Personal income tax and expatriates: the 2025 PIT Law, residence, the 2026 rates and deductions, taxable benefits, employer withholding and finalisation, arrival and departure, treaty relief and tax on investment income

The law in force

Personal income tax (thuế thu nhập cá nhân, PIT) is governed by Law No. 109/2025/QH15 on Personal Income Tax, passed in December 2025 and in force from 1 July 2026, which replaced Law No. 04/2007/QH12 and its amendments. Its provisions on employment income of residents and on business income apply from the 2026 tax year, so the new scale governs the whole of 2026 for employees. Decree No. 253/2026/ND-CP of 30 June 2026 details the law, covering residence, taxable and exempt income, deductions, withholding and finalisation. The family deductions were raised separately, from the 2026 tax period, by Resolution No. 110/2025/UBTVQH15 of the National Assembly Standing Committee. Declaration, payment and the departure rules follow Law No. 108/2025/QH15 on Tax Administration and Decree No. 252/2026/ND-CP.

For a foreign-invested company the practical questions are threefold: which of its foreign staff are resident and therefore taxed on their worldwide income, how their packages, often including housing, schooling and tax equalisation, are taxed, and what the company must withhold, declare and finalise as employer. Payroll, compulsory insurance and work permits are covered in Wages, minimum wage and payroll, Social, health and unemployment insurance and Work permits for foreign staff.

Residence: the 183-day and home tests

An individual is resident in Vietnam for a tax year if he or she is present in Vietnam for 183 days or more in the calendar year or in the 12 consecutive months from the first day of arrival, the days of arrival and departure together counting as one day, or has a habitual residence in Vietnam: a registered permanent residence, or a residence card or temporary residence registration together with a home in Vietnam, including a rented home under a lease, as defined in Article 4 of Decree No. 253/2026/ND-CP. Anyone else is non-resident. Where an individual is also resident in another state under that state's law, a double taxation agreement's tie-breaker, which looks to the permanent home and the centre of vital interests, decides which state may tax as the state of residence (FAQ 27).

Residence decides the base and the rate. A resident is taxed on worldwide income, wherever paid, at the progressive rates on employment income; a non-resident is taxed only on Vietnam-source income, at a flat 20% on employment income with no deductions. Employment income is Vietnam-source if it relates to work performed in Vietnam, whoever pays it and wherever it is paid, so a salary paid offshore by the parent for work done in Vietnam is taxable and must be declared, by the individual if the Vietnamese company does not include it in its own withholding.

The 2026 rates and deductions

Law No. 109/2025/QH15 reduced the progressive scale from seven bands to five. Monthly taxable employment income of a resident, after deductions, is taxed at 5% up to VND 10 million, 10% from VND 10 million to VND 30 million, 20% from VND 30 million to VND 60 million, 30% from VND 60 million to VND 100 million and 35% above VND 100 million. The top rate is unchanged but now starts at VND 100 million instead of VND 80 million, and the lower bands are wider, so most employees pay less than under the old scale.

From the taxable income are deducted the family deduction of VND 15.5 million a month for the taxpayer and VND 6.2 million a month for each registered dependant, under Resolution No. 110/2025/UBTVQH15 from the 2026 tax period; the employee's compulsory social, health and unemployment insurance contributions; contributions to supplementary and voluntary pension schemes and life insurance within the prescribed limits; and qualifying charitable donations. The new law adds deductions for medical expenses at domestic providers of up to VND 23 million a year and for education and training at domestic institutions of up to VND 24 million a year, for the taxpayer and dependants, with invoices; an employee who claims them must finalise his or her own tax rather than through the employer (Decree No. 253/2026/ND-CP). Dependants, which may include children, a spouse and parents meeting the income conditions, must be registered with the tax authority, and foreign dependants need documents establishing the relationship.

What counts as employment income: benefits and allowances

Taxable employment income includes salary, wages, bonuses, allowances and benefits in cash or in kind, whether paid in Vietnam or abroad. For expatriates the significant items are these. Housing paid by the employer, including rent, electricity and water, is taxable at the amount paid but not more than 15% of the employee's total taxable income from that employer excluding the housing itself (Article 8(2)(h) of Decree No. 253/2026/ND-CP); a cash housing allowance paid to the employee is taxable in full, so packages should pay rent directly to the landlord under a lease in the company's or employee's name. School fees for expatriates' children paid by the employer were, under the guidance in force before July 2026, not taxable for kindergarten to upper secondary level; employers should confirm that treatment under Decree No. 253/2026/ND-CP before relying on it for 2026. Home leave airfare, relocation costs, club memberships, cars for private use, and life insurance with a savings element are treated according to the decree's list of taxable and non-taxable benefits, which should be checked item by item.

Some payments are expressly exempt. Overtime and night-work premiums and pay for untaken annual leave are exempt where they comply with the Labour Code; a cash meal allowance is exempt up to VND 1.2 million a month; severance and job-loss payments are exempt, including amounts above the statutory minimum where paid under a formal company policy; and the new law gives a five-year exemption on employment income to qualifying personnel in high technology and digital technology. Shares awarded to employees under share plans are taxed when the shares are distributed, the securities company or custodian withholding 10% and the employee including the income in the annual finalisation.

Tax equalisation and net salaries

Many expatriates are employed on a net basis, the employer guaranteeing a salary after Vietnamese tax. The tax paid by the employer on the employee's behalf is itself taxable income, so the net salary must be grossed up to the equivalent gross salary under the net-to-gross conversion table prescribed by the Ministry of Finance, and the PIT computed on the gross figure. Under a group tax equalisation policy, a hypothetical home-country tax is deducted from salary and the employer bears the actual Vietnamese tax; the hypothetical deduction does not reduce Vietnamese taxable income, and the Vietnamese tax borne by the employer is grossed up in the same way. The costs of an expatriate seconded by a group company and recharged to the Vietnamese company are deductible for CIT where the secondment arrangement meets the conditions in Decree No. 320/2025/ND-CP, and the recharge must not be treated as a service fee subject to foreign contractor tax if the documents show it to be a reimbursement of employment cost (Corporate income tax).

Withholding, declaration and finalisation

The employer withholds PIT monthly from employees with labour contracts of three months or more, applying the progressive scale to residents, and withholds 10% from payments of VND 5 million or more to individuals without a contract or with a contract under three months (the threshold was raised from VND 2 million by Decree No. 253/2026/ND-CP), and 20% from employment income of non-residents. Withheld PIT is declared and paid monthly by the 20th, or quarterly by the last day of the month after the quarter for quarterly filers. Income paid abroad by the parent for work in Vietnam must be declared by the employee directly, quarterly, unless the Vietnamese company includes it in its own withholding, as many do by agreement with the parent.

After year end the employer files its PIT finalisation, covering all employees, by the last day of the third month, and can finalise on behalf of resident employees who authorise it and have no other income to declare beyond the limits the decree allows. Employees who claim the new medical or education deductions, have income from more than one source, or have foreign income, finalise themselves by the last day of the fourth month (30 April for a calendar year). Overpaid tax is refunded or carried forward. The finalisation deadlines appear in Compliance calendar after licensing.

Arrival and departure

On arrival the employer registers the expatriate for a personal tax code, or the expatriate's identification number is used where the tax authority allows, and registers dependants. A newcomer who becomes resident in the first year is taxed on worldwide income from the time residence begins; the treatment of the first and last years, including whether the tax year is the calendar year or the 12 months from arrival, should be agreed with the tax office at the outset, because it affects the declaration of income earned abroad before arrival.

On departure, a foreign national whose assignment in Vietnam ends must finalise his or her PIT with the tax authority before leaving, either personally or through the employer under authorisation, and settle any tax due. Under Decree No. 252/2026/ND-CP a foreign national with outstanding tax obligations before departure can be subject to temporary exit suspension, the tax authority notifying the immigration authority immediately (Tax administration, audits and disputes). Plan the departure finalisation weeks before the flight, and obtain the tax office's confirmation before the work permit is returned and the residence card cancelled (Visas and temporary residence).

Treaty relief for short-term assignees

A double taxation agreement can exempt employment income of a short-term assignee from Vietnamese tax under its dependent personal services article if three conditions are met together: the individual is present in Vietnam for not more than 183 days in the period the treaty specifies (a calendar year, a fiscal year or any 12-month period, depending on the treaty); the remuneration is paid by, or on behalf of, an employer that is not resident in Vietnam; and the remuneration is not borne by a permanent establishment that the employer has in Vietnam. If the Vietnamese company bears the cost through a recharge, the third condition usually fails. Relief is claimed by dossier with a certificate of residence under Circular No. 95/2026/TT-BTC and Circular No. 89/2026/TT-BTC (Foreign contractor tax and tax treaties). The individual's presence can also create a permanent establishment of the foreign employer, which is a separate question.

Dividends, share sales and other investment income

Individuals, resident or not, pay PIT at 5% on dividends and other income from capital investment, withheld by the paying company (FAQ 62). On the transfer of shares in a joint stock company, public or not, the tax is 0.1% of the transfer price on each transaction; the draft proposal to tax gains on unlisted shares at 20% was not adopted. On the transfer of capital in a limited liability company or other non-share interest, a resident pays 20% of the gain, the price less the cost of acquisition and reasonable expenses, or 2% of the price where the cost cannot be established; the transfer of a whole company whose value lies in real estate is treated as a real estate transfer. Non-resident individuals are also taxed on transfers of capital in Vietnamese companies, and the method should be confirmed against Decree No. 253/2026/ND-CP before a sale. Real estate transfers are taxed at 2% of the price, royalties and franchise income at 5% above VND 20 million, and transfers of digital assets and gold bullion at 0.1%. The obligations of the target company and the buyer are in Tax on share transfers and dividends.