Vietnam Payroll & Personal Income Tax the complete guide

PIT rates and brackets

Vietnamese Personal Income Tax is progressive with 7 brackets:

5% on taxable income from VND 0–5 million / month (VND 0–60 million / year)

10% on VND 5–10 million / month (VND 60–120 million / year)

15% on VND 10–18 million / month (VND 120–216 million / year)

20% on VND 18–32 million / month (VND 216–384 million / year)

25% on VND 32–52 million / month (VND 384–624 million / year)

30% on VND 52–80 million / month (VND 624–960 million / year)

35% on VND 80 million+ / month (VND 960 million+ / year)

Taxable income is gross income less the personal deduction (VND 11 million / month for the employee, VND 4.4 million / month per dependent) and any tax-deductible contributions (mandatory SI, voluntary retirement, charitable contributions).

PIT is computed on a monthly basis for employment income (with annual finalisation to reconcile) and on a transaction basis for non-employment income (e.g. capital gains, freelance fees).

Tax residency: the 183-day rule

An individual becomes a Vietnam tax resident if present for 183 days or more in a calendar year (or any 12-month period from arrival), or has a permanent residence in Vietnam, or has a registered rental of 90+ days with no intention to leave. The determination is made for each 'tax year' which is the calendar year.

Residents are taxed on worldwide income. Non-residents are taxed only on Vietnam-source income at a flat 20% rate on employment income (or treaty rate).

For an assignee on a typical 2–3 year Vietnam assignment, the determination usually flips during the assignment: non-resident in year 1 (less than 183 days), resident from year 2 onwards. The transition creates complex PIT obligations that we model and reconcile.

The 'split residency' determination is one of the most common sources of PIT error. A short assignment extension can tip the determination; we recalculate the determination for each calendar year and adjust the PIT regime accordingly.

Monthly PIT withholding

The employer is the PIT withholding agent. Monthly PIT is calculated on each employee's taxable income, applying the progressive rate schedule, and remitted to the tax authority by the 20th of the following month.

PIT is withheld in VND regardless of the currency of payment. Foreign-currency-paid employees have their salary converted to VND at the SBV central rate for PIT calculation.

The monthly PIT declaration (Form 05/KK-TNCN) lists each employee, their taxable income, the PIT amount, and the total remittance. The declaration is filed alongside the monthly VAT return.

Common errors: withholding PIT on allowances that are exempt (e.g. one-off TET bonus up to 3 months' salary, mid-shift meals up to a cap), failing to withhold PIT on taxable benefits (housing, school fees, transportation), and using the wrong exchange rate.

Year-end PIT finalisation

PIT finalisation reconciles monthly withholding to actual annual liability. The annual return (Form 02/QTT-TNCN for residents, Form 02/NTNN for non-residents) is filed by the employee within 90 days of year-end, or by the employer (with authorisation) within the same window.

Most expatriate employees authorise the employer to file on their behalf. The employer prepares the finalisation based on actual income, deductions, and dependents. The employee reviews and signs the authorisation.

The finalisation calculates: actual annual PIT liability, total monthly withholding paid, refund (if over-withheld) or additional tax (if under-withheld). The balance is settled with the tax authority.

An expatriate leaving Vietnam mid-year must finalise before departure. Failure to finalise can block TRC issuance and create personal tax liability. We handle pre-departure finalisation for all assignee clients.

Expatriate tax and equalisation

Expatriate PIT follows the same progressive rates as residents. The tax base includes salary, allowances (housing, transportation, schooling, cost of living, tax equalisation payments), and benefits-in-kind. Most FDI expat packages are heavily weighted in allowances, which are fully taxable.

Tax equalisation is a policy under which the employer ensures the expatriate's after-tax position is the same as if they had remained in their home country. The employer pays the higher of home-country tax or Vietnam tax; the expatriate's net is set at the home-country equivalent. The gross-up calculation models both regimes and produces the equalised salary.

The 'hypo-tax' register is the monthly schedule of hypothetical tax calculations for each expatriate. It is reconciled quarterly and used for year-end finalisation. We maintain hypo-tax registers for clients with multi-expat assignments.

Tax-equalisation payments from the employer to the expatriate are themselves taxable in Vietnam, creating a circular calculation that requires careful modelling. The standard approach is to gross-up the equalisation to keep the expatriate whole after Vietnam PIT.

Social insurance contributions

Total SI contributions are 32.5% of insurable salary (capped at 20x base salary, currently VND 46.8 million): employer 21.5% (SI 17.5% + HI 3% + UI 1%), employee 10.5% (SI 8% + HI 1.5% + UI 1%). Trade-union fees add 2% of base salary (employer).

Foreign employees with work permits or exemption certificates became subject to mandatory SI from 1 July 2025 under amendments to the Social Insurance Law. Pre-2025, foreign employees were exempt in practice.

Insurable salary is contractual salary plus fixed allowances (housing, transportation, meals if fixed, position, seniority) up to the cap. One-off bonuses and certain benefits are excluded.

SI is declared monthly via the SI agency's e-portal, due by the 25th of the following month. Late payment triggers late-payment interest and penalties. SI audits are common and can result in material assessments for unpaid contributions.

Taxable benefits and exemptions

Taxable benefits include: housing allowance (taxed at actual or deemed rent), school fees (taxed unless paid directly to school under certain conditions), transportation allowance (taxed unless actual cost), home-leave flights (taxed), cost-of-living allowance (taxed), tax equalisation (taxed), and interest-free or low-interest loans from employer (taxed on the difference between market and actual interest).

Exempt benefits include: one-off TET bonus up to 3 months' average salary, mid-shift meals up to a regulatory cap (currently VND 730,000/month), business travel reimbursements, training costs, and certain welfare benefits.

Common errors: failing to tax housing when provided, treating school fees as exempt by default, missing the loan-benefit calculation. We conduct annual benefits reviews for clients to ensure compliance.

Split payroll: offshore and onshore

Split payroll is a common arrangement where an assignee's salary is partly paid offshore (by the home country) and partly paid onshore (by the Vietnam entity). The Vietnam entity withholds PIT only on the onshore portion; the home country handles home-country obligations.

Split payroll creates complexity in the PIT calculation: the home country and Vietnam both have a claim on the same economic income. The standard approach is to allocate the salary based on days in each country, document the split, and reconcile annually.

We model split-payroll scenarios at the start of each assignment and reconcile at year-end. The hypo-tax register captures the split and ensures that the employer's tax-equalisation policy is correctly applied.

ESOP and RSU taxation

ESOPs are taxed at vesting. The taxable amount is the fair market value at vesting less any exercise price paid. The employer withholds PIT at vesting and declares monthly. Cash settlement is taxed at receipt.

RSUs are taxed at delivery (when the shares are delivered to the employee). The taxable amount is the fair market value at delivery. Withholding applies at delivery.

For Vietnamese tax residents working for Vietnamese employers, ESOP/RSU income is Vietnam-source employment income and subject to PIT. For assignees on Vietnam assignment, the income is also Vietnam-source and subject to PIT in Vietnam, even if the shares are issued by the home-country parent.

The valuation at vesting/delivery requires a defensible fair-market-value determination. The employer's transfer agent typically provides the valuation; the GDT may challenge the valuation if it appears understated.

Common payroll mistakes

The most expensive payroll mistakes we see: (1) misclassifying employees as contractors (Vietnam PIT/VAT implications), (2) failing to tax benefits (housing, school, transportation), (3) wrong FX rate for foreign-currency salary, (4) failing to finalise PIT on departure, (5) incorrect SI declarations.

The most common avoidable penalty: late SI declaration. The penalty is small but triggers SI audits. SI audits can be more disruptive than CIT audits because they review employment contracts and salary records for every employee.

The most expensive avoidable penalty: failing to withhold PIT on taxable benefits. The GDT assesses the under-withheld PIT plus penalties. The benefit amount is also added back to the employee's PIT base, creating compounding exposure.

Frequently asked questions

The most common questions our tax and accounting team receives about vietnam payroll & personal income tax guide for foreign companies.