The Government of Vietnam is preparing many important changes related to Personal Income Tax (PIT) in 2026. On March 27, 2026, the Ministry of Finance announced the Draft Decree guiding Personal Income Tax Law No. 109/2025/QH15, which contains many provisions directly affecting businesses, operations of payroll, salary calculation, and PIT declaration in Vietnam.
For foreign businesses, companies using payroll outsourcing, EOR, or human resource management in Vietnam, updating new PIT policies is a prerequisite to ensure compliance with Personal Income Tax regulations and accurate payroll operations.
Highlights of PIT in Vietnam in 2026
1. Proposal for PIT exemption for high-tech and digital transformation personnel
According to the new draft, individuals working in science and technology, innovation, digital technology, and strategic technology fields may be considered for exemption from Personal Income Tax (PIT) for a maximum period of 5 years. This is a strategic move by Vietnam to attract high-quality human resources in the IT and digital technology sectors.
However, the criteria for determining "high-quality personnel" are expected to be further guided in detail by the Government in subsequent documents. For businesses recruiting software engineers or technology specialists in Vietnam, this is a crucial point to note when performing payroll and calculating PIT.
2. Proposal to increase PIT exemption for lunch allowance
One of the most significant concerns for businesses during payroll and salary calculation in Vietnam is the lunch allowance. The draft proposes increasing the PIT exemption for cash meal allowances from 730,000 VND/month to 1,200,000 VND/month. The portion exceeding 1.2 million VND/month will be subject to Personal Income Tax (PIT).
Furthermore, if the company directly organizes meals for employees, such as providing meal portions, an internal canteen, or meal vouchers, this amount will not be included in PIT-taxable income. This is a very important point in the payroll and salary calculation process to optimize tax costs for employees in Vietnam.
3. Considering additional deductions for medical and education expenses
The new draft is also considering additional PIT deductions for medical examination and treatment expenses and education and training expenses of taxpayers and their dependents. The proposed amounts include:
- Medical expenses: from 20 – 23 million VND/year
- Education expenses: from 21 – 24 million VND/year
If approved, this will be a major change in the Personal Income Tax (PIT) system in Vietnam and will directly affect the payroll, salary calculation, and annual PIT finalization processes.
4. Proposal to change the 10% PIT withholding threshold for short-term contracts
Currently in Vietnam, income paid to individuals who do not sign labor contracts or contracts for less than 3 months will be subject to 10% PIT withholding if it reaches the threshold of 2,000,000 VND/time. According to the new draft, authorities are proposing to raise the 10% PIT withholding threshold from 2,000,000 VND/time to approximately 3,000,000 – 5,000,000 VND/time, depending on the option being considered.
If approved, this regulation will significantly affect businesses employing seasonal staff, freelancers, collaborators, and short-term workers during payroll and PIT declaration.
5. Guidance on PIT exemption for overtime and night shift pay
On April 16, 2026, the Tay Ninh Provincial Tax Department issued Official Letter No. 3962/TNI-QLDN1 providing guidance on Personal Income Tax (PIT). Accordingly, payments for night shifts, overtime, and unused annual leave are considered PIT-exempt income if paid in accordance with Vietnam's labor laws.
This is a point businesses need to pay special attention to when performing payroll and salary calculation to avoid PIT errors during tax inspections in Vietnam.
Summary table of important PIT changes in 2026
| Content | Current Regulation | New Proposal |
|---|---|---|
| PIT exemption for high-tech personnel | None | Maximum 5 years |
| PIT-exempt lunch allowance | 730,000 VND/month | 1,200,000 VND/month |
| 10% PIT withholding threshold | 2,000,000 VND/time | 3,000,000–5,000,000 VND/time |
| PIT deduction for medical expenses | Not yet available | 20–23 million VND/year |
| PIT deduction for education expenses | Not yet available | 21–24 million VND/year |
What businesses need to do to comply with PIT and payroll in Vietnam?
In the context of continuously changing Personal Income Tax (PIT) policies in Vietnam, businesses – especially foreign companies or entities using payroll outsourcing services – need to proactively update to:
- Ensure compliance with PIT regulations in Vietnam
- Optimize costs in the salary calculation and payroll process
- Minimize risks of tax audits and inspections
- Properly perform annual PIT finalization and reporting
Key areas to monitor include: monthly PIT calculation, timely PIT declaration, PIT exemptions, PIT deductions, and PIT for foreign employees working in Vietnam. Each policy change can directly affect the salary calculation formula and the overall human resource costs of businesses.
Joblinks accompanies businesses in payroll and PIT in Vietnam
With many years of experience in HRO and payroll in Vietnam, Joblinks provides professional salary calculation solutions, continuously updated according to the latest PIT regulations. Whether it's a domestic enterprise or an FDI company, Joblinks can effectively support payroll operations in compliance with Personal Income Tax (PIT) in Vietnam.
Businesses should regularly update the latest Decrees, Circulars, and Official Letters related to Personal Income Tax (PIT) and payroll in Vietnam to ensure that salary calculation activities are carried out in accordance with legal regulations.
Reference: Draft Decree guiding PIT Law No. 109/2025/QH15 — Ministry of Finance dated March 27, 2026; Official Letter No. 3962/TNI-QLDN1 dated April 16, 2026, of Tay Ninh Provincial Tax Department.
