What kind of gifts does the company give to employees that must withhold personal income tax in Vietnam? Are the gifts exceeding VND 10,000,000 VND taxable income?
- What kind of gifts does the company give to employees that must withhold personal income tax in Vietnam?
- Vietnam: What is the rate of personal income tax on incomes from gifts?
- Vietnam: How to calculate the rate of personal income tax on income from gifts? Are the gifts exceeding VND 10,000,000 VND taxable income?
What kind of gifts does the company give to employees that must withhold personal income tax in Vietnam?
Pursuant to Clause 10, Article 2 of Circular 111/2013/TT-BTC, there are provisions on taxable incomes as follows:
Taxable incomes
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10. Incomes from receipt of gifts
Incomes from receipt of gifts are incomes the person receives from organizations and individuals at home and overseas. To be specific:
a) Gifts being securities: shares, call options on shares, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities; shares of the person in the joint-stock company according to the Law on Enterprises.
b) Gifts being capital in economic organizations and businesses: capital contribution to limited liability companies, cooperatives, partnerships, business cooperation contracts; capital in private enterprises and businesses of the person; capital in associations and funds established within the law, or the entire business if the private enterprise or business is under the ownership of the person.
c) Gift being real estate: rights to use land, rights to use land and property thereon; ownership of houses, including future houses, infrastructure and constructions on land, including off-the-plan constructions; rights to rent land or water surface; other incomes from inheritance being real estate in any shape or form, except for incomes from the gifts being real estate mentioned in Point d Clause 1 Article 3 of this Circular.
d) The ownership and use rights of gifts being other assets (cars, motorbikes, ships, barges, speedboats, towboats, yachts, airplanes, hunting guns, sporting guns) must be registered with state agencies.
At the same time, in Official Letter 33037/CTHN-TTHT in 2023, there are instructions on giving gifts to employees after the end of the labor contract as follows:
In case the Company gives gifts to employees after the end of the labor contract, which is not included in the clauses specified in Clause 10, Article 2 of Circular 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Industry and Trade. Finance is not subject to PIT from receiving gifts.
In case the Company gives gifts to employees, if they fall into the forms specified in Clause 10, Article 2 of Circular 111/2013/TT-BTC, they shall be subject to PIT from receiving gifts. The tax calculation bases comply with the provisions of Article 16 of Circular 111/2013/TT-BTC of the Ministry of Finance.
Thus, in case the Company gives gifts to employees after the end of the labor contract, if it is in the following forms of gifts, PIT must be withheld, specifically:
- Gifts being securities: shares, call options on shares, bonds, treasury bills, fund certificates, and other securities according to the Law on Securities; shares of the person in the joint-stock company according to the Law on Enterprises.
- Gifts being capital in economic organizations and businesses, including: + Capital contribution to limited liability companies, cooperatives, partnerships, business cooperation contracts;
+ Capital in private enterprises and businesses of the person;
+ Capital in associations and funds established within the law, or the entire business if the private enterprise or business is under the ownership of the person.
- Gift being real estate, including:
+ Rights to use land, rights to use land and property thereon;
+ Ownership of houses, including future houses, infrastructure and constructions on land, including off-the-plan constructions;
+ Rights to rent land or water surface; other incomes from inheritance being real estate in any shape or form, except for incomes from the gifts being real estate from:
++ Incomes from inherited real estate (including future houses and constructions according to regulations of law on real estate trading) between husband and wife, parents and children; adoptive parents and adopted children; parents-in-law and children-in-law; grandparents and grand children, and among siblings.
- The ownership and use rights of gifts being other assets (cars, motorbikes, ships, barges, speedboats, towboats, yachts, airplanes, hunting guns, sporting guns) must be registered with state agencies.
On the contrary, if the gift is not in the form of gifts specified above, it is not required to withhold PIT.
What kind of gifts does the company give to employees that must withhold personal income tax in Vietnam? Are the gifts exceeding VND 10,000,000 VND taxable income?
Vietnam: What is the rate of personal income tax on incomes from gifts?
Pursuant to the provisions of Article 16 of Circular 111/2013/TT-BTC on the PIT rate for increased gifts as follows:
Basis for calculating tax on incomes from inheritance and gifts
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2. The rate of personal income tax on the income from inheritance and gifts is 10% according to the whole income tax table.
3. Time to calculate the assessable income
The assessable income from inheritance and gifts is calculated when the person registers the ownership or rights to use of inheritance and gift.
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Accordingly, the personal income tax rate for gifts is 10%.
Vietnam: How to calculate the rate of personal income tax on income from gifts? Are the gifts exceeding VND 10,000,000 VND taxable income?
Pursuant to the provisions of Article 16 of Circular 111/2013/TT-BTC (amended by Clauses 1 and 2, Article 19 of Circular 92/2015/TT-BTC) on personal income tax on increased gifts as follows:
Basis for calculating tax on incomes from inheritance and gifts
The basis for calculating tax on incomes from inheritance and gifts is the assessable income and tax rate.
1. Assessable income
The assessable income from inheritance and gifts is the excess over 10 million VND of the inheritance or gifts received. The value of inheritance and gifts is determined as follows:
a) The value of inheritance and gifts being securities is the value of securities at the time of registration of ownership transfer. Assessable income from an inheritance or gift being securities is the value of the inheritance or gift in excess of VND 10 million regardless of ticker symbols without any deductions at the time of registration of securities ownership transfer. To be specific:
a.1) The value of securities traded at the Stock Exchange is based on the reference price at the Stock Exchange at the time of registration of securities ownership.
a.2) The value of securities in cases other than the above is based on the book value provided by the corresponding issuer at the time of making the latest financial statement before the time of registration of securities ownership.
b) The assessable income from the inheritance and gifts being contributions to businesses is the value of the contributions based on their latest book values of the companies before the contribution ownership is registered.
c) The value of inheritance and gifts being real estate is determined as follows:
c.1) The value of rights to use land is based on the land price list made by the People’s Committee of the province before the person registers the rights to use real estate.
c.2) The value of houses and constructions on land is based on the regulations of competent authorities in charge of house classification, construction standards and limits imposed by competent authorities, residual value of the house or construction when the ownership is registered.
If the value is not identifiable, the prices imposed by the People’s Committee of the province shall apply.
d) For inheritance and gifts being other assets of which the right to ownership or right to enjoyment must be registered with regulatory agencies: the value of assets are based on the prices imposed by the People’s Committee of the province at the time the person registers the right to ownership or right to enjoyment of inheritance and gifts.
If the person who receives the inheritance or gift being imported goods has to pay taxes on the import of such goods, the property value subject to PIT is the price imposed by the People’s Committee of the province at the time of registration of right to ownership or right to enjoyment of the property minus (-) taxes paid by the person during the import stage.
2. The rate of personal income tax on the income from inheritance and gifts is 10% according to the whole income tax table.
3. Time to calculate the assessable income
The assessable income from inheritance and gifts is calculated when the person registers the ownership or rights to use of inheritance and gift.
4. Tax payable:
Personal income tax payable = Assessable income x 10% tax
Accordingly, personal income tax for gifts will be calculated on the gift value exceeding 10 million dong, applying the tax rate of 10% with the formula:
Personal income tax payable = Assessable income x 10% tax
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