the Vietnamese lucky money given by the employer is subject to PIT.

What are the responsibility of enterprises for declaring, paying tax on Vietnamese lucky money?

Based on Article 24 of the Personal Income Tax Law 2007 (amended by clause 6, Article 1 of the Amendment Law for Personal Income Tax 2012, further amended and supplemented by clause 1, Article 8 of the Law on Amendments to the Law on Securities, the Law on Accounting, the Law on Independent Audit, the Law on State Budget, the Law on Management, Use of Public Property, the Law on Tax Administration, the Personal Income Tax Law, the National Reserve Law, the Law on Handling Administrative Violations 2024) which stipulates the responsibility for declaring, deducting, paying, and finalizing taxes of organizations and individuals as follows:

Responsibilities of organizations and individuals paying income, organizations managing e-commerce transaction platforms, managers of digital platforms with payment functions, other economic activity organizations; responsibility of taxable individuals residing

1. Responsibilities for declaring, deducting, paying, finalizing taxes are regulated as follows:

a) Organizations and individuals paying income are responsible for declaring, deducting, paying tax to the state budget and finalizing taxes concerning taxable incomes paid to taxpayers;

a1) Organizations managing e-commerce transaction platforms, managers of digital platforms with payment functions, other economic activity organizations regulated by the Government of Vietnam must withhold and pay tax as substitutes, and declare withheld tax amounts concerning business transactions on e-commerce and digital platforms of households and individuals;

b) Individuals having taxable income are responsible for declaring, paying tax to the state budget, and finalizing taxes as prescribed by law.

2. Organizations and individuals paying income have a responsibility to provide information on income and dependents of taxpayers under their management as prescribed by law.

3. the Government of Vietnam stipulates the appropriate tax withholding rates for each kind of income specified in point a, clause 1 of this Article, and the tax finalization prescribed in clause 1 of this Article.

Thus, when the company distributes Vietnamese lucky money to employees, it has the responsibility to declare, deduct, pay tax to the state budget, and finalize tax on the income that resembles salary and wages of the employees.