Last updated on October 7th, 2026 at 05:09 pm

1. Summary

Personal income tax in Vietnam (PIT) is a direct tax on the income of individuals. In 2026, a tax resident pays 5% to 35% on salary income in five brackets, and a non-resident pays a flat 20%. Law 109/2025/QH15 on Personal Income Tax sets these rules.

This guide is for foreign investors, directors, and expatriates who earn income in Vietnam, and for the companies that employ them. An expatriate is a foreigner who lives and has a job in Vietnam. The guide tells you who pays Vietnam PIT, how to calculate it, which benefits are tax-exempt, and when to file.

personal income tax in Vietnam in 2026

These seven facts answer the most frequent questions about PIT in Vietnam:

• A tax resident is a person who is in Vietnam for 183 days or more in a year. A tax resident pays PIT on income from all countries.
• A non-resident pays PIT only on income from Vietnam, at a flat rate of 20% on salary.
• The Vietnam PIT rates for the salary of a tax resident are 5%, 10%, 20%, 30%, and 35%.
• The personal relief is VND 15.5 million each month. The relief for each dependent is VND 6.2 million each month.
• Employers withhold PIT from each salary payment and file the annual finalization before the end of March 31.
• Individuals who file directly with the tax authority have until April 30.
• Vietnam has double taxation agreements with more than 80 countries and territories.

2. What Is Personal Income Tax (PIT)?

What is personal income tax (PIT) in Vietnam?

Personal income tax in Vietnam is a direct tax on the taxable income of an individual. To find the taxable income, subtract the family relief, the mandatory insurance payments, and approved charity donations from the income. The tax applies to ten categories of income: salaries, business income, capital investments, capital transfers, real estate transfers, royalties, franchises, prizes, inheritances, and gifts.

Why is Vietnam PIT important for foreign-owned companies?

The employer deducts PIT from the salary and pays the tax to the government. The employee then receives the net salary, which is the amount after tax. Many foreign managers and specialists agree on a net salary in their contract. In this case, the employer pays all the tax.

To know the cost, the employer must calculate the gross salary from the net salary. This calculation is known as gross-up. If the gross-up is incorrect, or if the company does not use the tax-exempt allowances, the cost of the employee increases.

3. Who Pays PIT in Vietnam? Tax residents and non-residents

All individuals who earn taxable income in Vietnam pay PIT, and the tax residency of the person sets the rules. Nationality does not change the liability. A tax resident is a person for whom one of these two conditions is true:

Classification Factor	Tax Resident	Non-Resident
Physical Presence in Vietnam	Present in Vietnam for 183 days or more in a calendar year, or across 12 consecutive months from the initial date of arrival.	Present in Vietnam for fewer than 183 days in the relevant tax year.
Permanent Residence / Lease	Holds a registered permanent or temporary residence (TRC) or leases residential accommodation in Vietnam for 183 days or more.	Does not maintain a permanent residence or holds residential leases totaling fewer than 183 days.
Taxable Income Scope	Worldwide Income: Taxed on all income generated both inside and outside Vietnam, regardless of payment location.	Vietnam-Sourced Income Only: Taxed solely on income generated from work performed within Vietnam territory.
Applicable Salary Tax Rate	5-bracket progressive rate from 5% to 35%; eligible for personal and dependent family deductions.	Flat 20% tax rate on employment income; no family deductions allowed.
Burden of Proof	If renting a home for 183 days or more but staying under 183 days, must present a foreign Tax Residence Certificate to avoid resident status.	Must present passport arrival/departure stamps and home country fiscal residency proof.

The 183-Day Rule and the Rental Lease Presumption

A stay of fewer than 183 days in Vietnam does not automatically make you a non-resident. Under the Law, the tax authority considers you a tax resident if you sign a long lease. The lease can be for a house, an apartment, or a hotel room, and its period must be 183 days or more in a tax year.

To change this result, give a Certificate of Tax Residence from the tax authority of your home country for the same tax year. If you cannot provide this certificate, you are a Vietnam tax resident. You then pay tax on your income from all countries.

4. Which income is taxable under Vietnam PIT?

Vietnam personal income tax applies to ten categories of income. These five categories are the most important for foreign employees and companies:

1. Employment Income: Salaries, wages, overtime pay, allowances, operational subsidies, performance bonuses, directors’ fees, and monetary or non-monetary benefits provided by employers.

2. Capital Investment Income: Dividends from joint-stock companies, profit distributions from limited liability companies, and interest received from corporate loans (personal bank deposit interest remains tax-exempt).

3. Capital Transfer Income: Gains realized from transferring capital contributions in LLCs (taxed on net profit) or selling shares and securities in joint-stock corporations (taxed on total gross sales proceeds).

4. Real Estate Transactions: Revenues earned from transferring real estate ownership, land use rights, or leasing physical property.

5. Royalties, Franchising, and Capital Gifts: Royalties from intellectual property, commercial franchising fees, lottery winnings, inheritances, and gifts with an individual value exceeding 20 million VND.

Salary paid outside Vietnam

If you do the work in Vietnam, the salary is income from Vietnam. The country where the employer pays the salary does not change this. Some foreign employees receive a part or all of their salary from a parent company into a bank account abroad. This arrangement is known as split payroll.

The employer and the employee must declare the full salary and convert the foreign currency to VND. If they do not declare the part paid abroad, this is tax evasion. The tax authority can then charge the unpaid tax for past years, and the company can have criminal liability.

Remote workers and freelancers in Vietnam

A foreigner who lives in Vietnam and does remote work for foreign clients can become a tax resident. This applies to holders of investor, business, or visitor visas who are in Vietnam for 183 days or more in a calendar year. These people must register for a Vietnamese tax code and declare their income from all countries. Income from independent services is subject to the business tax rates or to the progressive rates for employment income.

5. What are the Vietnam personal income tax rates in 2026?

The Vietnam personal income tax rates in 2026 are progressive rates from 5% to 35% for the employment income of a tax resident. Flat rates apply to non-residents and to the other income categories.

Progressive PIT rates for the salary of a tax resident

The rates apply to the taxable income of each month. Taxable income is the gross income minus the mandatory social security, the family relief, and the tax-exempt benefits.

For example, an employee has a taxable income of VND 40,000,000 in one month.

This income is in bracket 3.

The tax for the month is (20% × 40,000,000) − 3,500,000 = VND 4,500,000.

Flat PIT rates for non-residents and other income

A non-resident pays a flat 20% on employment income and gets no family relief. The other income categories have flat rates with no deductions.

Income Category	Tax Rate	Tax Calculation Base
Capital Investment (Dividends/Interest)	5%	Gross dividend or loan interest received
Capital Transfer (LLC Equity)	20% on net gain; or2% on sale proceeds	Net gain / Gross sales price
Securities / Shares in JSC	0.1%	Gross transfer proceeds per transaction
Real Estate Transfers	2%	Gross contract sales proceeds
Royalties & Franchising	5%	Income portion exceeding 20,000,000 VND per contract
Prizes, Inheritances, Gifts	10%	Asset value portion exceeding 20,000,000 VND per occurrence
Business / Independent Services	1% to 5%	Gross commercial service revenue by industry

6. Tax-Exempt Income and Strategic Expatriate Fringe Benefits

Structuring compensation packages to maximize non-taxable allowances is fully legitimate under Vietnamese tax law and significantly reduces overall payroll costs.

Family relief and insurance deductions

• Personal Relief: 15,500,000 VND per month (186,000,000 VND per year) automatically deducted from gross income before applying tax brackets.
• Dependent Relief: 6,200,000 VND per month per qualifying dependent (minor children under 18, adult children in university with no income, or elderly parents unable to work). Dependent tax codes and supporting birth/family certificates must be registered with the tax bureau.
• Compulsory Insurance Deductions: Mandatory employee contributions for Social Insurance (8%), Health Insurance (1.5%), and Unemployment Insurance (1%) are 100% tax-deductible, along with voluntary pension contributions up to 1 million VND per month.

Non-Taxable Expatriate Allowances and Benefits:

Under Circular 111/2013/TT-BTC and related decrees, foreign employees can receive specific tax-exempt benefits when properly documented in employment contracts and company policies:

Benefit	Tax-exempt amount	Condition
Home leave airfare	One round trip each year to the home country	The employer pays the airfare
School tuition for children	Full tuition from kindergarten to grade 12 in Vietnam	The employer pays the school directly
Housing	The part of the rent above 15% of the other taxable income	The employer supplies or rents the housing
Lunch allowance	Up to VND 1,200,000 each month in cash, or the full value of meals	For the full value, the employer supplies the meals directly
Uniform allowance	Up to VND 5,000,000 each year in cash, or the full value in kind	For the full value, the employer has VAT invoices for the uniforms
Relocation allowance	One payment for the move to Vietnam	Relocation invoices and flight tickets

The housing rule sets a maximum for the taxable part. When the employer supplies housing, the taxable housing benefit is not more than 15% of the other taxable income of the employee. Rent above this limit has no PIT.

7. How do PIT withholding and annual finalization operate in Vietnam?

The employer withholds PIT each time it pays a salary, and one time each year the withheld tax is compared with the tax for the full year. This yearly comparison is known as PIT finalization.

The tax year

For a tax resident, the tax year is the calendar year, from January 1 to December 31.

One exception applies to a foreign employee who arrives for the first time and is in Vietnam for fewer than 183 days in the first calendar year. For this employee, the first tax year is 12 consecutive months from the date of arrival. From the second year, the tax year is the calendar year.

The 10% withholding rule for service contracts

Some people have a temporary service or consulting contract and no labor contract of 3 months or longer. For these people, the payer withholds a flat 10% on each payment of VND 5,000,000 or more. The rule applies to Vietnamese and foreign people.

If the person estimates that the total annual income will be below the taxable level, the person can sign Form 08/CK-TNCN. With this form, the payer temporarily does not withhold the 10%.

Who can authorize the employer to do the finalization

An employee can authorize the employer to do the finalization only when two conditions are met. The employee has only one source of employment income in the year, and the employee is employed at the company at that time. These three groups must file by themselves with the local tax department:

• People who had two or more employers in the year
• People who claim a tax refund
• Expatriates who end their contract in Vietnam, before they leave the country

PIT finalization deadlines

Vietnam has two deadlines for the annual PIT finalization:

• March 31 is the deadline for companies that pay employment income. The company files Form 05/QTT-TNCN for all its staff not later than the last day of the third month after the end of the year.
• April 30 is the deadline for individuals who file directly. If April 30 is a public holiday, the deadline moves to the subsequent business day.

8. How do double taxation agreements apply to Vietnam PIT?

A double taxation agreement (DTA) is an agreement between two countries that prevents tax on the same income two times. Vietnam has DTAs with more than 80 countries and territories. Examples are Singapore, Japan, South Korea, the United Kingdom, Germany, France, and Australia. Vietnam and the United States signed an agreement in 2015, but it is not in force.

Under a DTA, the tax paid in Vietnam can decrease the tax in the home country. Some employment income can also be exempt from Vietnam PIT.

Three conditions for the DTA exemption on employment income

A foreign employee whom an overseas company sends to Vietnam is exempt from Vietnam PIT on the salary when all three conditions are true:

1. The employee is in Vietnam for fewer than 183 days in the calendar year or the 12-month period.
2. The employer that pays the salary is not a tax resident of Vietnam.
3. A permanent establishment or branch of the foreign company in Vietnam does not pay or refund the salary cost.

How to claim the DTA exemption?

The DTA exemption is not automatic. The taxpayer or the employer must prepare a dossier with these four documents:

• The official DTA notification form
• An original Certificate of Tax Residence from the tax authority of the home country, with consular legalization and a Vietnamese translation
• Certified copies of the employment contracts
• The original passport

Submit the dossier to the local tax department at least 15 days before the work in Vietnam starts, or together with the annual finalization return. If the dossier is late, you lose the DTA benefits. You then pay the 20% non-resident tax and late payment interest of 0.03% for each day.

Circular 95/2026/TT-BTC gives new guidance on DTAs from July 1, 2026. Make sure that you use the current procedure before you file.

9. VNBG is a one-stop partner for tax and payroll in Vietnam

Navigating personal income tax in Vietnam requires rigorous operational control. From determining 183-day tax residency and grossing up net compensation to structuring tax-free expatriate allowances and executing annual finalization filings, proactive payroll management protects corporate cash flow and eliminates legal exposure.

VNBG is a leading corporate service provider delivering one-stop solutions for foreign investors, international directors, and multinational enterprises in Vietnam. We manage the entire business lifecycle, including company incorporation (IRC & BRC licensing), complete payroll administration, Employer of Record (EOR) services, personal income tax finalization, Work Permits, and Temporary Residence Cards (TRC).

• One-Stop Corporate Solutions: We manage legal incorporation, payroll processing, tax withholding, and labor compliance through a single integrated team.
• Free Consultation & Unlimited Advisory: International founders and HR leaders receive unlimited strategic advisory on tax structuring and expatriate compensation without hourly billing constraints.
• 100% Compliance Guarantee: Our experienced payroll specialists calculate Gross/Net conversions, register dependent codes, and prepare DTA filings to guarantee 100% on-time, audit-proof compliance.

VNBG supplies business services for foreign investors, directors, and companies in Vietnam. One team does your company registration, payroll, Employer of Record (EOR) service, PIT finalization, work permits, and temporary residence cards (TRC).

As a result, your legal, payroll, and tax tasks stay with one partner.

For personal income tax in Vietnam, the VNBG payroll team can assist you with these five tasks:

• Calculation of gross and net salaries
• Registration of dependents with the tax office
• Monthly withholding and annual PIT finalization
• Preparation of DTA dossiers
• A salary structure that uses the tax-exempt allowances

VNBG prepares each filing to be on time and in compliance with the law. Advice on tax structure and on the pay of foreign employees has no hourly charge.

10. Book a Free Consultation with VNBG

The PIT and payroll consultation with VNBG is free.

In the meeting, tell the consultant how many employees you have, their nationalities, and if their salaries are net or gross. The consultant answers your questions about tax residency, salary structure, and deadlines.