In the context of 2025, Vietnam’s personal income tax (PIT) policy continues to undergo significant adjustments, directly affecting employees and enterprises in calculating tax obligations.
The following article, compiled by DNP Viet Nam Law Firm, provides essential legal information on taxable income thresholds and tax calculation methods to help both employees and employers proactively comply with tax regulations.
1. Taxpayers of Personal Income Tax (PIT)
Legal basis: Article 2 of the Law on Personal Income Tax 2007 (as amended and supplemented).
- Resident individuals with taxable income arising within or outside the territory of Vietnam.
- Non-resident individuals with taxable income arising within the territory of Vietnam.
Among them, resident individuals are classified into two groups:
- Individuals with labor contracts of three months or more;
- Individuals without labor contracts or with contracts of less than three months.
2. Taxable income threshold
Legal basis: Article 1 of Resolution 954/2020/UBTVQH14 and Article 21 of the Law on Personal Income Tax 2007 (as amended and supplemented).
- Personal deduction: VND 11 million/month (VND 132 million/year).
- Dependent deduction: VND 4.4 million/month per dependent.
Accordingly:
- Individuals without dependents must pay PIT when their total income from salary and wages exceeds VND 11 million/month.
- Individuals with dependents are entitled to higher deductions: 01 dependent → deduction of VND 15.4 million/month; 02 dependents → deduction of VND 19.8 million/month, etc.
Taxable income refers to income from salaries and wages after deducting the following:
- Compulsory insurance contributions, voluntary pension fund contributions, and charitable, humanitarian, or educational donations;
- Income exempted from PIT;
- Non-taxable allowances such as lunch allowance, certain subsidies, etc.
3. Latest PIT Calculation Method
Legal basis: Chapters II and III of the Law on Personal Income Tax 2007 (as amended and supplemented).
General formula: PIT payable = Taxable income × Tax rate
In which:
- Taxable income = Taxable earnings − Deductions (personal deductions; insurance contributions; voluntary pension fund contributions; charitable/humanitarian/educational donations).
- Tax rate: Applied on a progressive scale.
| For resident individuals | For non-resident individuals | ||
| In case a non-resident individual works both in Vietnam and abroad but cannot separate the portion of income earned in Vietnam, the following formula shall apply: | |||
| Case 1: Individuals with contracts of three months or more | Case 2: Individuals without labor contracts or with contracts under three months | Case 1: Foreigner not present in Vietnam | Case 2: Foreigner present in Vietnam |
| – Individuals with contracts of 03 months or more: PIT is withheld according to the progressive tax schedule, even if they work for multiple employers. – Individuals who terminate employment before contract expiry: PIT is still calculated under the progressive tax schedule. Personal income tax payable = Taxable income × Tax rate In which: – The applicable personal income tax rate in this case follows the progressive tax schedule specified in Article 22 of the Law on Personal Income Tax. – Alternatively, the simplified tax schedule in Appendix 01/PL-TNCN issued together with Circular 111/2013/TT-BTC may be applied. Legal basis: Point b, Clause 1, Article 25 of Circular 111/2013/TT-BTC; Clause 6, Article 25 of Circular 92/2015/TT-BTC. | – When the total payment is VND 2,000,000 or more per instance, tax is withheld at 10% before payment. – If the individual declares that their income after deductions is below the taxable level (using Form 08/CK-TNCN), the payer may temporarily not withhold tax but must report the list of such individuals to the tax authority at year-end. PIT payable = 10% × Total income before payment Legal basis: Point i, Clause 1, Article 25 of Circular 111/2013/TT-BTC. | Taxable income from amounts arising in Vietnam is calculated based on the number of working days in the year (in accordance with the Labor Code 2019). See the detailed formula in Clause 2, Article 18 of Circular 111/2013/TT-BTC. | Taxable income = Total income from salaries, wages, and other monetary or non-monetary benefits arising in Vietnam that are paid or borne by the employer. See the detailed formula in Clause 2, Article 18 of Circular 111/2013/TT-BTC. |
| In ordinary cases: Personal income tax = Taxable income × 20% In which: Taxable income is determined in the same way as for resident individuals. Legal basis: Clause 1, Article 18 of Circular 111/2013/TT-BTC. | |||
“The above content is provided by DNP Viet Nam Law Firm for reference purposes only. For detailed, accurate, and tailored legal advice that meets your specific needs, please contact us using the information provided below.”
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