Answer:
1. Prizes from a prize draw
For the case of a prize draw, if the Employee joins a prize draw in the Employer’s year-end parties and win gifts or vouchers, these gifts will be considered the incomes from the prized games or contests or other prize-winning events which are held by economic organisations, administrative agencies, business units, unions, and other individuals or organisations[1]. Therefore, these incomes will be subject to PIT. However, if the value of the prize is less than VND10 million, the Employee will not have to pay PIT on the income earned from the prize[2]. Accordingly, the income from the prize will not be added to the income from salary or wage to calculate PIT as per the partially cumulative tariff. On the other hand, if the value of the prize is over VND10 million, the Employee will have to pay a tax rate of 10%[3] on the portion exceeding VND10 million.
Of note, the prizes that the Employee wins from a prize draw in the Employer’s year-end parties will not be considered monetary or non-monetary rewards under any form, including rewards in form of securities, which will be added to the calculation of the Employee’s income from salary or wage[4]. According to the above regulation, “monetary or non-monetary rewards” mean the rewards for the Employee’s good performance that is based on specific criteria or conditions. For instance, a sales Employee achieves or over-achieve sales targets in the period, and he or she gets a bonus or reward for his or her good performance. This income will be counted into the income from salary or wage to calculate PIT.
2. Rewards from long-term service
For the case where the Employee has many years of service in the enterprise and get rewards in cash from the Employer, these rewards will be considered the income from salary or wage and fall into the category of other benefits[5], so they will be added to the Employee’s income from salary or wage in the tax period. In practice, many people maintain the opinion that this is an income from gifts[6], but from a more general point of view, one may find that offering rewards to the Employee with many years of service is a policy to encourage other Employees to make a long-term commitment to the enterprise, which is stated in the CLA or internal regulations for consistent application. Therefore, this income is, by nature, a benefit for the Employee and arises from the employment relationship.
[1]Article 2.6. (dd) of the Circular No. 111/2013/TT-BTC of the Ministry on Finance dated 15/08/2013
[2]Article 15.1 of the Circular No. 111/2013/TT-BTC of the Ministry on Finance dated 15/08/2013.
[3]Article 16.2 of the Circular No. 111/2013/TT-BTC of the Ministry on Finance dated 15/08/2013.
[4]Article 2.2 (e) of the Circular No. 111/2013/TT-BTC of the Ministry on Finance dated 15/08/2013
[5]Article 2.2. (đ.7) of the Circular No. 111/2013/TT-BTC of the Ministry on Finance dated 15/08/2013
[6]Article 2.10 of the Circular No. 111/2013/TT-BTC of the Ministry on Finance dated 15/08/2013
