Only about one month remains until Vietnam’s amended Personal Income Tax Law (Law No. 109/2025/QH15) takes effect on July 1, 2026. The new personal allowance (15.5M VND/month) and dependent allowance (6.2M VND/month) have already been applied to payroll since January 2026, and the implementing Decree draft has already revealed concrete additional changes to allowances and tax exemptions that companies can prepare for now.
This article serves as a follow-up to our February 2026 piece “Vietnam PIT Law Amendment July 2026: 5 Things Companies Must Prepare Now.” With enforcement just around the corner, we provide HR and accounting professionals at Japanese-affiliated companies with the latest status of sub-laws and a 12-point final checklist to verify before July 1.
Quick Review: New 5-Tier Tax Table and Deductions
Law No. 109/2025/QH15 was passed by the National Assembly on December 10, 2025, replacing the previous Law No. 04/2007/QH12. Article 9 of the new law restructures the progressive tax brackets from 7 tiers to 5 tiers, and the threshold for the top rate (35%) has been raised from 80M VND to 100M VND.
| Tier | Monthly taxable income | Tax rate |
|---|---|---|
| 1 | 0 – 10M VND | 5% |
| 2 | Over 10M – 30M VND | 10% |
| 3 | Over 30M – 60M VND | 20% |
| 4 | Over 60M – 100M VND | 30% |
| 5 | Over 100M VND | 35% |
Regarding deductions, the personal allowance has been raised from 11M VND → 15.5M VND/month, and the dependent allowance from 4.4M VND → 6.2M VND/month. These were applied retroactively to wages and salaries from January 1, 2026, so payroll calculations should already reflect them.
Five Draft-Based Changes to Prepare for Proactively
The implementing Decree draft was published by the Ministry of Finance on March 27, 2026 and went through public consultation. Regardless of when the final version is officially issued, the draft already contains concrete changes that directly affect payroll logic and internal regulations. Preparing now lets you avoid confusion immediately after enforcement.
The table below summarizes the major changes identified in the draft, followed by recommended proactive preparation actions.
| Item | Current | Draft (effective July 1, 2026) |
|---|---|---|
| Meal allowance (cash) cap | 730,000 VND/month | 1.2M VND/month |
| Voluntary pension/life insurance deduction | 1M VND/month | 3M VND/month |
| Severance pay | Partially taxable | Fully tax-exempt (if specified in internal rules) |
| Overtime/night shift allowance | Conditional exemption | Fully tax-exempt |
| Side income withholding threshold | 2M VND/transaction, 10M VND/year | 3M VND/transaction, 15M VND/year |
Proactive Preparation Actions
- Document the basis for severance pay in work rules or financial regulations so it qualifies for full tax exemption
- Run a simulation switching overtime and night shift allowances from “premium portion only” to “fully tax-exempt” treatment
- Configure the new caps for meal allowance and pension deductions as parameters in your payroll system, ready to switch on the effective date
- Build a payroll setup that can be updated by configuration rather than code changes, so further adjustments after the official Decree are quick to apply
12-Point Final Checklist Before Enforcement
Below is the final checklist that Japanese-affiliated companies should complete by July 1, 2026. We recommend dividing tasks among HR, accounting, and payroll system administrators and proceeding in parallel.
| No. | Check item | Owner |
|---|---|---|
| 1 | Confirm payroll system supports the new 5-tier tax table | System Admin |
| 2 | Confirm new deductions (15.5M / 6.2M) are reflected (already applied since Jan) | Payroll |
| 3 | Update meal allowance cap to 1.2M VND | HR / Accounting |
| 4 | Update voluntary pension deduction cap to 3M VND | Payroll |
| 5 | Reflect 21 tax-exempt categories in internal rules | HR |
| 6 | Update overtime/night shift exemption processing | Payroll |
| 7 | Review employment contracts, work rules, and financial regulations | HR / Legal |
| 8 | Confirm CCCD (Citizen ID) integration with tax codes | HR |
| 9 | Review expatriate tax equalization (gross-up) | Accounting |
| 10 | Communicate new rules to employees (especially personal allowance changes) | HR |
| 11 | Update gross-up calculation formula | Accounting |
| 12 | Continue monitoring official Decree/Circular publication | All |
Recommendation: Run final payroll simulations in June
It is strongly advised to run a parallel comparison between old rules and new rules using June 2026 payroll data. This allows you to identify discrepancies between system calculations and manual calculations before enforcement, minimizing the risk of incorrect withholding from July onwards.
Impact on Expatriates
For Japanese expatriate staff, the key points are as follows.
- Residency criteria: The 183-day rule remains unchanged.
- Tax residents: Middle-income earners (annual income roughly 360M – 1.2B VND) will see meaningful tax reductions.
- Non-residents: 20% flat rate unchanged.
- Gross-up calculations: With the top-rate threshold raised from 80M to 100M VND, the company’s burden for high earners is reduced.
For expatriates whose tax is borne by the company under tax equalization arrangements, the gross-up formula must be reviewed. We recommend running test calculations for several typical salary brackets in advance.
New Taxable Items (Digital Assets, Gold, etc.)
Article 3 of the new law adds the following new categories of taxable income. While these are less likely to apply directly to Japanese-affiliated manufacturers, they should be noted as future business considerations.
- Digital asset transfers: 0.1% (already in effect under Circular 32/2026)
- Gold bar transfers: 0.1% (from July 1, 2026)
- .vn domain name transfers: Taxed as transfer income
- Carbon credit transfers: Taxed as transfer income
- E-commerce platform income: Withholding by platform
Comparison with February Article: Confirmed vs. Still Unclear
The following table summarizes the progress made between our February 2026 article and June 2026.
| Item | February 2026 | June 2026 |
|---|---|---|
| 5-tier tax table | Confirmed by law | Confirmed (unchanged) |
| Personal/dependent allowances | Pending Decree | Applied to payroll since Jan |
| Meal allowance cap | Unknown | Draft: 1.2M VND (ready to prepare) |
| Pension deduction cap | Unknown | Draft: 3M VND (ready to prepare) |
| Severance pay exemption | Unknown | Draft: fully exempt (ready to prepare) |
| Implementing Decree | Not yet drafted | Draft published; final timing to monitor |
The legal framework is clear, and the draft already reveals the practical changes that will hit payroll. The smart approach is to start preparing now based on the draft so that minor adjustments after the official Decree can be absorbed quickly.
Conclusion: Lock In Final Confirmations During June
With Vietnam’s amended PIT Law taking effect on July 1, 2026, we recommend that Japanese-affiliated companies complete the following three priorities during the month of June.
- Payroll system parallel verification: Confirm both old and new rule calculations match expected values
- Internal regulation updates: Document tax-exempt categories such as severance pay and meal allowances in writing
- Continued monitoring of official sub-laws: Be ready to respond immediately when Decree and Circular are published
Build a payroll setup that can absorb further fine-tuning after the official Decree is published, while leveraging the draft content to lock in the major preparation work now. This approach minimizes disruption immediately after July 1.
Related Articles
- Vietnam PIT Law Amendment July 2026: 5 Things Companies Must Prepare Now
- Vietnam PIT Law Amendment 2026: Overview and Key Points
- Vietnam Personal Income Tax (PIT) Comprehensive Guide
- Vietnam Payroll Deductions Explained
Author of this article
関連記事
-
PIT Law Amendment Effective July 2026 | 5 Things Companies Should Do Now -
Vietnam Payroll FAQ: Common Questions on Social Insurance, PIT, and Foreign Employees
-
Understanding Vietnam’s Personal Income Tax (PIT): How It Works and the Calculation Steps — Explained Clearly with Deductions and Tax Rates
-
Vietnam National Assembly Passes Amendment to the Personal Income Tax Law — Effective July 1, 2026
