Vietnam Personal Income Tax the complete guide

Progressive rates and brackets

Employment income is taxed at progressive rates from 5% to 35%. The brackets are calculated monthly for withholding purposes and annually for finalisation.

Non-employment income (business income, capital gains, royalties, interest, dividends) is taxed at flat rates from 0.1% to 25% depending on the category. Specific rules apply to each category.

Personal deductions: VND 11 million/month for the employee, VND 4.4 million/month for each qualified dependent. The deductions are applied to the taxable income to arrive at the amount subject to progressive rates.

Voluntary contributions: certain contributions to approved retirement funds and charitable organisations are deductible. Mandatory SI contributions are deductible.

Residents vs. non-residents

Resident determination is based on physical presence: 183 days or more in a calendar year, OR a permanent residence in Vietnam, OR a registered rental of 90+ days with no intention to leave.

Residents are taxed on worldwide income. The tax is calculated on a monthly basis for employment income, with year-end finalisation. Worldwide income includes income earned abroad during the period of Vietnam residence.

Non-residents are taxed only on Vietnam-source income at a flat 20% rate on employment income. Non-employment income is taxed at the same flat rates that apply to residents (e.g. 0.1% on securities gains, 5% on royalties).

The transition from non-resident to resident mid-assignment creates complex obligations. We model the determination for each calendar year and adjust the withholding regime accordingly.

Employment income and withholding

Employment income includes: salary, allowances (housing, transportation, meals, position, seniority, school fees, cost of living), bonuses, stock-based compensation, and benefits-in-kind. Most FDI packages are heavily weighted in allowances, which are fully taxable.

The employer withholds PIT monthly on the gross taxable income, applying the progressive rate schedule. The withholding is remitted to the tax authority by the 20th of the following month.

Year-end finalisation reconciles monthly withholding to actual annual liability. For residents, the finalisation considers 12 months of income; for non-residents, only the Vietnam-source portion of the assignment.

The tax code for individuals (MST) is required for all employees. The employer applies for the MST on the employee's behalf; the employee receives a tax code card and uses it for the finalisation return.

Business / freelance income

Business income (from freelance, consulting, or independent services) is taxed at a flat rate. The rate depends on the activity: 0.1%–5% depending on the sector.

Individuals with business income register with the tax authority and file quarterly returns. The tax is computed on revenue (not profit) under the simplified regime, or on profit under the regular regime if registered.

For foreign individuals, business income sourced in Vietnam is taxed even if the individual is not a Vietnam resident. The withholding is typically by the Vietnamese payer.

The distinction between 'employment' and 'business' income is critical. Misclassification is a common audit finding. We help clients structure contractor relationships to avoid misclassification risk.

Capital gains and securities

Capital gains from the transfer of securities (listed shares, bonds, fund certificates) are taxed at 0.1% on the gross transfer price. The tax is withheld by the broker or the transfer agent at the time of sale.

Capital gains from the transfer of capital in a Vietnamese unlisted company are taxed at 20% on the actual gain (transfer price less cost of capital). The transfer is a taxable event regardless of whether the gain is realised as cash or rolled over.

Real estate gains are taxed at 2% on the transfer price (for individuals) or 20% on the gain (for entities). The 2% rate is widely criticised but remains in force.

Capital gains on crypto assets are taxed under the securities framework (0.1%) for assets classified as securities, or under the personal-income framework for other assets. The classification is evolving.

Dependent deductions

A deduction of VND 4.4 million/month is available for each qualified dependent: spouse, minor children, parents in some cases, siblings in some cases.

Dependents must be registered with the employer and the tax authority. Registration requires documentation: birth certificates, marriage certificates, household registration, and a declaration of dependency.

Only one taxpayer can claim each dependent. For separated families, the deduction is allocated by agreement. The employer maintains the dependent register and applies the deduction monthly.

Mis-claiming dependents (e.g. an adult child who is not actually dependent) is a common audit finding. We conduct annual dependent reviews for clients with expat staff.

Tax treaty relief

Vietnam has DTAs with 80+ countries. The DTA typically reduces withholding tax on dividends, interest, and royalties, and may provide exemption for short-term assignees (less than 183 days in a 12-month period).

To claim treaty relief, the foreign individual or entity must obtain a Certificate of Residence from its home tax authority and submit it to the Vietnamese payer. The CoR is typically valid for 1–2 years and must be renewed.

Common treaty benefits: 0% withholding on dividends to a corporate parent (most DTAs), 5–10% on interest, 5–10% on royalties, exemption from PIT for short-term assignees.

Treaty positions must be documented and updated annually. The GDT routinely reviews treaty positions on audit. We maintain treaty-claim calendars for clients.

Common PIT mistakes

The most expensive PIT mistakes: (1) misclassification of employees as contractors, (2) failing to tax benefits, (3) wrong residency determination for short-term assignees, (4) failing to claim treaty relief, (5) incorrect dependent deductions.

The most common avoidable penalty: late PIT remittance. The penalty is small but triggers PIT audits.

The most expensive avoidable penalty: failing to withhold PIT on taxable benefits. The GDT assesses the under-withheld amount plus penalties on both the employer and the employee.

Frequently asked questions

The most common questions our tax and accounting team receives about vietnam personal income tax (pit) guide: rates, residency, withholding.