Is “Tet bonus” required for social insurance payment and personal income tax payment?

One of the welfare regimes besides salary, allowance, KPI bonus, etc., “Tet bonus” is also believed to be a great concern for employees. Currently, enterprises are not obliged to give Tet bonus by the law, and Tet bonus can be in cash or in kind depending on each company’s bonus regulation. This is only seen as an amount with the purpose of encouraging employees’ morale. However, many employees, even employers, are still get confused whether Tet bonus they receive will be included in the payment of social insurance and personal income tax or not.

PL & Partners would like to deliver readers the analysis and answers to the above questions as follows.

Tet bonus is knowns as a form of bonus specified in Article 104 of the Labor Code 2019:

Article 104. Bonuses

1. A bonus means an amount of money, a piece of property or item that is provided by an employer for his/her employees on the basis of the business performance or the employees’ performance.

2. A bonus regulation shall be decided and publicly announced at the workplace by the employer after consultation with the representative organization of employees.

Is Tet bonus required to social insurance payment?

  • Clause 2, Article 5 of the Law on Social Insurance 2014 stipulates: The compulsory social insurance premium rate shall be calculated based on an employee’s MONTHLY SALARY.
  • In which, monthly salary to be calculated as social insurance premiums from 01/01/2021 is stipulated in Clause 26, Article 1 of Circular 06/2021/TT-BLDTBXH, including: job- or position-based salary; salary-based allowance to compensate factors such as working conditions, job complexity, employee’s life and employment attraction, and additional amounts which can be determined as specific amounts in addition to the wage level agreed upon in the labor contract, and are regularly paid in each period of wage payment (Circular No. 10/2020/TT-BLDTBXH).

Also in Clause 3, the amounts not included in social insurance contributions include:

  • Bonus.
  • Invention awards.
  • Mid-shift meal.
  • ….

=> From the above provisions, Tet bonus of employees shall NOT BE INCLUDED IN THE EMPLOYEE’S SALARY AS THE BASIS FOR SOCIAL INSURANCE PAYMENT. Therefore, employees shall not be obliged to deduct Tet bonus to pay social insurance..

Is Tet bonus required to personal income tax payment?

  • Incomes subjects to personal income tax are wages, remunerations, and the other amounts of similar nature paid in cash or in kind, and allowances. (Clause 2, Article 2 of Circular 111/2013/TT-BTC).
  • Tet bonus in Article 104 of the Labor Code 2019 mentioned above is provided by an employer for his/her employees on the basis of the business performance or the employees’ performance, as a result, it shall be considered as INCOME OF SIMILAR NATURE OF WAGES AND REMUNERATIONS.
  • Besides, Point b, Clause 2 of the Law on Personal Income Tax stipulates allowances NOT LIABLE FOR PERSONAL INCOME TAX, including: those paid under legal provisions on preferential treatment of persons with meritorious services; defense or security allowances; hazard or danger allowances for persons working in branches, occupations or jobs at places where exist hazardous or dangerous elements; allowances for attraction of laborers to work in certain branches or in certain regions specified by law; allowances for sudden difficulties, allowances for laborers having labor accident or suffering from occupational disease, lump-sum maternity or child adoption allowances; allowances for working capacity loss, lump-sum retirement allowances, monthly survivorship allowances, severance and job loss allowances specified in the Labor Code, other allowances paid by the Social Insurance, allowances for combat of social evils, and allowances not of the nature of salary and wage according to the Government’s regulations => Tet bonus is NOT INCLUDED IN the list of allowances exempt from Personal Income Tax.

Thereby, it can be seen that Tet bonus is an income that has the nature of wages and remunerations, and not included in the list of allowances that are exempt from PIT. Therefore, Tet bonus is a taxable income and employees are responsible for paying tax in accordance with the law.

The article is based on the current legal regulations at the time of writing, and it may no longer be valid or relevant at the time you read it due to changes of the law. The article, therefore, is seen as reference only.
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