As Vietnam continues to attract foreign talent and investment, understanding the personal income tax (PIT) obligations for foreigners becomes essential for both expatriates and the companies that employ them. Whether you’re an individual working in Vietnam or a business hiring foreign staff, this guide provides a clear overview of how to calculate PIT for foreigners and the key legal points to keep in mind.
1. Who Is Subject to PIT in Vietnam?
1.1. Tax Residents
Foreigners are considered tax residents in Vietnam( Articles 2 Law on Personal Income Tax No. 04/2007/QH12, as amended by Law No. 26/2012/QH13, Law No. 71/2014/QH13, and Law No. 54/2023/QH15) if they:
– Stay in Vietnam for 183 days or more within a calendar year or a consecutive 12-month period,
– Or have a permanent residence in Vietnam (either via registered residence or a leased property with a term of 183 days or more).
Tax residents are taxed on their worldwide income, not just income earned in Vietnam.
1.2. Non-Residents
– Foreigners are non-residents for tax purposes if they do not meet the above conditions.
– Non-residents are taxed only on income sourced from Vietnam, and at a flat rate (not progressive).
2. Types of Taxable Income
The following types of income are subject to PIT for foreigners in Vietnam:
– Salaries and wages (including bonuses, allowances, and other benefits),
– Business income (if self-employed or running a business),
– Income from capital investments, transfers, or property,
– Other taxable incomes (prizes, inheritances, etc., depending on context).
3. How to Calculate PIT
3.1. For Tax Residents
Tax residents are taxed based on a progressive tax rate from 5% to 35%:
| Monthly Taxable Income (VND) | Tax Rate |
|---|---|
| Up to 5 million | 5% |
| 5 – 10 million | 10% |
| 10 – 18 million | 15% |
| 18 – 32 million | 20% |
| 32 – 52 million | 25% |
| 52 – 80 million | 30% |
| Over 80 million | 35% |
Calculation steps:
1. Determine gross income from all relevant sources in Vietnam and abroad.
2. Deduct allowable expenses and reliefs, including:
– Personal deduction: VND 11 million/month (as of 2025),
– Dependent deduction: VND 4.4 million/month per qualified dependent.
3. Apply the progressive tax rates.
✅ Example: A tax resident earning VND 60 million/month (after deductions) would pay PIT across multiple tax brackets, not just 30%.
3.2. For Non-Residents
– PIT is calculated as a flat 20% on income earned in Vietnam.
– No personal deductions or family reliefs are allowed.
✅ Example: A non-resident earning VND 50 million in a month will pay VND 10 million in PIT (20% of 50 million).
4. Key Considerations for Foreigners
Tax filing and deadlines
PIT is usually withheld monthly by the employer. However, annual tax finalization may be required—especially for tax residents or those with multiple income sources. Late submission or payment can result in administrative penalties and interest charges.
Treatment of benefits and allowances
Certain in-kind benefits such as housing, transportation, and school tuition may be partially exempt if clearly specified in the labor contract and supported by valid documents. Some lump-sum payments and overseas allowances may also qualify for exemption under tax treaties.
Double Taxation Agreements (DTAs)
Vietnam has signed DTAs with over 80 countries to prevent double taxation and offer tax relief. Eligible foreigners should submit the DTA exemption application (Form 02/ĐXN-HTQT) early to benefit from preferential rates or exemptions.
Legal and tax advisory
Tax matters for expatriates can be complex—especially in cases involving stock options, multiple jurisdictions, or short-term assignments. Seeking legal or tax advice helps ensure compliance, avoid risks, and optimize tax efficiency in Vietnam.
Understanding Vietnam’s personal income tax system is essential for any foreigner working or doing business in the country. From determining tax residency and applying progressive rates, to navigating benefit exemptions and double taxation agreements—compliance requires both accuracy and local insight.
If you’re unsure where to start or want peace of mind in handling your tax matters, we’re here to help.
At TLA LAW FIRM, we support international clients with:
- Tax advisory & compliance for expatriates,
- DTA assessment and exemption filing,
- Employment contract reviews,
- Full-service legal retainer for foreign businesses operating in Vietnam.
👉 Contact us today to ensure your tax obligations are met efficiently—and in full compliance with Vietnamese law.
————————————————
CONTACT LEGAL CONSULTANT:
1. Lawyer Vu Thi Phuong Thanh, Manager of TLA Law LLC, Ha Noi Bar Association
Email: vtpthanh@tlalaw.vn
2. Lawyer Tran My Le, Chairman of the Members’ Council, Ha Noi Bar Association
Email: tmle@tlalaw.vn.
– Nguyen Huong Huyen-