DO WE HAVE TO DECLARE AND PAY PERSONAL INCOME TAX FOR THE WINNINGS?

DO WE HAVE TO DECLARE AND PAY PERSONAL INCOME TAX FOR THE WINNINGS?
Posted date: 08/10/2020

I'm Nguyen Van B currently living and working in Da Nang city. Two days ago, I won the lottery with 02 tickets. The total winnings were VND 30,000,000. Do I have to declare and pay personal income tax for the amount of the winnings? And how much do I have to pay? Thank you!

 

FDVN’s opinions:

Thank you for concerning FDVN’s legal services. Regarding your consulting requests, after studying the relevant legal documents, FDVN Law Firm would like to give you the following advice:

Pursuant to Clause 6, Article 2 of Circular No. 111/2013/TT-BTC regulating taxable incomes:

“Article 2. Taxable incomes

[…]

6. Incomes from winning prizes

Incomes from winning prizes are amounts of money or items received by the person in the form of:

a) Winning lottery prizes.

b) Wining prizes from promotion programs when buying products or services according to the Law on Commerce.

c) Winning prizes from the types of betting permitted by law.

d) Winning prizes in the casino permitted by law.

dd) Winning prizes from the games with prizes and the like held by economic organizations, administrative agencies, associations, other organizations and individuals.”

Therefore, the money earned from the lottery also falls into the type of taxable income.

In addition, in Clause 1, Article 15 of Circular No. 111/2013/TT-BTC, the basis for calculating tax on income from prizes is the assessable income and tax rate.

“1. Assessable income

The assessable income from a prize is the excess of over 10 million VND of the prize the taxpayer receives, regardless of the number of payments being made.

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 win multiple prizes in a game, the assessable income is calculated based on the total value of prizes.”

That is: “The assessable income from a prize is the excess over 10 million VND of the prize the taxpayer receives, regardless of the number of payments being made.”

In Clause 7, Article 2 of Law on Amendments to tax laws 2014, the tax rate is specified as follows:

Assessable income

Tax rate (%)

a) Income from capital investment

5

b) Income from royalties, franchise

5

c) Income from prize-winning

10

d) Income from inheritance, gifts

10

dd) Income from capital transfer prescribed in Clause 1 of this Law

Income from securities transfer prescribed in Clause 1 Article 13 of this Law

20

0.1

e) Income from real estate transfer

2

Therefore, the tax rate to calculate the personal income tax when the winnings are 10%.

The amount of personal income tax paid by you is as follows:

The amount of personal income tax payable

=

Assessable income

x

Tax rate 10%

= (15 million VND x 2 ) – 10 million VND x 10% = 2 million VND

Accordingly, it is stipulated in Point b, Clause 5, Article 7 of Circular No. 111/2013/TT-BTC that taxable income shall be calculated when the income is paid to the person by the lottery company, insurer, or network marketing company.

According to Clause 1 and  Point a Clause 3 of Article 23 of Circular No. 111/2013/TT-BTC, the personal income tax on incomes from prizes, inheritance, or gifts earned by a non-resident equals the assessable income multiplied by (x) the 10% tax. The assessable income from prizes shall be calculated when the organization or person in Vietnam pays the prize money to the non-resident.

Above is FDVN Law Firm's opinion for your consulting requests based on studying the relevant legal provisions. Hopefully, FDVN's advice would be helpful to you.

Dinh Thi Thong - FDVN Law Firm


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