On December 10, 2025, the National Assembly of Vietnam approved the amended Personal Income Tax Law.
This article provides a clear summary of key points of the new tax system that will take effect on July 1, 2026, specifical companies operating in Vietnam.
Overview of Vietnam’s Amended Personal Income Tax Law: Effective July 1, 2026
The amended Personal Income Tax Law introduces significant changes, including revised tax brackets, statutory family deductions, new rules for household businesses, expansion of non-taxable income, and taxation on gold bar transactions. These changes will impact a wide range of taxpayers, including employees, business households, small business owners, and investors.
- Date approved by the National Assembly: December 10, 2025
- Effective date: July 1, 2026
- Scope: Employees, household businesses, small business owners, investors, agricultural and aquaculture workers, etc.
New Progressive Tax Rates (Simplified from 7 Brackets to 5)
The amended law simplifies progressive tax rates for personal income into five brackets.
In particular, the tax burden for middle-income earners is expected to decrease due to reductions in the second and third brackets.
| Taxable Income (per month) | New Tax Rate |
|---|---|
| Up to 10 million VND | 5% |
| 10 million – under 30 million VND | 10% |
| 30 million – under 60 million VND | 20% |
| 60 million – under 100 million VND | 30% |
| Over 100 million VND | 35% |
Compared to the previous system, the tax brackets are now more streamlined, requiring updates to payroll calculation logic.
Statutory Family Deductions and Future Adjustments
Under the amended law, family deductions—previously stipulated by National Assembly resolution—are now formally codified in law.
- Taxpayer deduction: 15.5 million VND per month
- Dependent deduction: 6.2 million VND per month per dependent
The amended law also includes a mechanism allowing future adjustments to deduction amounts based on living costs and income levels, meaning deductions may continue to be revised periodically.
New Tax Rules for Household and Small Business Owners
For household businesses and individual business owners, the amended law introduces expanded non-taxable thresholds and a simplified tax calculation method.
- The non-taxable income threshold is increased from 200 million VND → 500 million VND annually.
- For annual revenue over 500 million VND and up to 3 billion VND, taxable income may now be calculated using the “Revenue − Expenses” method with a 15% tax rate.
- Taxpayers may choose between this new method and the traditional percentage-of-revenue method.
For Foreign companies, this means re-evaluating contracts and withholding tax treatment for freelance contractors and individual business partners in Vietnam.
Annual revenue levels and tax classifications must be checked carefully when updating agreements and tax procedures.
Expansion of Non-Taxable Income: Agriculture & Science/Technology
The amended law expands the categories of non-taxable income as follows:
- Income from households directly engaged in growing crops, raising livestock, aquaculture, or planting production forests
- Dividends of members of agricultural cooperatives or cooperative unions
- Income of farmers engaged in large-scale crop production, artificial forest planting, or aquaculture
- Salaries earned from performing scientific and technological innovation tasks
- Copyright income from the commercialization of scientific and technological innovation results
Companies engaged in R&D, agriculture, or related sectors must correctly determine which employees or partners fall under non-taxable categories.
Taxation of Gold Bar Transfer Income
The amended law adds income from gold bar transfers to taxable income categories.
The government is expected to set minimum value thresholds, ensuring that transactions intended purely for savings are excluded from taxation.
This aims to improve transparency in gold trading, prevent speculation, and promote more stable capital flows in the economy. Investors and individuals conducting financial transactions in Vietnam may be impacted.
Four Key Actions for Foreign Companies and Vietnam Offices
- Review payroll calculation logic
Update payroll spreadsheets and systems to reflect new tax brackets and deductions. - Revise internal regulations and payroll rules
Ensure alignment of taxable allowances, non-taxable items, and dependent declaration procedures. - Review contracts with contractors and freelancers
Apply the correct tax treatment based on revenue levels and business classifications. - Explain the changes to employees and expatriates
Provide clear communication on net salary impact and major tax changes.
EST Automatically Complies with Vietnam’s New Tax System
HARO’s EST – HR & Payroll System for Vietnam will be updated according to the amended Personal Income Tax Law.
- Automatic calculation under the new 5-tier progressive tax structure
- Updated family deduction amounts (15.5M VND / 6.2M VND)
- Support for new tax methods for household and small business owners
Instead of revising Excel sheets and internal documents each time the law changes, companies can rely on EST to stay automatically aligned with Vietnam’s latest tax regulations.
If you would like more information about the amended Personal Income Tax Law or EST’s updated features, feel free to contact us.
