Holiday bonuses are a highly anticipated source of income for employees, serving as a recognition of their hard work throughout the year. However, many are unsure whether these bonuses are subject to personal income tax.
Holiday bonuses are a way for companies to acknowledge employees’ efforts throughout the year.
Determining Taxable Income from Bonuses
According to current regulations, bonuses that are considered part of salary or wages are not exempt from taxation. Therefore, if the total income from salary and wages exceeds the family deduction threshold and other deductible amounts, employees are required to pay personal income tax.
Specifically, under Article 7 of Circular 111/2013/TT-BTC (amended by Clause 6, Article 25 of Circular 92/2015/TT-BTC), taxable income is calculated as the total taxable income minus deductions, including: a family deduction of 11 million VND/month for the individual and 4.4 million VND/month for each dependent (as per Resolution 954/2020/UBTVQH14); contributions to insurance and voluntary retirement funds; and donations to charitable, humanitarian, and educational causes.
Thus, if the total income from salary and wages exceeds 11 million VND/month, employees must pay personal income tax on the excess amount, including regular holiday bonuses.
Employees receiving holiday bonuses must pay tax if their income exceeds the family deduction threshold.
Bonuses Exempt from Personal Income Tax
Not all bonuses are subject to taxation. According to Clause 2, Article 3 of the Law on Personal Income Tax 2007 (amended in 2012), taxable income includes salary, wages, and income with the nature of salary or wages, except for those exempt by law. Specifically, the following bonuses are exempt from tax:
Bonuses accompanying state-awarded titles (such as national-level, ministerial, or provincial labor emulators, advanced workers, etc.); awards such as certificates of merit, commendations, medals, badges, and prizes granted by the state or socio-political organizations; bonuses accompanying national or international awards recognized by the state; bonuses for technical innovations, inventions, or discoveries recognized by competent state agencies; and bonuses for reporting violations of the law to competent state agencies.
These bonuses are not considered regular salary or wages and are therefore exempt from personal income tax.
Bonuses in the form of goods from companies are also subject to personal income tax, except in special cases.
Are Bonuses in the Form of Goods Taxable?
According to Clause 1, Article 104 of the Labor Code 2019, bonuses can be in the form of money, assets, or other forms, based on production results, business performance, and work completion.
However, under Point e, Clause 2, Article 2 of Circular 111/2013/TT-BTC, all forms of bonuses, whether in cash or goods, are subject to personal income tax, except for the special cases mentioned above.
Therefore, if an employee receives a bonus in the form of goods that does not fall under the exempt cases, this bonus is still subject to personal income tax.
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