Benefits of a salary nature that businesses pay to employees are determined as income subject to personal income tax.

Legal grounds:

• Circular No. 111/2013/TT-BTC;
• Official Dispatch No. 46550/CTHN-TTHT of the City Tax Department. Hanoi on September 22, 2022.

Businesses can give gifts to employees on special occasions as a way to care for their lives, encourage labor and retain talent. Depending on the type of gift received, the employee will be subject to personal income tax. Specifically:

Pursuant to Clause 10, Article 2 of Circular No. 111/2013/TT-BTC as follows:

Article 2. Taxable income

According to the provisions of Article 3 of the Law on Personal Income Tax and Article 3 of Decree No. 65/2013/ND-CP, income subject to personal income tax includes:

…

10. Income from receiving gifts

1. Income from receiving gifts is the income an individual receives from domestic and foreign organizations and individuals, specifically as follows:
2. Gifts of securities includes: stocks, stock purchase rights, bonds, treasury bills, fund certificates and other types of securities according to the provisions of the Securities Law; shares of individuals in joint stock companies according to the provisions of the Law on Enterprises.
3. Gifts of capital in economic organizations and business establishments, including: capital in limited liability companies, cooperatives, partnerships, business cooperation contracts, capital in private enterprises, business establishments of individuals, capital in associations, funds allowed to be established according to the provisions of law or the entire business if it is a private enterprise, business establishment of individuals.
4. Gifts of real estate includes: land use rights; land use rights with assets attached to the land; home ownership, including housing formed in the future; infrastructure and construction works attached to land, including construction works formed in the future; land lease rights; water surface lease rights; Other income received from inheritance is real estate in any form; Deduct income from gifts of real estate guided in Point d, Clause 1, Article 3 of this Circular.
5. Gifts of other assets must register ownership or use rights with state management agencies such as: cars; motorbikes; Ships, including barges, canoes, tugboats, and pushboats; boats, including yachts; Airplane; hunting guns, sporting guns.

According to the above regulations, there are 4 groups of assets used as gifts that are determined as income subject to personal income tax, including:

• Stock;
• Capital in economic organizations and business establishments;
• Real estate;
• Other assets must have their ownership or use rights registered with the State.

Therefore:

• With gifts belonging to the 4 asset groups mentioned above, employees must pay personal income tax when receiving gifts from the company;
• With gifts of other assets, employees are not subject to personal income tax from receiving gifts.

In addition, Official Dispatch No. 46550/CTHN-TTHT of the City Tax Department. Hanoi on September 22, 2022 also has the following instructions:

• In case the Company organizes to give gifts to employees but the gifts do not fall under the provisions of Clause 10, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, it is not subject to Personal income tax from receiving gifts.
• In case the Company pays monetary or non-monetary benefits in the nature of salaries or wages to employees, it shall be included in taxable income from salaries and wages to individual employees according to the provisions of Clause 1 of this Article. 2 Article 2 Circular 111/2013/TT-BTC.

Therefore, it should be noted: if the gift given to the employee is in the nature of wages or salaries, it is still determined to be an income subject to personal income tax.