Vietnam Amends Personal Income Tax Law: Key Highlights and Business Implications

Vietnam’s National Assembly approves the amended Law on Personal Income Tax, updating the rules on taxable income, exemptions and deductions, progressive tax brackets, and applicable tax rates for certain irregular income.

Note: Below are provisions from the draft law, along with highlights from the official text reported in the media. The scope and details of the implementation will become clear once the official text is released in the coming days.

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The PIT reform is a central pillar of Vietnam’s 2025–2030 fiscal modernization strategy. By widening the tax base and easing pressure on low- and middle-income earners, the government aims to strengthen purchasing power, improve tax fairness, and enhance workforce competitiveness.

The overhaul also aligns with updates under Vietnam’s Corporate Income Tax (CIT) and Value-Added Tax (VAT) frameworks – signaling a coordinated move toward a more transparent, integrated, and technology-enabled tax administration. For multinational employers managing cross-border talent, these reforms reduce uncertainty and support long-term workforce planning in Vietnam’s rapidly growing digital and services economy.

Why this reform matters

The PIT reform is part of Vietnam’s 2025-2030 fiscal modernization roadmap, which seeks to widen the tax base while reducing inequality.

In line with this, the MoF has proposed a substantial increase to the basic dependent deduction. This move is intended to ease the financial pressure on low- and middle-income taxpayers, aligning with the government’s stated goal of promoting fairness and improving purchasing power across income groups.

The draft also complements ongoing reforms in the Corporate Income Tax (CIT) and Value Added Tax (VAT) frameworks, signaling the government’s commitment to building a cohesive, technology-enabled tax administration capable of managing a digitized, global workforce.

Implementation timeline and next steps

The revised PIT Law is expected to come into force on July 1, 2026. However, to accelerate relief for taxpayers, provisions related to income from salaries, wages, and business activities will take effect earlier, from January 1, 2026.

Additional procedural guidance, including detailed calculation methods and documentation requirements, will be confirmed once the official law text and accompanying regulations are released.

Businesses should begin assessing the potential impacts now – reviewing payroll systems, modeling compensation scenarios, and preparing internal teams for compliance updates as Vietnam’s tax landscape continues to evolve.

Key reforms of Vietnam’s Draft PIT Law

Simplified progressive tax brackets

The law reduces the number of progressive PIT brackets from seven to five and retains a top statutory rate of 35 percent while raising thresholds for higher bands under some options. This adjustment aims to simplify filing, enhance transparency, and provide relief to low and middle-income earners, especially amid rising living costs and inflationary pressures.

Adjusted family circumstance deductions

The new law revises the principles for adjusting personal and dependent deductions, including:

• Personal deduction: increases from VND 11 million (US$418) to VND 15.5 million (US$589) per month; and
• Dependent deduction: increases from VND 4.4 million (US$167) to VND 6.2 million (US$236) per month.

Correspondingly, the new deduction thresholds will be as follows:

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• Individuals without dependents earning VND 17 million (US$646) per month will not yet be subject to PIT;
• Individuals with one dependent will remain tax-exempt at an income level of VND 24 million (US$912) per month; and
• Individuals with two dependents will remain tax-exempt at an income level of VND 31 million (US$1,178) per month.

In addition, the law updates the principle for adjusting deduction levels. The current law authorizes the Standing Committee of the National Assembly to revise deductions only when the Consumer Price Index (CPI) fluctuates by more than 20 percent. However, this threshold has become inadequate amid faster changes in living costs and income levels. In practice, waiting for a 20 percent CPI increase could take more than five years, while expenses and incomes may vary more frequently.

To address this, the 2025 PIT Law requires the Government to promptly submit adjustment proposals to the Standing Committee to modify family circumstance deductions in response to changes in prices and incomes, ensuring timely and practical alignment with economic realities.

New taxable revenue threshold for household businesses

One of the provisions that drew significant attention during NA discussions of the draft law was the tax policy applicable to household businesses.

In response to feedback from the lawmakers, the new law raises the revenue threshold for tax exemption. The adjustment is as follows:

• The non-taxable revenue threshold has been increased from the current VND 100 million (US$3,798) to over VND 500 million (US$18,989) per year; and
• Household businesses with annual revenue of VND 500 million or less will be exempt from personal income tax.

Taxing gold bar transactions to curb speculation

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To support gold market management and limit speculative activity, the law imposes a PIT on income derived from the transfer of gold bars, at a rate of 0.1 percent of the transaction value for each transfer.

At the same time, to safeguard the interests of individual savers, the government will issue detailed regulations on the taxable threshold for gold bar transactions. Individuals trading gold for savings or long-term holding purposes below this threshold will not be subject to PIT.

Expanded tax exemptions introduced to support labor and innovation

The law also expands the scope of tax exemptions to encourage labor participation and innovation. These provisions include:

• A full PIT exemption on income from night work and overtime (instead of exempting only the premium portion as previously applied);
• A five-year tax exemption on salary and wages earned by high-tech professionals and high-quality digital technology industry workers; and
• Tax exemptions on income from the initial transfer of carbon credits and green bonds.

Other changes from the draft law

Although the media has highlighted only some of the key aspects of the new PIT Law, businesses and individuals can glimpse additional changes by reviewing the previously published draft.

Expanded deductions for education and healthcare expenses

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The draft law introduces new deductible categories, allowing taxpayers to deduct certain education, training, and healthcare expenses before calculating taxable income. This revision preserves existing deductions while expanding the scope to include essential personal expenses.

By permitting deductions for education and healthcare costs, the government aims to encourage individuals to invest in learning and skills development, while also supporting financial resilience in cases of illness.

Expanded taxable base for modern income types

The proposal clarifies and extends PIT coverage to income from digital platforms, e-commerce, and certain digital asset trading, such as cryptocurrency, in the PIT base. This extension addresses long-standing tax gaps in Vietnam’s fast-growing online economy, which generated over US$25 billion in platform-based revenue in 2024.

Additionally, the draft law also suggests a 0.1 percent PIT on each gold bullion transaction.

Reform of capital gains and securities taxation

The draft introduces clearer rules for PIT on capital and securities transfers,  including alternative calculation methods that seek to treat long-term investors differently from short-term traders. This is aimed at improving fairness and removing distortions from the existing per-transaction flat measures.

Digital reporting and administrative modernization

The reform package aligns with Vietnam’s accelerated tax digitalization agenda: authorities plan to strengthen reporting, e-filing, and cross-platform information sharing to capture digital incomes. These are working proposals rather than final law. 

Immediate implications for businesses

Tax withholding and payroll administration

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With the changes to the PIT brackets and thresholds, payroll withholding tables will be revised. Employers must be ready to quickly adapt payroll engines and employee communications to avoid over- or under-withholding and the associated reputational or compliance risks.

Multinational employers should coordinate with global payroll vendors on patch releases and test payroll runs during transition months.

Compliance burden for platform-based payments

Extending taxable incomes to digital platforms and e-commerce means online marketplaces, gig platforms, and marketplace sellers will face new reporting obligations. Companies that operate or aggregate payments (digital platforms, payment service providers) should prepare for enhanced data collection and reporting workflows and consider revising merchant contracts to allocate tax compliance responsibilities.

Capital gains administration and investor reporting

If implemented in the new law, the draft’s provision to tax capital and securities transfers could change how taxes are calculated for individual investors, founders, and employees exercising equity awards.

Companies with employee share plans or those that handle secondary sales should review their plan documents, tax withholding policies, and investor communications. When the draft allows taxing based on net taxable income instead of the transfer price, maintaining detailed records of purchase prices and costs will become essential.

Global mobility and assignment policy

If deductible items and thresholds change materially, net pay for expatriates and cross-border assignees may change. Employers should run “what if” scenarios for typical assignee profiles, update gross to net projections, and consider compensation adjustments or tax equalization policy tweaks.

Strategic and tax planning considerations

Review salary structures and benefits packaging

Because the draft contemplates broader definitions of taxable income and potentially higher top rates, firms should reassess whether components such as bonuses, allowances, fringe benefits, or non-cash perks remain tax-efficient. Consider restructuring remuneration (where commercially and legally appropriate) to balance employer costs with employee after-tax outcomes.

Strengthen record-keeping and systems integration

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Enhancing internal audit and risk management

The move to digital reporting and the taxation of digital incomes means organizations must upgrade invoicing, merchant reporting, and tax reconciliation systems.

E-commerce platforms should ensure they can supply granular transaction data, including timestamps, buyer and seller identification, consideration, and fees, to meet future reporting needs.

Revisit equity-based compensation designs

Changes to capital gains and securities taxation can materially affect employees’ after-tax value from stock options and restricted shares. Consider alternative long-term incentive structures (e.g., deferred cash plans, phantom equity) and ensure plan documentation and grant letters reflect new tax calculation methods.

Engage proactively with tax advisers and trade bodies

The draft is still subject to final drafting and political negotiation. Employers and industry groups should feed into any public consultation windows and model the operational impacts of likely scenarios. Early engagement reduces execution risk and can influence outcome details such as implementation timelines and grandfathering arrangements.

See also: Vietnam Wages in 2025: Overview, Trends and Implications for Investors

Takeaway for businesses

Businesses should prepare for Vietnam’s upcoming PIT Law, effective July 1, 2026, by streamlining payroll processes to adapt to the simplified tax brackets and ensuring systems reflect increased personal and dependent deductions, which will boost employee take-home pay.

It is crucial to update payroll systems to accommodate new tax exemption thresholds and to communicate these changes clearly to employees to foster transparency and trust. Proactive adjustments will position businesses well for compliance and enhance employee satisfaction as they navigate the evolving tax landscape.

(US$1 = VND 26,325)

This article was first published on November 5, 2025, and was last updated on December 10, 2025.

With input from Vu Nguyen Hanh.

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