Vietnam: Will the personal income tax rate for winners from the Vietlott lottery be increased?
How much is the personal income tax rate of lottery winners?
According to the provisions at Point a, Clause 6, Article 3 of the 2007 Law on Personal Income Tax in Vietnam as follows:
Taxable incomes
...
6. Incomes from won prizes, including:
a/ Lottery winnings;
b/ Sales promotion winnings;
c/ Betting or casino winnings;
According to the provisions of Article 15 of the 2007 Law on Personal Income Tax in Vietnam as follows:
Taxable incomes from won prizes
1. A taxable income from won prize is the prize value in excess of VND 10 million received by a taxpayer upon each time of winning.
2. Time of determination of a taxable income from won prize is the time when an organization or individual pays income to a taxpayer.
According to the provisions of Article 23 of the 2007 Law on Personal Income Tax in Vietnam as amended by Clause 7, Article 2 of the 2014 Law on amendments to tax laws, the tax rate from incomes from prize winning is 10%.
Thus, individuals who win the lottery are subject to personal income tax at the rate of 10%.
Vietnam: Will the personal income tax rate for winners from the Vietlott lottery be increased?
Assessment of the Ministry of Justice on the current tax rate for income from winning prizes?
Currently, Clause 6, Article 3 of the 2007 Law on Personal Income Tax in Vietnam, Article 15 of the 2007 Law on Personal Income Tax in Vietnam, Clause 2, Article 21 of the 2007 Law on Personal Income Tax in Vietnam, and Article 23 of the 2007 Law on Personal Income Tax in Vietnam have the following provisions:
Incomes from winning prizes include: winning lottery prizes; winning prizes in the form of promotions; winning prizes in the form of betting; winning prizes in games, contests and other forms of winning.
According to that, taxable income from winning is the prize value in excess of VND 10 million that a taxpayer receives for each prize winning.
Tax rate for income from winning prizes: 10%.
The time to determine taxable income from winning prizes is the time when organizations or individuals pay incomes to taxpayers.
Since Vietnam has introduced the prize payment model of the Vietlott computer lottery, it is suggested that it is necessary to study to have regulations on personal income tax collection for winners of this type more suitable for the reason that Tax rates in Vietnam are too low compared to other countries, for example, jackpot winners in the US...
Therefore, it is necessary to amend the tax rate for income from winning prizes accordingly.
In the US, net lottery winnings are considered ordinary taxable income, so for this income the individual is subject to an initial tax rate of 25%, the remainder will be additionally paid when finalizing tax according to the progressive tax rate schedule (the highest tax rate is 37%).
Romania also imposes a personal income tax rate of 25%, Poland is 10%, Italy is 6%, and Greece stipulates a personal income tax rate on winnings from lottery games, games, random game, football bet is 10%…
In the Philippines, winners with prizes under 10,000 PHP apply a progressive tax rate; above 10,000 PHP applies a tax rate of 20%.
In countries where betting games are banned like China and India, any winnings from gambling are considered illegal.
In addition, in India, money received from winning the lottery, TV games, crossword puzzles, horse racing, etc. is considered as income from other sources.
According to the Income Tax Law, all income from the above sources will be taxed at the rate of 30% along with a number of fees and surcharges. This means that the total tax on winnings can be up to 35.53% depending on the type of income tax.
Proposal to increase personal income tax rate for Vietlott lottery winners?
This proposal is stated in section 1.3, subsection 1, Section II, Appendix 2, Draft Government's Proposal on Law and Ordinance Development Program in 2024; to adjust the Program for making laws and ordinances in 2023, as follows:
The Ministry of Justice proposes to amend the progressive tax rate for income from winning prizes to be progressive, to regulate at a high tax rate for the higher part of income instead of the current tax rate. Specific tax rates need to be researched and evaluated carefully to ensure that they are suitable to the domestic context as well as international practices.
Thus, with this proposal, the Ministry of Justice assesses that:
The amendment of the progressive tax rate for income from winning prizes will contribute to reasonable regulation of personal income tax on income from winning prizes, thereby supporting the process of restructuring the state budget according to the given objectives and direction.
However, it is possible that there is a high level of reaction from the winners, but this is also less likely.
See the full draft report here.
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