Question:
My company organizes a lucky draw program for employees. I am not sure whether employees who participate in the lucky draw and receive prizes must pay additional PIT. I would like to request SB Law to provide guidance and a detailed explanation on the correct method of application in accordance with the law so that the Company can implement it properly.
Answer:
For income from prizes, personal income tax is only calculated on the portion of the prize value that exceeds VND 10 million for each time the taxpayer receives a prize, regardless of the number of prizes received during the year.
Pursuant to Point đ, Clause 6, Article 2 of Circular 111/2013/TT-BTC, taxable income from prizes is defined as: “Income from prizes consists of money or in-kind items that individuals receive in the following forms:
đ) Prizes from games, contests with prizes, and other forms of prizes organized by economic organizations, administrative bodies, public service units, mass organizations, and other organizations or individuals.”
And Clause 1, Article 15 of Circular 111/2013/TT-BTC states: “The basis for PIT calculation on income from prizes includes taxable income and tax rate: 1. Taxable income from prizes is the portion of the prize value exceeding VND 10 million that the taxpayer receives for each prize-winning instance, regardless of the number of times the prize is received.”
In summary, if an employee receives a prize in the form of in-kind items from participating in contests or other prize-winning activities organized by the Company, such prize is considered income from prizes as prescribed. If the value of the prize received by the employee exceeds VND 10 million per prize-winning instance, the Company must withhold PIT before awarding the prize; the withheld tax amount shall be determined in accordance with Article 15 of Circular 111/2013/TT-BTC. If the prize value is VND 10 million or less, the employee is not subject to PIT for this income.
Consultation services: Legal services Personal Income Tax (PIT)
