Employment Tax

Vietnam | Proposed new Personal Income Tax (PIT) law

Summary

In early July, Vietnam’s Ministry of Finance introduced a draft law to amend the existing PIT framework, which was last updated in 2014. The revised PIT law is expected to be submitted to the National Assembly in October 2025 and, if approved, will take effect from 1 January 2026.

The detail

We summarize below some of the key proposals:

• Employment income tax brackets for tax residents will be reduced from 7 to 5 tiers, with a broader base affecting middle-income earners.  Employment income of tax non-residents will continue to be taxed at a flat rate of 20%.
• Increased relief thresholds:
  • Personal relief: Raised from VND11 million/month (approx. USD5,076 annually) to VND13.3 – 15.5 million/month (approx. USD6,144 – 7,152 annually).
  • Dependent relief: Increased from VND4.4 million/month (approx. USD 2,031 annually) to VND5.3 – 6.2 million/month (approx. USD2,446 – 2,862 annually).
• A new deduction is proposed for healthcare and education/training expenses for the taxpayer and their dependents (parent, spouse, and/or children).
• Incentives for high-tech and priority sectors – 50% PIT reduction on employment income for individuals working in high-tech, IT, science, innovation, digital transformation, and other state-prioritized sectors.
• Incentives for experts and scientists – Experts and scientists working in creative startups, R&D centers, innovation hubs, or startup support organizations will receive a 2-year PIT exemption on employment income followed by a 50% reduction for the subsequent 4 years.
• Under current rules, only monthly voluntary pension payments are exempt from PIT. The draft law proposes removing the “monthly” condition, extending the exemption to one-time pension payments.
• Reinforces the filing obligations for individuals receiving employment income from overseas payers. This includes foreign employees who continue to be paid by their home-country employers and applies in cases of mobility and secondments where payroll remains outside Vietnam.
• Tax on share transfers – For tax residents, the current 0.1% tax on gross proceeds from share sales will be replaced with a 20% tax on net gains. However, the proposal also suggested that if cost basis cannot be determined, then the tax shall be calculated at 0.1% of sales proceeds.  This shift to taxing net gains may have implications for share-based compensation reporting and planning.  No change of the current 0.1% tax on sales proceeds for tax non residents.
• Tax on capital transfer – For tax non residents, the tax on capital transfers will also shift from a 0.1% tax on sales proceeds to a 20% tax on net gains.  For tax residents, the current 20% tax on net gains remains unchanged.  However, the proposal also suggested that if cost basis cannot be determined, then the tax shall be calculated at 2% of the sales proceeds, applicable to both tax residents and tax non residents.

What this means

The PIT Law, originally enacted in 2007 and effective from 2009, was amended in 2012 and 2014. Many of its provisions are now considered outdated. The proposed changes aim to modernize the law by:

• updating personal and dependent relief thresholds to better reflect inflation and current living costs.
• addressing some outdated provisions to align with current economic conditions.
• introduces targeted incentives to support priority sectors such as high-tech, innovation, and green growth.

These reforms are designed to increase net take-home income for many taxpayers, particularly in the low to middle-income earners, without adding extra cost burdens on employers.

We will continue to provide timely updates as more guidance becomes available.

Contact us

For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:

Brittany Chong
Partner

Further information on Vialto Partners can be found here: www.vialtopartners.com

Want to know when a Regional Alert is posted?

Simply follow our Vialto Alerts page on LinkedIn and posts will be displayed on your feed. To ensure you don’t miss one, once you’re on our LinkedIn page, click on the bell icon under the banner image to manage your notifications.

Further information on Vialto Partners can be found here: www.vialtopartners.com

Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.

© 2025 Vialto Partners. All rights reserved.