Is it necessary pay personal income tax on prize money from a contest with prizes for employees in Vietnam?
Is it necessary pay personal income tax on prize money from a contest with prizes for employees in Vietnam?
Is it necessary pay personal income tax on prize money from a contest with prizes for employees in Vietnam?
Pursuant to Clause 1.d Article 15 of the Circular 111/2013/TT-BTC stipulating bases for calculation of tax on incomes from winning prizes as follows:
Bases for calculation of tax on incomes from winning prizes
Bases for calculating tax on incomes from prizes are the assessable income and tax rate.
1. Assessable income
The assessable income from a prize is the excess over 10 million VND of the prize the taxpayer receives, regardless of the number of times of prize money receipt.
If a prize is won by multiple people, the assessable income shall be divided among the prizewinners. The prizewinners shall present legal evidence. If no legal evidence is provided, the prize is considered won by one person. Where a person wins multiple prizes in a game, the assessable income is calculated based on the total value of prizes.
Assessable income from some games of chance:
d) The income form prizes won in games with prizes or competitions is calculated when the every prize is received. The value of prize equals the excess over 10 million VND of prize money the player receives without any deductions.
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Pursuant to Clause 1 Article 25 of the Circular 111/2013/TT-BTC stipulating tax deduction and certificate of tax deduction as follows:
Tax deduction and certificate of tax deduction
1. Tax deduction
Tax deduction is an act of calculating and withholding the tax payable from the taxpayer’s income by the income payer before the income is paid to the tax payer.
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g) Incomes from winning prizes:
The prize provider shall withhold personal income tax before providing prizes to the prizewinner. The determination of tax being withheld is guided in Article 15 of this Circular.
Official Dispatch 3469/CTHN-TTHT in 2023 provides guidance on income tax for employee rewards as follows:
In the case of a company organizing contests for employees and their relatives, if the value of the prize exceeds VND 10 million, the company must withhold income tax for the employee who won the prize in accordance with the guidance in clause g, paragraph 1, Article 25 of Circular 111/2013/TT-BTC.
In the case of an employee receiving a gift from the company in the form of a gift card, voucher, or other item, if the gift does not have the nature of wages or salary and does not fall under the provisions of Article 2, Clause 10 of Circular 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, then the employee does not have to declare or pay income tax on the gift.
In summary, for prize money from a company-sponsored contest with a value of more than VND 10 million, the company must withhold income tax before paying the prize to the winner.
The amount of tax to be withheld is determined in accordance with the guidance in Article 15 of Circular 111/2013/TT-BTC.
Is it necessary pay personal income tax on prize money from a contest with prizes for employees in Vietnam? - Source: Internet
What incomes from winning prizes are subject to personal income tax in Vietnam?
Pursuant to Clause 6 Article 2 of the Circular 111/2013/TT-BTC (amended by Clause 7 Article 25 of the Circular 92/2015/TT-BTC), fowlloing incomes from winning prizes of individuals are subject to personal income tax in Vietnam:
- Winning lottery prizes.
- Wining prizes from promotion programs when buying products or services according to the Law on Commerce in 2005.
- Winning prizes from the types of betting permitted by law.
- Winning prizes from the games with prizes and the like held by economic organizations, administrative agencies, associations, other organizations and individuals.
Are non-residents subject to personal income tax in Vietnam?
Pursuant to Article 2 of the Law on Personal Income Tax in 2007 stipulating taxpayers as follows:
Taxpayers
1. Personal income taxpayers include residents who earn taxable incomes specified in Article 3 of this Law inside and outside the Vietnamese territory and non-residents who earn taxable incomes specified in Article 3 of this Law inside the Vietnamese territory.
2. Resident means a person who satisfies one of the following conditions:
a/ Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;
b/ Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.
3. Non-resident means a person who does not satisfy any of the conditions specified in Clause 2 of this Article.
As regulations above, non-residents who earn taxable incomes inside the Vietnamese territory.
Non-resident means a person who does not satisfy any of the conditions of residents. Specifically, non-residents mean people who do not satisfy one of the following conditions:
- Being present in Vietnam for 183 days or more in a calendar year or 12 consecutive months counting from the first date of their presence in Vietnam;
- Having a place of habitual residence in Vietnam, which is a registered place of permanent residence or a rented house for dwelling in Vietnam under a term rent contract.
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