Individuals with income from receiving gifts are subject to personal income tax, except in certain cases.

This article was consulted by Lawyer Nguyen Quang Trung

Legal grounds:

• Circular No. 111/2013/TT-BTC;
• Official Dispatch No. 3469/CTHN-TTHT dated February 1, 2023 of the City Tax Department Hanoi.

We receive the following questions:

Could you please tell me if my company buys Tet gifts for employees this Tet, including calendars, candy, rice, etc., will my company have to deduct personal income tax?

Pursuant to Points đ6, đ7, Clause 2, 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:

2. Income from salaries and wages

đ) Monetary or non-monetary benefits other than salaries and wages paid by the employer that taxpayers enjoy in any form:

đ.6) For payments for training to improve qualifications and skills for employees in accordance with the employee’s professional work or according to the employer’s plan, then not included in the employee’s income.

đ.7) Other benefits.

Other benefits that employers pay to employees include: spending on days off and holidays; hiring consulting services, hiring tax declaration for a specific individual or group of individuals; Expenses for domestic workers such as drivers, cooks, and people who do other household chores under contract

10. Income from receiving gifts

Income from receiving gifts is the income an individual receives from domestic and foreign organizations and individuals, specifically as follows:

1. Receiving 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.
2. Receiving gifts of capital in economic organizations and business establishments, including: capital in limited liability companies, cooperatives, partnerships, business cooperation contracts, capital in private enterprises, individual business establishments, capital in associations, funds allowed to be established according to the provisions of law or the entire business establishment if it is a private enterprise, individual business establishment .
3. Receiving 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; Except income from gifts of real estate guided in Point d, Clause 1, Article 3 of this Circular.
4. Receiving gifts of other assets, ownership or use rights must be registered with state management agencies such as: cars; motorbikes; Ships, including barges, canoes, tugboats, and pushboats; boats, including yachts; Airplane; hunting guns, sporting guns.

The above regulations do not provide clearly guidance on monetary or non-monetary benefits that the company pays to employees, so that:

• If holiday gifts are income from wages or salaries, this is income subject to personal income tax;
• If Tet gifts are not considered as part of wages or salaries, they are not subject to personal income tax, because Tet gifts such as calendars, candy, and rice are not in the group of gifts subject to personal income tax.

Official Dispatch No. 3469/CTHN-TTHT dated February 1, 2023 of the City Tax Department Hanoi has the following instructions:

In case an employee receives a gift in kind from the company, it is a “Gift in the form of a shopping card (voucher, gift card) or in kind (candy gift basket, cup, shirt, etc….” if this gift is given not in the nature of salary or wages and not falling under the provisions of Clause 10, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance, employee receiving the above gifts do not have to declare and pay personal income tax for this gift.

Thus, it can be understood that if an employee receives a Tet gift regardless of work performance, job title or position, the Tet gift can be considered income that is not in the nature of wages or salary and employees are not subject to personal income tax on Tet gifts.