PERSONAL INCOME TAX CALCULATION
FOR TET BONUS
OUTLINES
1. Regulations on bonuses according to the Labor Code 2019.
2. Tet bonus income is subject to personal income tax.
3. How to calculate personal income tax for Tet bonus.
Based on the results of production and business activities and the employees' productivity, the employer has a Tet bonus scheme. In some cases, employees who earn income from Tet bonuses must pay personal income tax as prescribed in the Law on Personal Income Tax. So, in which case must pay personal income tax on Tet bonus? How to calculate personal income tax on Tet bonus? The following article will analyze this content, helping readers understand the necessary information.
Regulations on bonuses according to the Labor Code (Illustration)
- According to Article 103 of the 2019 Labor Code, bonus is the amount of money or property or other form that the employee receives from the employer based on the production and business results, the degree of successful completion of the workers.
- After consulting with the representative organization of employees at the grassroots, the employer shall decide on the Regulation on bonus and publicize it at the workplace.
- Vì vậy, người sử dụng lao động có thể không thưởng Tết cho người lao động khi hoạt động sản xuất, kinh doanh không thu được lợi nhuận và người lao động không hoàn thành công việc.
- Thus, the Labor Code of 2019 does not mention the obligation of employers to give Tet bonuses to employees. Therefore, employers may not give Tet bonuses to employees when production and business activities are not profitable and employees do not complete the work.
- From the above basis, the Tet bonus depends on the employer to decide based on the operation situation of the business, the work productivity, the level of work completion of the employees with the appropriate Tet bonus regime with the actual conditions of the business.
- According to the Law on Personal Income Tax in 2007, amendments and supplements in 2012 stipulate that bonuses are one of the types of income subject to personal income tax.
- According to Point e, Clause 2, Article 2 of Circular No. 111/2013/TT-BTC guiding bonuses in cash or not in any form that are subject to personal income tax, individuals earning income from bonuses must pay personal income tax, including stock bonuses.
- Bonuses that are not subject to personal income tax are:
- National and international awards recognized by the State of Vietnam are accompanied by bonuses.
- Competent State agencies recognize inventions, inventions and technical improvements with bonuses.
- Detect and report violations of the law to competent State agencies and receive bonuses.
- The titles conferred by the State are accompanied by bonuses and other forms of commendation in accordance with the law on emulation and commendation, specifically:
- Forms of reward (Bonus included).
- Titles conferred by the State (Bonus included).
- Emulation titles such as Advanced Soldier, Advanced Labor, Grassroots Emulation Soldier;
- Danh hiệu thi đua như Chiến sĩ tiên tiến, Lao động tiên tiến, Chiến sĩ thi đua cơ sở; Chiến sĩ thi đua cấp Bộ, ngành, đoàn thể Trung ương, tỉnh, thành phố trực thuộc Trung ương; Chiến sĩ thi đua toàn quốc (Có kèm theo tiền thưởng).Emulation fighters at the ministerial, branch, and mass organizations level at the central, provincial, and municipal levels; National emulation fighters (Bonus included).
- Ho Chi Minh Prize, State Award (Bonus included).
- Medals, Badges (Bonus included).
- Certificate of Merit (Bonus included).
- The awards granted by associations and organizations belonging to political organizations, socio-political organizations, social organizations, and socio-professional organizations of the central and local levels in accordance with the charter of the organization and in accordance with the provisions of the Law on Emulation and Commendation (Bonus included).
- Thus, the Tet bonus is subject to personal income tax if the total income from salaries and wages is subject to personal income tax payment as prescribed.
Cách tính thuế thu nhập cá nhân thưởng Tết (Ảnh minh họa)
- How to calculate personal income tax for Tet bonus
- How to calculate personal income tax for Tet bonus Employees will pay personal income tax on Tet bonus when receiving Tet bonus and have a total taxable income after deducting deductions greater than 11 million/month.
- In case the employee earns income from salary or wages and signs a labor contract of 03 months or more, personal income tax is calculated by the formula: Tax rate x Actual income.
- In case an employee who earns income from salary or wages signs a labor contract of less than 3 months or does not sign a labor contract, the organization or individual shall pay an income of 2 million VND/time or more to the employee then deduct at source 10% before paying income.
- When calculating personal income tax on Tet bonus, deductions according to Article 7 of Circular 111/2013/TT-BTC include: Family circumstances; insurance contributions, voluntary retirement funds; charitable, humanitarian and study promotion contributions.
- On June 2, 2020, the National Assembly issued Resolution No. 954/2020/UBTVQH14 stipulating that from July 1, 2020, the family circumstance deduction level will be adjusted as follows: When there are no dependents, the employee will have to pay personal income tax when the salary is from 11 million VND per month (132 million VND/year). When there are dependents, for each dependent, the employee's income to pay personal income tax increases by 4.4 million VND compared to the original tax payment rate.
- For example: The income level for paying personal income tax of an employee when there is a dependent is 15.4 million VND/month. The level of personal income tax payment of employees when there are 2 dependents is 19.8 million VND/month. The level of personal income tax payment of employees when there are 3 dependents is 24.2 million VND/month.
- Thus, Tet bonus is included in taxable income. Employees who receive Tet bonuses, salaries and other amounts, after deducting deductions, will have to pay personal income tax as prescribed. The time to calculate personal income tax for Tet bonuses is the time when the employer pays the salary and bonus to the employee.
- In case the Tet bonus is included in a reasonable expense for the enterprise
- According to Article 4 of Circular No. 96/2015/TT-BTC guiding employees who receive Tet bonuses, they are included in deductible expenses when determining taxable income.
- Conditions for Enterprises to include Tet bonus in deductible reasonable expenses, this bonus, including the amount and conditions for enjoyment, must be specified in the Labor Contract or the Collective Labor Agreement or the Regulation on Bonuses of the enterprise or its financial regulations to ensure compliance with the provisions of Article 4 of Circular 96/2015/TT-BTC; Article 6 Circular No. 78/2014/TT-BTC; Article 3 of Circular No. 25/2018/TT-BTC.
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