The Vietnamese Government has introduced significant changes to the country’s Personal Income Tax (PIT) framework through Decree No. 253/2026/ND-CP and Circular No. 87/2026/TT-BTC, providing detailed guidance for the implementation of the revised Personal Income Tax Law. Issued on 30 June 2026, Decree No. 253/2026/ND-CP took effect on 01 July 2026, replacing Decree No. 65/2013/ND-CP. The Decree introduces many important amendments affecting the taxation of employment income, employee benefits, tax deductions, withholding obligations, and annual PIT finalisation.
These provisions provide greater tax relief for employees, and also introduce new compliance requirements for employers. Many of the new provisions apply retrospectively from 01 January 2026, while others take effect from 01 July 2026. Below is an overview of the key changes introduced under the new regulations. HR, payroll, and finance teams should review their payroll policies, employee benefits, tax withholding procedures, and supporting documentation to ensure ongoing compliance.
This article summarises the key changes and highlights the practical implications for businesses operating in Vietnam.
PIT-exempt benefits and deductions
Meal allowance
The monthly PIT exemption for employer-provided meal allowances has been increased.
Before 01 July 2026
- Meal allowances were exempt from PIT up to VND 730,000/employee/month.
From 01 July 2026
- The PIT exemption increases to VND 1.2 million/employee/month.
- Any amount exceeding this threshold remains subject to PIT. Employers should update payroll policies if meal allowances exceed the exempt threshold.
Night work, overtime work, and unused annual leave
The Decree expands the scope of PIT-exempt employment income relating to additional working hours.
Before 01 January 2026
- Only the additional portion of wages paid for overtime work or night work was exempt from PIT.
From 01 January 2026
- Wages paid for overtime work, night work, and salaries paid for days not taken as leave are non-taxable if compliant with the Labour Law.
Medical and education expenses tax deductions
For the first time, resident taxpayers are permitted to deduct certain medical and education expenses from taxable income before calculating PIT.
Eligible deductions include:
- Medical examination and treatment expenses incurred at domestic healthcare establishments, up to VND 23 million per year.
- Education and training expenses incurred at domestic educational institutions, up to VND 24 million per year.
To qualify, the expenses must:
- Be supported by valid documentation;
- Be invoiced in the name of the taxpayer or their eligible dependent; and
- Not have been reimbursed or covered by another party, such as an employer or an insurance provider.
Tax declaration and withholding
Dependent deduction
The Decree revises both the registration deadline and the income threshold for determining whether an individual qualifies as a dependent.
Before 01 January 2026
- Registration deadline: 31 March of the relevant tax year.
- Income threshold: The dependent’s average monthly income could not exceed VND 1 million.
From 01 January 2026
- Registration deadline: 31 December of the relevant tax year.
- Income threshold: A dependent’s average monthly income from all sources must not exceed VND 3 million.
PIT withholding for short-term workers
The Decree raises the income threshold requiring 10% PIT withholding for payments made to resident individuals who do not have a labour contract, or have a labour contract with a term of less than three months.
Before 01 January 2026
- Employers were required to withhold PIT at 10% where a payment reached VND 2 million or more.
From 01 January 2026
- The withholding obligation applies only where a payment is VND 5 million or more.
- The income payer must withhold PIT at 10% of the gross payment before making payment and declare and remit the tax on behalf of the individual.
As a result, this update simplifies the overall tax declaration process for enterprises managing seasonal workers, interns, and other short-term personnel.
PIT finalisation
Individuals receiving additional income that has already been subject to the 10% withholding tax are no longer required to include that income in their annual PIT finalisation, provided:
- Average monthly income from those sources does not exceed VND 15 million; and
- The income payer has properly withheld PIT at 10%.
This change is expected to reduce administrative burdens for many part-time workers, consultants, and freelancers. Individuals who choose to conduct their own annual PIT finalisation must continue to declare all employment income earned during the tax year, together with the corresponding PIT already withheld.
What should employers do?
To prepare for the implementation of the new regulations, businesses should review their payroll systems and internal policies to ensure they reflect the updated PIT rules. In particular, employers should pay attention to meal allowances, overtime payments, dependent registration procedures, withholding obligations for short-term workers, and employee communication regarding the newly available deductions for medical and education expenses. Therefore, taking proactive steps now will help minimise compliance risks and reduce the need for payroll adjustments later in the year.
How RBA Group can help
The new PIT regulations present both opportunities and compliance obligations for employers. RBA Group assists businesses in assessing the impact of the new rules, reviewing payroll processes and employee benefit structures, and ensuring ongoing compliance with Vietnam’s evolving tax regulations.
If you would like to understand how these changes may affect your organisation or require assistance with implementation, our tax and payroll specialists are ready to help.
