What is Bitcoin? Is income arising from Bitcoin subject to personal income tax according to legal regulations?
What is Bitcoin?
Currently, there are no specific regulations explaining the term Bitcoin. However, it can be understood that Bitcoin is a form of virtual currency also considered a type of digital currency not subject to any regulation.
Bitcoin is issued by software developers enabling secure peer-to-peer transactions over the internet.
Bitcoin operates on blockchain technology, allowing direct transactions between individuals without intermediaries like banks. Bitcoin transactions are encrypted and recorded on the blockchain, making it difficult to forge or alter information when transacting Bitcoin on this platform.
Thus, it can be understood that Bitcoin is one of the currencies used in a community or organization in transactions on online platforms using Bitcoin.
Is income arising from Bitcoin subject to personal income tax?
According to the provisions of Article 3 of the Value-Added Tax Law 2008 regarding subjects liable for value-added tax, including types of goods and services used in production, business, and consumption activities in Vietnam.
In addition, based on Article 2 of the Personal Income Tax Law 2007, it is regulated as follows:
Taxpayer
1. The subjects liable for personal income tax are resident individuals with taxable income specified in Article 3 of this Law arising inside and outside the territory of Vietnam, and non-resident individuals with taxable income specified in Article 3 of this Law arising within the territory of Vietnam.
2. A resident individual is someone who meets one of the following conditions:
a) Being present in Vietnam for 183 days or more within a calendar year or for 12 consecutive months from the first day of being present in Vietnam;
b) Having a permanent residence in Vietnam, including having a registered permanent residence or renting a house to stay in Vietnam under a lease contract with a term.
3. A non-resident individual is someone who does not meet the conditions specified in Clause 2 of this Article.
And based on Article 3 of the Personal Income Tax Law 2007, the taxable income is defined as follows:
Taxable income
Taxable personal income includes the following types of income, except for income that is exempt from tax as specified in Article 4 of this Law:
...
Nevertheless, from the referenced regulations above, we can see that the taxable objects for value-added tax include types of goods and services in the process of production, business, and consumption. In addition, the income that must be subject to personal income tax is specifically regulated in Article 3 of the Personal Income Tax Law 2007, except for the income stated in Article 4 of the Personal Income Tax Law 2007.
However, as of now, Bitcoin or Bitcoin currency has not been defined by any specific clause that categorizes this currency as goods or services according to regulations.
Moreover, the State Bank of Vietnam does not recognize Bitcoin as currency according to legal regulations and as a means for users to make legal payments.
Specifically, according to the provisions of Article 17 of the State Bank of Vietnam Law 2010 regarding the issuance of money as follows:
Issuance of paper money and metal coins
1. The State Bank is the sole authority to issue paper money and metal coins of the Socialist Republic of Vietnam.
2. Paper money and metal coins issued by the State Bank are legal payment means in the territory of the Socialist Republic of Vietnam.
In addition, non-cash payment methods are understood as means provided by organizations providing payment services, financial companies authorized to issue credit cards, and organizations providing intermediary payment services offering e-wallet services used by customers, including: checks, payment orders, collection orders, direct debit, credit card (including: debit cards, credit cards, prepaid cards), e-wallets, and other payment means as per the regulations of the State Bank,... (based on Clause 10 Article 3 of Decree 52/2024/ND-CP)
It can be seen that virtual currency or Bitcoin is not considered one of the currencies according to the regulations of the State Bank of Vietnam and is also not allowed to use virtual currency for non-cash transaction payments according to regulations.
Accordingly, from the above analysis, Bitcoin, often referred to as virtual currency, is not regulated by law. Therefore, there is no basis or foundation to apply when calculating personal income tax on income arising from Bitcoin.
Thus, income arising from Bitcoin currency is not subject to personal income tax, and the trading of Bitcoin is also not subject to value-added tax as Bitcoin or virtual currency is still not considered as an entity liable for personal income tax and value-added tax according to regulations.
