This article has been compiled by Senior Tax Advisors to address inquiries and provide a detailed legal compliance roadmap for expatriate Personal Income Tax (PIT) in Vietnam, based on landmark regulatory changes effective from the 2026 tax year.
Legal Basis and Tax Residency Determination
The personal income tax (PIT) legal system in 2026 operates based on key regulations:
- Personal Income Tax Law No. 109/2025/QH15.
- Decree No. 253/2026/ND-CP (providing detailed guidance on the implementation of the Law).
- Circular No. 87/2026/TT-BTC and Circular No.90/2026/TT-BTC (on tax registration and tax dossiers).
- Circular No. 50/2024/TT-BYT (on the list of critical illnesses).
Tax Residency Classification and Day-Counting Rules (Article 4 Decree 253/2026/ND-CP)
Determining tax residency status is the most critical step in establishing whether an individual is subject to worldwide tax liability or source-based tax liability.
| Criteria | Tax Resident | Non-Tax Resident |
|---|---|---|
| Presence duration | 183 days or more in a calendar year or 12 consecutive months. | Less than 183 days in the tax year |
| Day-counting rule | Day of arrival counts as 1 day, day of departure counts as 1 day. Entry and exit on the same day counts as 1 day of residency. | Based on immigration authority stamps on passport |
| Permanent residence | Holding a Permanent/Temporary Residence Card or leasing accommodation for 183 days or more (including hotels, guesthouses, workplaces). | Does not satisfy accommodation conditions |
| Taxable scope | Income arising inside and outside Vietnam (Worldwide income) | Only income arising within Vietnam territory |
Risk Warning: If an individual maintains a permanent residence but is physically present for fewer than 183 days, they are still deemed a tax resident of Vietnam unless they prove tax residency in another country via a Tax Residency Certificate (TRC).
Double Taxation Relief (Article 66): Where an individual is a resident for 12 consecutive months that span across calendar years:
Overlapping tax deductible = (Tax payable in Year 1 x Overlapping months) / 12
Employment Income and Global Mobility Mechanism (Articles 46, 64)
Foreign Currency Conversion Principles (Article 17)
Foreign currency income must be converted into VND at the buying exchange rate of the commercial bank where the account is opened. Special Note: If no bank account is opened in Vietnam, the Central Exchange Rate or Cross Rate announced by the State Bank of Vietnam at the time of income generation must be applied.
Global Income Allocation (Split Payroll – Article 64)
For non-residents working simultaneously in Vietnam and abroad without separable Vietnam income, the following formulas are mandatory:
- When individual is NOT present in Vietnam:
Vietnam-sourced income = (Working days in VN / Total working days in year) x Worldwide employment income + Other taxable income in VN - When individual IS present in Vietnam:
Vietnam- sourced income = (Days present in VN / 365 days) x Worldwide employment income + Other taxable income in VN
Gross-up Procedure and Housing Allowance Cap
For net salary, converted income is determined as:
Converted Income = Net Take-Home Pay + Employer-Paid Benefits – Allowable Deductions
15% Housing Cap Rule: Employer-paid housing, electricity, and water utilities are taxable based on actual amounts but capped at a maximum of 15% of total taxable income (excluding housing, utilities, and associated services).
Under new regulations, employees receiving bonus shares or ESOP are not immediately subject to tax upon receipt. Tax liability arises only upon share transfer/sale:
- Employment income tax: Assessed on actual benefit value at granting/issuance.
- Securities transfer tax: 0.1% on selling price. (Note: Securities firms/custodian banks must withhold 10% on employment income prior to annual tax finalization).
Exempt Benefits, Tax Deductions, and Personal Relief
Technical Tax-Exempt Benefits List (Article 8)
- Lunch/shift meal allowance: Capped at maximum 1.2 million VND/month.
- Home leave airfare: Tax-exempt for 01 round- trip ticket per year to home country or family residence.
- Children’s tuition fees: Tax-exempt from Kindergarten through High School level in Vietnam.
- Relocation allowance: Tax-exempt for one-off relocation allowance upon expat arrival to reside in Vietnam.
- Mandatory foreign insurance: Deductible for mandatory social, health, and unemployment insurance contributions paid in home country from taxable income in Vietnam.
Personal Deductions (Article 10 PIT Law)
- Personal relief: 15.5 million VND/month (186 million VND/year).
- Dependent relief: 6.2 million VND/month per dependent.
- Voluntary pension / Life insurance: Maximum deduction of 3 million VND/month.
Progressive Tax Scale (Tax Residents):
| Tier | Taxable Income per Month (Million VND) | Taxable Income per Year (Million VND) | Tax Rate |
|---|---|---|---|
| 1 | Up to 10 | Up to 120 | 5% |
| 2 | Over 10M to 30M | Over 120 to 360 | 10% |
| 3 | Over 30 to 60 | Over 360 to 720 | 20% |
| 4 | Over 60 to 100 | Over 720 to 1.200 | 30% |
| 5 | Over 100 | Over 1.200 | 35% |
Documentary Requirements (Circular 87): Dependent supporting documents (Birth Certificates, Marriage Certificates) issued by foreign authorities must be Consularly Legalized and Certified Translated to be acceptable.
Investment and Capital Transfer Income
| Type of Income | Tax Rate (Resident) | Tax Rate (Non-Resident) | Notes |
|---|---|---|---|
| Capital investment (Dividends, interest) | 5% | 5% | Withheld at source |
| Capital transfer | 20% (Net gain) | 20% (Net gain) | 2% on gross sale price applies if cost basis is unidentifiable. |
| Securities transfer | 0,1% (Gross sale) | 0,1% (Gross sale) | Calculated per transfer transaction. |
| Real estate transfer | 2% (Gross sale) | 2% (Gross sale) | Based on contract price or official State land tariff. |
| Prizes / Inheritance / Gifts | 10% | 10% | On value exceeding 20 million VND |
Double Taxation Avoidance Agreements (DTAA)
Tax residents in Vietnam are entitled to credit tax paid overseas against Vietnam tax liabilities under DTAA provisions.
- Tax Exemption Conditions for Non-Residents: Must be present for fewer than 183 days and submit exemption notification along with Tax Residency Certificate (TRC).
- Expert Note: If home country does not issue TRC, Vietnam tax authorities may accept passport copies for presence verification, but rejection risk remains high without reasonable justification.
Tax Finalization and Exit Procedures
Expatriates who are tax residents must perform mandatory tax finalization upon employment contract termination and departure. Standard 4-Step Procedure:
- Document Collection: Obtain Income Confirmation Letter (Form No. 20/TXN-TNCN) and withholding certificates from all paying entities.
- Tax Filing: Use Form No. 02/QTT-TNCN (self- finalization) or Form No. 05/QTT-TNCN (company authorization).
- Submission: Submit at registered Tax Department or via eTax Mobile system.
- Confirmation: Receive tax clearance confirmation prior to exiting Vietnam.
Tax Relief for Critical Illnesses (Circular 50/2024/TT-BYT)
Tax reduction equals actual medical treatment expenses paid (net of insurance reimbursement), up to total tax payable. Key Critical Illness List:
- Cancer at all stages (especially malignant stages)
- Chronic renal failure (requiring dialysis or kidney transplant)
- Stroke (I64.0) and prolonged coma
- HIV infection at AIDS stage
- Decompensated liver cirrhosis (ascites)
Required Dossier: Application form (Form 01/MGTH), medical summary report, and valid hospital fee receipts.
Frequently Asked Questions (FAQ)
You are a Tax Resident. Under Article 4 of Decree 253/2026/ND-CP, individuals leasing accommodation for 183 days or more in a tax year are classified as tax residents.
No. This is a one-off tax-exempt Relocation Allowance.
Tax is not due upon receipt. You are only required to declare and pay PIT upon transferring/selling these shares.
Yes. Tax residents can deduct mandatory social insurance paid in their home country from Vietnam taxable income.
Proof of relationship documents must undergo Consular Legalization and Certified Translation.
