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A query was raised regarding whether prizes in the form of vouchers for school supplies awarded in literary and drawing competitions are subject to withholding tax. The DGT ruled that, as they involve the transfer of exploitation rights, they are classified as employment income and are subject to pay-as-you-earn (PAYE) tax deductions.
This ruling clarifies that prizes involving the transfer of intellectual property rights are treated as employment income rather than capital gains, requiring the withholding of tax at the source.
The tax team reviews your specific situation.
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