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CIRCULAR

PROVIDING GUIDANCE ON PERSONAL INCOME TAX ON PRIZE WINNERS IN GAMES AT PRIZE-GAME VENUES

THE MINISTRY OF FINANCE

Pursuant to Personal Income Tax (PIT) Law-No. 04/2007/QH12 of November 21, 2007, and the Government's Decree No. 100/2008/ND-CP of September 8, 2008, detailing a number of articles of the PIT Law;
Pursuant to the Government's Decree No. 118/2008/ND-CP of November 27, 2008, defining the functions, tasks, powers and organizational structure of the Ministry- of Finance;
Pursuant to the Prime Minister's Decision No. 32/2003/QD-TTg of February 27, 2003, promulgating the Regulation on prize-video game business applicable to foreigners;
Pursuant to the Finance Ministry's Decision No. 91/2005/QD-BTC of December 8, 2005, promulgating the Financial Management Regulation applicable to prize-game business, and Decision No. 84/2007/QD-BTC of October 17, 2007, promulgating the Financial Management Regulation applicable to prize-game business (amended and supplemented).
The Ministry of Finance provides guidance on PIT on winners in prize games as follows:

Article 1. Scope of regulation

This Circular guides the determination of taxed income, and tax registration, withholding, declaration, payment and finalization for income from prizes in the following forms of game at prize-game venues: games between gamesters and gaming machines with attendants: games between gamesters themselves with attendants collecting the casino fee; games in which one or more gamesters play with automatic gaming machines without attendants; games in which prizes are won from jackpots or periodical prizes for lucky gamesters; and other forms of game at prize-game venues.

Article 2. Subjects of application

This Circular applies to:

- Prize winners in games at prize-game venues of lawfully licensed business organizations.

- Business organizations licensed to deal in prize-game venues in accordance with law.

Article 3. Definitions referred to in the Circular

- Prize winner means an individual playing a prize game and winning a prize under the game's prize rules.

- Prize games means games defined at Point 1, Article 2 of the Financial Management Regulation applicable to prize-game business promulgated together with the Finance Minister's Decision No. 91/2005/QD-BTC of December 8, 2005.

- Conventional tokens means chips, intermediary chips and counters defined at Point 2, Article 2 of the Financial Management Regulation applicable to prize-game business promulgated together with the Finance Minister's Decision No. 91/2005/QD-BTC of December 8, 2005.

- Prize-game venues means venues defined at Point 5. Article 2 of the Financial Management Regulation applicable to prize-game business promulgated together with the Finance Minister's Decision No. 91/2005/QD-BTC of December 8, 2005.

- Game is determined as follows:

+ For games played in conventional tokens, a game starts when a gamester enters a prize-game venue and ends when he/she leaves the prize-game venue.

+ For games played in cash with automatic gaming machines, a game starts when a gamester cashes in/keys in a gaming machine and ends when he/she cashes out from the gaming machine.

+ For prizes from jackpots, periodical prizes for lucky gamesters and other similar forms of prize, each time of prize winning is regarded a separate game.

- Payer means an organization dealing in prize-game venues in accordance with law.

Article 4. Tax bases

Tax bases include taxed income and tax rate.

1. Taxed income

a/ Taxed income is the value exceeding VND 10 million of income from prizes won in a game.

b/ Income from prizes won in a game is the difference between the cash amount a gamester receives and the cash amount he/she pays in that game.

The formula for calculating income from won prizes is as follows:

c/ In case income from won prizes is in a foreign currency, such income must be converted into Vietnam dong at the exchange rate announced by the State Bank and applicable at the time of income generation.

d/ Methods of determining the cash amount received and the cash amount paid in a game are as follows:

- For games played in conventional tokens:

+ The cash amount a gamester receives in a game is the total value gained through his/her exchanges of chips/counters for cash throughout the game.

+ The cash amount a gamester pays in a game is the total value gained through his/her exchanges of cash for chips/counters throughout the game.

The cash amount received and the cash amount paid in a game shall be determined based on cash-chip/counter exchange invoices (form No. 03 enclosed with the Finance Minister's Decision No. 91/2005/QD-BTC of December 8, 2005) and invoices and documents under the current law on accounting.

Example 1: From the time of entering to the time of leaving a prize-game venue, Mr. A exchanged three times cash for chips with a total value of USD 500 and exchanged twice chips for cash with a total value of USD 700. Based on these exchanges, Mr. A's income from won prizes and taxed income are determined as follows:

* Income from won prizes = USD 700 - USD 500 = USD 200.

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

- For games played in cash with automatic gaming machines:

+ The cash amount a gamester receives in a game is the total value of the cashed-out amount when the game finishes minus the jackpot (if any).

+ The cash amount a gamester pays in a game is the total value gained through the times of key in/cash in a gaming machine throughout the game.

Particularly for prizes from jackpots, periodical prizes for lucky gamesters and other similar forms of prize, income from won prizes is the total value of won prizes without subtracting any expense.

Example 2: Mr. B played in cash directly with an automatic gaming machine. In a game, he twice keyed in with a total value of USD 300. When the game finished, he cashed out the whole remaining amount from the gaming machine with a total value of USD 1,500. In this game, Mr. B also won USD 1,000 in prize from jackpots (the value of prize from jackpots had been accumulated in the cashed-out amount). Based on keyed-in and cashed-out amounts, Mr. B's income from won prizes and taxed income include:

(1) Income from won prizes from jackpots, which is the total value of jackpots:

- Income from won prizes = USD 1,000

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

(2) Income from won prizes from the game with the automatic gaming machine:

- Income from won prizes = USD 1,500 -USD 1,000 - USD 300 = USD 200

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

2. Tax rate

The PIT rate for income from prizes won in games at prize-game venues is 10%.

Article 5. Tax registration, withholding, declaration, payment and finalization

1. Tax registration

Winners in games at prize-game venues are not required to make tax registration.

2. Tax withholding

PIT shall be withheld by payers upon paying income to prize winners. The withheld PIT amount is determined according to the following formula:

Withheld PIT amount = Taxed income x Tax rate.

Income payers shall issue PIT withholding documents to taxpayers upon request under regulations.

3. Tax declaration, payment and finalization

Payers shall make tax declaration, payment and finalization under Point 2.1, Section II, Part D of the Finance Ministry's Circular No. 84/2008/TT-BTC of September 30, 2008, guiding a number of articles of the PIT Law, and guiding the Government's Decree No. 100/2008/ND-CP 'of September 8, 2008, detailing a number of articles of the PIT Law.

Article 6. Organization of implementation

1. Tax agencies at all levels shall disseminate, and guide prize-game venue business organizations in implementing, this Circular.

inspect and handle violations committed by these organizations and taxpayers.

2. Prize-game venue business organizations operating under the Prime Minister's Decision No. 32/2003/QD-TTg of February 27, 2003, shall:

a/ Fully abide by the provisions of the Financial Management Regulation applicable to prize-game business promulgated together with the Finance Ministry's Decision No. 91/2005/QD-BTC of December 8, 2005, and Decision No. 84/2007/QD-BTC of October 17, 2007.

b/ Publicly post up tax withholding regulations and rules requiring gamesters to exchange all unused chips/counters for cash before leaving prize-game venues, as a basis for determining PIT calculation income.

3. The determination of taxed income on prize winners in games at prize-game venues before the effective date of this Circular complies with the Finance Ministry's Circular No. 84/2008/TT-BTC of September 30, 2008.

4. This Circular takes effect 45 days from the date of its signing. To annul the guidance on determination of taxed income of prize winners at prize-game venues under Point 6.1, Clause 6. Section II, Part B of the Finance Ministry's Circular No. 84/2008/TT-BTC of September 30, 2008.

Problems arising in the course of implementation should be reported to the Ministry of Finance for timely settlement.

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