Pursuant to Article 15 of Circular 111/2013/TT-BTC stipulating the tax basis for income from winning prizes as follows:

“Tax calculation basis for income from winning prizes

The tax basis for income from winning prizes is taxable income and tax rate.

1. Taxable income

Taxable income from winning prizes is the prize value exceeding 10 million VND that the taxpayer receives for each prize win regardless of the number of times the prize is received.

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2. Personal income tax rate for income from winning prizes is applied according to the Full Tax Schedule with a tax rate of 10%.

3. Time to determine taxable income

The time to determine taxable income for income from winning prizes is the time the organization or individual pays the prize to the winner.

4. How to calculate tax:

Personal income tax payable = Taxable income x Tax rate 10%”

From the above regulations, income from winning prizes is determined by the formula Personal income tax payable = Taxable income x Tax rate 10%.

In particular, taxable income from winning prizes is the prize value exceeding 10 million VND that the taxpayer receives for each prize win regardless of the number of times the prize is received.

When paying bonuses, the bonus payment organization is responsible for deducting personal income tax before paying the prize to the winning individual.

However, as mentioned above, for rewards in kind, reward organizations will require the winner to pay personal income tax.

In case the winner does not have the financial ability to pay personal income tax for that reward, the winner can request the person paying the prize to deduct the tax from the value of the reward.

If the reward is in kind, the reward will be paid in kind with a lower value (according to the remaining value of the winning object, after tax deduction); or sell the winning item, deduct tax, and pay in cash to the recipient.