Personal Income Tax in Vietnam 2025: Rates & Obligations

There are a number of taxes that foreign business owners in Vietnam should be aware of. One of these taxes is Vietnam’s personal income tax which is particularly important for foreign businesses with local employees. With this in mind, this article runs through what this tax is, what it applies, and the key elements that apply to foreign business persons.

What is the Personal Income Tax in Vietnam?

Personal Income Tax in Vietnam–locally known as the PIT–is the tax applied to income earned within Vietnam. It is codified in the Law on Personal Income Tax legislated in 2007. This includes income earned on wages or returns from local investments and depending on the situation possibly income generated overseas. 

PIT for foreign employees

Foreign employees working in Vietnam are subject to PIT whether they are directly employed by a Vietnamese entity or seconded from abroad. Income earned from employment, including base salary, bonuses, housing allowances, and other benefits in kind, is generally subject to PIT. However, exemptions may apply depending on the terms of the employment contract and applicable tax treaties.

A tax resident for PIT purposes is a person that has been in Vietnam for 183 days or more in one calendar year; or that has a permanent residence in Vietnam either a property that they own or that the lease with a rental agreement.

This distinction is important in that non-resident taxpayers are subject to a flat 20 percent tax on their wages or salaries whereas resident taxpayers are taxed progressively.

What are Vietnam’s progressive income tax rates?

Vietnam has seven tiers in its progressive tax rates. The percentage of income tax charged increases as the income generated increases. Note that there are also flat tariffs on capital gains, prizes, and inheritances, however, these generally do not apply to foreign entities. That said, the are detailed in the linked Personal Income Tax Law in Article 23 and include:

• Capital investment income: 5 percent
• Capital transfer (including securities): 20 percent (if assessed as business income)
• Prizes, inheritance, or gifts: 10 percent
• Royalties and franchising income: 5 percent

While less common for most foreign employees, this may apply to business owners or investors in Vietnam.

Progressive income tax rates, Vietnam, VND millions

A resident employee earning VND 100 million per month would fall into Tier 7. However, only the portion above VND 80 million is taxed at 35 percent. Lower portions of income are taxed at the lower rates listed in Tiers 1–6. This cumulative system ensures that only high-income portions are taxed at higher rates, not the entire salary.

Double taxation agreements

Vietnam has double taxation agreements with most countries in the world. Essentially these agreements allow for two-way communication between tax departments in different countries to ensure tax payers are not taxed twice in two different jurisdictions. For example, a taxpayer from another country who pays tax in Vietnam will not be charged tax in their home country if there is a double taxation agreement in place.

As of 2025, Vietnam has signed DTAs with over 80 countries, including Australia, Singapore, Japan, the United States, the United Kingdom, France, and Germany. These treaties often include reduced tax rates on dividends, interest, and royalties, as well as income attribution rules for permanent establishments.

Filing and withholding obligations

In Vietnam, employers are responsible for withholding PIT from employee salaries and remitting it monthly or quarterly, depending on company size. Annual finalisation is usually required by March 31 of the following year. Foreign individuals may also need to file a personal PIT finalisation return, particularly if they have multiple income sources or changed residency status during the year.

FAQ

What is Vietnam’s Personal Income Tax (PIT)?

PIT in Vietnam is a tax applied to income earned within the country, including wages and investment returns. It is governed by the Law on Personal Income Tax from 2007.

How is PIT applied to foreign employees in Vietnam?

Foreign employees working in Vietnam are subject to PIT on their employment income, including salary and benefits. Tax residency (183+ days or permanent residence) determines if they are taxed at progressive rates or a flat 20%.

What are Vietnam’s progressive PIT rates for resident taxpayers?

Vietnam has seven progressive tax tiers, ranging from 5% to 35%, applied to increasing levels of monthly or annual income in VND millions. Higher income portions are taxed at higher rates.

Does Vietnam have agreements to avoid double taxation?

Yes, Vietnam has double taxation agreements (DTAs) with over 80 countries, including major economic partners. These DTAs prevent taxpayers from being taxed twice on the same income.

What are the obligations for employers regarding PIT in Vietnam?

Employers in Vietnam are responsible for withholding PIT from employee salaries. They must remit this tax monthly or quarterly and usually perform annual finalization by March 31.

What’s next?

Firstly,  Vietnam’s Personal Income Tax. is just one of several taxes in Vietnam foreign firms should be aware of. Other important taxes in Vietnam include Vietnam’s Value-added Tax, Capital Gains Tax, Corporate Income Tax, Foreign Contractor Tax in Vietnam, and Special Consumption Tax. By familiarising themselves with these taxes it may help foreign firms avoid running afoul of Vietnam’s tax authorities.

Vietnam’s personal income tax regime is relatively straightforward in theory, however, its implementation is somewhat more complex. Vietnam’s tax bureaucracy has a lot of moving parts, and processes and procedures are not always consistent across provinces. With this in mind, foreign businesses looking to keep up with the latest developments in tax regulations should make sure to subscribe to the-shiv.

First published June 3, 2024. Last updated March 31, 2025.