Law Class: Is It Necessary to Pay Individual Income Tax for the Red Packet of Ten Thousand Yuan Received from Liu Qiangdong? It Is Not Taxed When Given by Individuals

On January 8th, Liu Qiangdong distributed large red envelopes containing 10,000 and 100,000 yuan to villagers in his hometown, which attracted the attention of netizens.
According to media reports, Liu Qiangdong brought heartwarming new year gifts such as old-age mobile phones, electric bicycles, and hearing aids to the Longxiang Town, Suyu District, Suqian City in Jiangsu Province. In addition, elders over 60 years old in the village can also receive a cash red envelope of 10,000 yuan each. In a New Year letter to his fellow villagers, Liu Qiangdong promised to give each teacher he had during his primary school days in Guangming Village a cash red envelope of 100,000 yuan.
Media interviews with lawyers stated that the red envelopes received by elders over 60 years old in Liu Qiangdong’s hometown and his primary school teachers are considered as windfall gains and are subject to individual income tax.
Pengpai News (www.thepaper.cn) contacted the tax service hotline 12366 for consultation. The hotline staff replied that cash or online red envelopes distributed by individuals do not fall within the scope of personal income tax, but if the red envelopes are distributed by companies, they need to be taxed as windfall gains.
Pengpai News noted that according to Article 3 of the “Announcement of the Ministry of Finance and the State Administration of Taxation on the Application of Personal Income Tax to Personal Income Projects” in 2019, gifts (including online red envelopes) randomly given to individuals outside the company during business promotion, advertising, and other activities, as well as gifts given to individuals outside the company during annual meetings, symposiums, celebrations, and other activities, are taxed as “windfall gains,” except for gifts with price discounts or rebates such as vouchers, redemption coupons, discount coupons, and coupons.
However, if the赠送方 is an individual rather than a company, what regulations apply?
The Individual Income Tax Law stipulates that the following types of personal income are subject to tax: (1) wages and salaries; (2) labor remuneration; (3) royalties; (4)特许权使用费收入; (5) business income; (6) interest, dividends, and bonus income; (7) rental income from property; (8) capital transfer income; and (9) windfall gains.
Article 6 of the implementation rules of the Individual Income Tax Law provides specific definitions of the scope of various personal income under the Individual Income Tax Law. Among them, capital transfer income refers to the income obtained by individuals from the transfer of negotiable securities, equity, property shares in partnerships, real estate, machinery equipment, vehicles and vessels, and other property. Windfall gains refer to personal awards, prizes, lottery wins, and other accidental nature gains. In addition, for personal income that is difficult to define as taxable income items, the determination is made by the state tax authorities.
So, do personal gifts in the form of red envelopes belong to “other accidental nature gains”?
Previously, many local tax departments have explained whether online red envelopes are subject to individual income tax. For example, in December 2024, Dalian Tax introduced that according to the “Notice of the State Administration of Taxation on Strengthening the Collection and Management of Individual Income Tax on Online Red Envelopes,” cash online red envelopes distributed by individuals should be taxed as windfall gains, and the company distributing the red envelopes should deduct and pay the individual income tax on behalf of the recipient.
According to Article 3 of this notice, “cash online red envelopes sent between individuals do not fall within the taxable income specified in the Individual Income Tax Law and are not subject to individual income tax.”