A foundation organizes a short film festival supported by the Ministry of Culture and Tourism and awards cash prizes to the winners. The foundation asks whether these awards are subject to income tax or inheritance and transfer tax.
In Terms of Income Tax:
According to the Income Tax Law, awards given to promote fine arts are exempt from tax. However, since cinema is not considered among the fine arts, awards given to film owners are not included in this exemption. If the winner of the award is a freelancer, the awards are subject to income tax withholding. No withholding is applied to commercial earners.
In Terms of Inheritance and Transfer Tax:
If the awards are subject to income tax, inheritance and transfer tax is not applied. However, if the awards are not subject to income tax, inheritance and transfer tax must be calculated and declared according to general provisions.
Source: Revenue Admin.
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