[IMPORTANT UPDATE] DETAILED GUIDANCE ON THE 2025 PERSONAL INCOME TAX LAW UNDER DECREE 253/2026/ND-CP

To support businesses and employees in promptly grasping critical changes in the new tax policy, A8 Company respectfully presents a detailed summary of the 6 core updates from Decree 253/2026/ND-CP guiding the 2025 Personal Income Tax Law. This decree is effective from July 1, 2026.

[LINK TO DOWNLOAD THE FULL DECREE 253/2026/ND-CP HERE]

I. SCOPE OF TAXABLE INCOME

• Scope of taxable income for resident individuals: Subject to tax on income arising within and outside the territory of Vietnam, regardless of where the income is paid and received. A resident individual is defined as a person present in Vietnam for 183 days or more in a calendar year or 12 consecutive months from the first day of presence in Vietnam, or has a regular residence in Vietnam. For countries with which Vietnam has signed a Double Taxation Avoidance Agreement, the provisions of the Agreement shall apply.
• Scope of taxable income for non-resident individuals: Subject to tax on income arising within the territory of Vietnam, regardless of where the income is paid and received.

II. MID-SHIFT AND LUNCH ALLOWANCE

• Mid-shift and lunch allowance in cash: Personal income tax is only calculated on the mid-shift or lunch allowance that exceeds 1.2 million VND per person per month.
• Mid-shift and lunch allowance in kind: If the enterprise organizes meals for employees through forms such as directly cooking, purchasing meals, or providing meal vouchers, it is not included in the taxable income of the individual.
• The specific effective date for this mid-shift and lunch allowance regulation is July 1, 2026.

III. SEVERANCE AND JOB-LOSS ALLOWANCE

• Regulations on severance and job-loss allowance: If the enterprise has specific provisions in its financial regulations, internal regulations, labor contracts, or collective labor agreements regarding severance pay or job-loss allowance higher than the statutory labor level, the actual payment exceeding this level is also not included in the taxable income of the employee.

IV. TAX EXEMPTION FOR OVERTIME AND NIGHT SHIFTS

• Conditions for tax exemption on overtime and night shifts: Wages and remuneration for night shift and overtime work at the workplace that comply with regulations on conditions and hours under labor laws will be exempt from personal income tax.
• Responsibilities of the income-paying organization: The paying organization or individual must create a detailed timesheet clearly reflecting the night shift and overtime hours at the workplace and the wages paid to the employee. This timesheet is kept at the paying organization or enterprise and presented upon request by the tax authority. The paying organization is responsible for proving the wages and remuneration for night shift and overtime work through payrolls, timesheets, labor contracts, and other legal documents.

V. EXCESS OVERTIME WAGES

• Regulations on calculating tax for excess overtime wages: If wages and remuneration for night shift, overtime, or payment for untaken leave exceed the statutory limit under the law, the excess amount will be included in the individual's taxable income.

VI. 10% WITHHOLDING TAX THRESHOLD

• Subjects of the 10% withholding tax threshold: This applies to resident individuals without a labor contract or with a labor contract of less than 03 months.
• When paying income of 5 million VND per time or more: The organization must deduct and pay tax at the rate of 10% on the income before paying the individual.
• When paying income under 5 million VND per time: The paying organization or individual only deducts tax at the rate of 10% upon the individual's request.
• Exception for making a commitment: If the individual only has income subject to tax deduction at the above rate but estimates that the total taxable income after family deductions does not reach the taxable level, the individual can submit a commitment letter to the paying organization to temporarily not deduct personal income tax. The individual making the commitment must bear legal responsibility for it; any discovered fraud will be handled according to tax administration laws and other related laws. At the end of the tax year, the paying organization must still compile and submit to the tax authority a list and income of individuals who have not reached the tax deduction level.

This advisory note is compiled by A8 Company.

For detailed consultation and comprehensive payroll-tax system reviews, please contact our support desk.

A8 Resource Co., Ltd   

Tel: +84 28 3910 1060

Website: https://greatcareerlife.com/   

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