Circular No. 164/2009/TT-BTC guides personal income tax for winners in games at entertainment zones with rewards.

 

CIRCULAR

Guidelines on personal income tax for winners in games at amusement and entertainment venues with prizes.

games at the point of entertainment with rewards.

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Pursuant to the Personal Income Tax Law No. 04/2007/QH12 dated November 21, 2007, and the Government's Decree No. 100/2008/NĐ-CP dated September 8, 2008 detailing certain provisions of the Personal Income Tax Law;

Pursuant to the Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 32/2003/QĐ-TTg dated February 27, 2003 of the Prime Minister on the issuance of regulations on the operation of electronic game businesses with prizes for foreigners.

Pursuant to Decision No. 91/2005/QĐ-BTC dated December 8, 2005 of the Ministry of Finance on the issuance of financial management regulations for prize game businesses and Decision No. 84/2007/QĐ-BTC dated October 17, 2007 of the Ministry of Finance on the issuance of financial management regulations for prize game businesses (amended and supplemented).

The Ministry of Finance provides guidelines on personal income tax for winners in prize games as follows:

Article 1. Scope of Regulation

This Circular guides the determination of taxable income, tax registration, withholding tax, tax declaration, tax payment, and final settlement of tax on income from winning prizes in various forms of games at amusement and entertainment venues with prizes including: individual games against machines with attendant service, individual games against each other with attendant service collecting fees, individual or multiple players playing against automatic machines without attendant service, jackpot winnings, periodic prizes for lucky customers, and other forms of games at amusement and entertainment venues with prizes.

Article 2. Scope of Application

This Circular applies to:

- Winners in various forms of games at amusement and entertainment venues with prizes operated by businesses permitted under the Law.

- Businesses permitted to operate amusement and entertainment venues with prizes under the Law.

Article 3. Concepts used in this Circular

- "Winner" is an individual participating in a prize game and winning according to the game's prize conditions.

- "Prize game" is defined as the games stipulated in Point 1, Article 2 of the Financial Management Regulations for Prize Game Business Operations issued together with Decision No. 91/2005/QĐ-BTC dated December 8, 2005 of the Minister of Finance.

- "Prescribed currency" is the chips, intermediate chips, and tokens as defined in Point 2, Article 2 of the Financial Management Regulations for Prize Game Business Operations issued together with Decision No. 91/2005/QĐ-BTC of the Minister of Finance.

- "Amusement and entertainment venue with prizes" is the location defined in Point 5, Article 2 of the Financial Management Regulations for Prize Game Business Operations issued together with Decision No. 91/2005/QĐ-BTC of the Minister of Finance.

- "One game session" is determined as follows:

+ For games using prescribed currency, a game session begins when the player enters the amusement and entertainment venue with prizes and ends when the player leaves the venue.

+ For games played with automatic machines using cash, a game session begins when the player deposits money into the machine (Key in/Cash in) and ends when the player withdraws money from the machine (Cash out).

+ For jackpot winnings, periodic prizes for lucky customers, and similar forms, each win is considered a separate game session.

- "Paying entity" is a business operating amusement and entertainment venues with prizes as regulated by the Law.

Article 4. Basis for Tax Calculation

The basis for tax calculation includes taxable income and tax rate.

1. Taxable Income

a) Taxable income is the portion of value exceeding 10 million Vietnamese dong from winnings in a game.

b) Winnings from a game are the difference between the amount of cash received by the player and the amount of cash spent in a game.

The formula for calculating winnings is as follows:

c) If winnings are in foreign currency, they must be converted to Vietnamese dong based on the exchange rate published by the State Bank of Vietnam at the time the income arises.

d) Methods for determining the amount of cash received and the amount of cash spent in a game are as follows:

- For games played with pre-agreed currency:

+ The amount of cash received by the player in a game is the total value of times when the player exchanged chips/coins for cash during the game.

+ The amount of cash spent by the player in a game is the total value of times when the player exchanged cash for chips/coins during the game.

The amount of cash received and the amount of cash spent in a game are determined based on the Exchange Receipt for Customers (Form 03 issued along with Decision No. 91/2005/QD-BTC dated December 8, 2005 of the Minister of Finance) and other invoices and documents as prescribed by current accounting laws.

Example 1: Mr. A exchanged cash for chips three times from the moment he entered until he left the entertainment venue, totaling 500 USD, and exchanged chips for cash two times, totaling 700 USD. Based on these exchanges, Mr. A's winnings and taxable income are calculated as follows:

. Winnings from a game = 700 USD - 500 USD = 200 USD.

. Taxable income = 200 USD x exchange rate USD/VND - 10 million VND

- For games played with automatic machines using cash:

+ The amount of cash received by the player in a game is the total value of money withdrawn from the machine at the end of the game minus any accumulated prize money (if applicable).

+ The amount of cash spent by the player in a game is the total value of times when cash was inserted into the machine during the game.

For winnings from accumulated prizes (jackpot), periodic prizes for lucky customers, and similar forms, the winnings from a game are the full value of the prize without deducting any other expenses.

Example 2: Mr. B played directly with a cash-operated automatic machine. In a game, Mr. B inserted cash twice, totaling 300 USD. At the end of the game, Mr. B withdrew all remaining money from the machine, totaling 1,500 USD. During the game, Mr. B also won an additional prize from the accumulated prize (jackpot) worth 1,000 USD (the value of the jackpot was included in the total withdrawal amount). Based on the amounts inserted and withdrawn, Mr. B's winnings and taxable income consist of two parts as follows:

(1) Mr. B's winnings from the accumulated prize (jackpot) are the full value of the accumulated prize (jackpot):

- Winnings from a game = 1,000 USD

- Taxable income = 1,000 USD x exchange rate USD/VND - 10 million VND.

(2) Mr. B's winnings from playing with an automatic machine are:

- Winnings from a game = 1,500 USD - 1,000 USD - 300 USD = 200 USD.

- Taxable income = 200 USD x exchange rate USD/VND - 10 million VND.

2. Tax Rate

The personal income tax rate for winnings from games at entertainment venues with rewards is 10%.

Article 5. Registration, Withholding, Declaration, Payment, and Settlement of Tax

1. Tax Registration

Winners from games at entertainment venues with rewards are not required to register for tax.

2. Withholding Tax

Withholding of personal income tax will be carried out simultaneously with the payment of winnings by the paying entity. The amount of withholding tax is determined according to the following formula:

Amount of withholding tax = Taxable income x Tax rate.

If the taxpayer requests it, the paying entity shall issue a withholding tax certificate to the taxpayer in accordance with regulations.

3. Tax Declaration, Payment, and Settlement

The paying entity shall declare taxes, make payments, and settle taxes in accordance with point 2.1, section II, part D of Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance guiding the implementation of certain provisions of the Law on Personal Income Tax and guiding the implementation of Decree No. 100/2008/NĐ-CP dated September 8, 2008 of the Government detailing certain provisions of the Law on Personal Income Tax.

Article 6. Implementation Organization

1. Tax authorities at all levels are responsible for disseminating and guiding business organizations operating entertainment venues with rewards to comply with the contents of this circular, inspecting and handling violations by business organizations and taxpayers.

2. Business organizations operating entertainment venues with rewards in accordance with Decision No. 32/2003/QD-TTg dated February 27, 2003 of the Prime Minister must fulfill the following responsibilities:

a) Fully implement the financial management regulations for operating reward games issued together with Decision No. 91/2005/QD-BTC dated December 8, 2005 and Decision No. 84/2007/QD-BTC dated October 17, 2007 of the Ministry of Finance.

b) Publicly display the regulations on withholding tax and require players to exchange all remaining chips/coins for cash before leaving the entertainment venue to serve as the basis for determining taxable income for personal income tax.

3. Determination of taxable income for winners in games at entertainment venues with rewards prior to the effective date of this circular shall be carried out in accordance with the guidance provided in Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance mentioned above.

4. This circular takes effect 45 days from the date of signature. It abolishes the relevant guidance on determining taxable income for winners in entertainment venues with rewards as stipulated in point 6.1, clause 6, section II, part B of Circular No. 84/2008/TT-BTC dated September 30, 2008 of the Ministry of Finance.

During the implementation process, difficulties arise; it is requested to seek the Ministry of Finance's opinion for timely resolution./.