Question 1: What is the threshold value for gifts given to employees before they become subject to personal income tax (PIT), and how is it determined?
Answer:
The PIT treatment depends on the nature of the gift, whether it is considered: A benefit in the form of salary or wages; Prize winnings; or A personal gift.
- Gifts considered salary or wages: No value threshold; the full amount is included in taxable income for PIT.
- Gifts considered prize winnings: The portion exceeding VND 10 million is subject to PIT.
- Gifts considered personal gifts: For physical gifts exceeding VND 10 million in value and requiring ownership registration, PIT is assessed at the time the individual registers ownership or usage rights.
Legal references:
1. Gifts awarded at year-end parties (lucky draws) are considered wage income and included in taxable income under the progressive PIT schedule.
Official Letter No. 4991/CT-TTHT (2017) on Personal Income Tax (PIT) issued by the Ho Chi Minh City Tax Department
Based on the stated regulations, if a company organizes a lucky draw to give gifts to employees during a year-end party, the company must include the value of the prizes in the employee’s taxable income from salary and wages for PIT purposes. The company must calculate, withhold, declare, and pay PIT according to the progressive tax schedule as prescribed.
Official Letter No. 2510/CT-TTHT (2017) on VAT Declaration and Withholding issued by the Ho Chi Minh City Tax Department
If a company purchases goods to award as gifts to employees during a year-end lucky draw, when delivering the gifts, the company must issue an invoice, declare, and pay VAT as if selling goods to customers, but the value is not included in corporate income tax (CIT) revenue. The gift expense, if not exceeding one month’s average actual salary paid in the tax year, is deductible when determining taxable CIT income, and the input VAT on the purchased gifts can be declared for deduction (if it meets the conditions for deductible expenses and VAT deduction under the regulations). The value of gifts given to employees is included in their taxable income from salary and wages (including prizes won from the lucky draw).
According to Official Letter No. 3300/CTHPH-TTHT dated October 17, 2022, issued by the Hai Phong Tax Department
If a company purchases Lunar New Year gifts for employees in December and distributes them on January 25 of the following year, this is considered a benefit received by the employees. Therefore, the gift value is included in the employee’s taxable income when calculating PIT, and the tax period is January — the month in which the employee receives the gift.
2/ Gifts Classified as Prize Income Exceeding VND 10 Million Are Subject to Personal Income Tax (PIT)
Official Letter No. 3469/CTHN-TTHT (2023) issued by the Hanoi Tax Department
In cases where a company organizes competitions for employees and their family members, if the value of the prize awarded to any individual exceeds VND 10 million, the company must withhold PIT as guided in Point g, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC.
Official Letter No. 24601/CTHN-TTHT (2023) issued by the Hanoi Tax Department
If employees receive non-cash prizes from company-organized competitions or other prize-winning activities, these are classified as prize income under Clause 6, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013. If the prize value received by an individual exceeds VND 10 million, the company must withhold PIT before awarding the prize. The withheld tax amount is determined as guided in Article 15 of Circular No. 111/2013/TT-BTC dated August 15, 2013.
The declaration of PIT by organizations paying prize income to individuals must follow the forms specified in Appendix II issued with Circular No. 80/2021/TT-BTC dated September 29, 2021, by the Ministry of Finance.
For more details on determining PIT for prize income, refer to Clause 6, Article 2, and Article 15 of Circular No. 111/2013/TT-BTC.
3. Gifts Classified as Personal Gifts, Exceeding VND 10 Million and Requiring Ownership Registration, Are Subject to Personal Income Tax (PIT)
Official Letter No. 3469/CTHN-TTHT (2023) issued by the Hanoi Tax Department
In cases where an employee receives non-cash gifts from the company — such as shopping vouchers, gift cards, or tangible items (gift baskets, mugs, shirts, etc.) — if these gifts are not considered salary or wage income and are not included in the items listed under Clause 10, Article 2 of Circular No. 111/2013/TT-BTC dated August 15, 2013, then the individuals receiving such gifts are not required to declare or pay PIT on these gifts.
For further details on determining PIT for personal gifts, refer to Clause 10, Article 2, and Article 16 of Circular No. 111/2013/TT-BTC.
Question 2: Is the lunch allowance subject to personal income tax (PIT)?
Answer:
- If the company provides meals (cooked or ordered), it is not included in taxable income.
- If the company pays a cash lunch allowance, it is not included in taxable income as long as it does not exceed VND 730,000/person/month; any excess is subject to PIT.
- If a company both provides meals and pays a cash allowance, the combined value must not exceed VND 730,000/person/month to remain tax-exempt.
Legal references:
According to Point g.5, Clause g, Article 2, Circular No. 111/2013/TT-BTC:
Article 2. Taxable Income Components
g) The following items are not included in taxable income:
g.5) Mid-shift meal or lunch expenses provided by the employer, in the form of directly cooked meals, meal purchases, or meal vouchers.
If the employer does not organize mid-shift or lunch meals but instead provides a cash meal allowance, such allowance is not included in the employee’s taxable income, provided the amount complies with the limits set by the Ministry of Labour – Invalids and Social Affairs (MOLISA). If the allowance exceeds the MOLISA limit, the excess must be included in the employee’s taxable income.
The specific limits for state-owned enterprises, administrative units, Party organizations, unions, and associations are based on MOLISA’s guidelines. For non-state enterprises and other organizations, the spending limit is determined by the unit head in agreement with the trade union but must not exceed the cap applied to state-owned enterprises.
Official Letter No. 35220/CTHN-TTHT (2021) issued by the Hanoi Tax Department on PIT for phone and lunch allowances:
If a company does not organize lunches or mid-shift meals but provides a cash meal allowance, this is not included in taxable income if it complies with MOLISA’s limits. Any excess over the MOLISA guidelines must be included in the employee’s taxable income.
Official Letter No. 4767/TCT-DNNCN (2019) issued by the General Department of Taxation on PIT policies for mid-shift meal allowances:
Based on the above guidance, when the employer organizes mid-shift or lunch meals (via direct cooking, meal purchases, or vouchers), or provides cash allowances, such benefits are not included in the employee’s taxable income if they comply with MOLISA’s limits. Any excess must be included in taxable income as prescribed.
If the enterprise both organizes meals and provides cash allowances, the combined amount must not exceed VND 730,000/person/month to remain PIT-exempt, following MOLISA’s guidelines.
Additionally, under Clause 4, Article 22, Circular No. 26/2016/TT-BLĐTBXH (dated September 1, 2016), companies can provide a maximum mid-shift meal allowance of VND 730,000/person/month. The implementation of the mid-shift meal regime follows the guidance under Circular No. 22/2008/TT-BLĐTBXH (dated October 15, 2008), which applies to state-owned enterprises.
