Official Letter No. 15679/DON-QLDN1 Issued by the Dong Nai City Tax Department in 2026, the circular provides important guidelines regarding the determination of personal income tax withholding obligations for employees whose employment contracts have been terminated. Given the significant revisions to the tax regulatory framework applicable to the 2026 tax year, a thorough understanding of the regulations governing income payments to former employees is crucial for the accounting department to accurately handle tax withholding obligations at source.
The payment of outstanding wages, salaries, or benefits after an employee leaves the company often gives rise to disputes and the risk of tax reassessments during audits. To clarify the basis for implementation, this article will provide a detailed analysis of the entire content of the guidance document and the relevant regulations based on Decree 253/2026/ND-CP and Personal Income Tax Law 2025, helping businesses optimize costs and ensure full compliance with the law.
Key Points Summary of Official Letter No. 15679/DON-QLDN1
- Official Letter No. 15679/DON-QLDN1 is an operational guidance document issued by the Dong Nai City Tax Department regarding the deduction of personal income tax from payments made to employees whose employment contracts have been terminated.
- This regulation applies to all businesses and organizations in the jurisdiction that pay income and incur expenses for wages, bonuses, or allowances for employees who have left the company, effective from the 2026 tax period.
- Payments of 5 million VND or more per transaction must be subject to a 10% withholding; payments of less than 5 million VND per transaction are subject to a 10% withholding only at the individual’s request. Businesses need to update their systems immediately to adjust payroll calculations and file tax returns on time.
The New Legal Framework for Personal Income Tax and the Issuance of Official Letter No. 15679/DON-QLDN1
The personal income tax legal framework in Vietnam is entering a transition phase, with new regulations set to take effect in mid-2026. Among these, Decree 253/2026/ND-CP Effective as of July 1, 2026; specifically, the provisions regarding income from wages and salaries of resident individuals shall apply starting with the 2026 tax year. The Decree serves as an important legal basis for regulations on taxable income, the timing of tax calculation, and tax deductions for wages and salaries.
To promptly address any issues faced by the business community during the transition period, local tax authorities have continuously issued practical guidance documents. Circular No. 15679/DON-QLDN1 was issued to clarify the deduction process personal income tax For payments arising after the termination of an employment contract, this helps employers ensure consistent implementation.
Experts at MAN, with 30 years of experience, note that the change in the withholding policy is not simply a matter of applying a fixed percentage. It represents a shift in the mindset regarding cash flow management, the timing of expense recognition, and the legal responsibilities of the organization paying income to the relevant tax authority.
The legal framework, to be implemented uniformly starting in 2026, consists of three levels of regulations:
- Personal Income Tax Law 2025: Revise major policies, general principles, and tax exemption and incentive programs.
- Decree No. 253/2026/ND-CP: Detailed regulations on taxable income, methods for determining it, and withholding rates.
- Official Letter No. 15679/DON-QLDN1: Operational Guidelines for Implementing the Tax Withholding Process When Making Payments to Employees Whose Employment Contracts Have Been Terminated.
What are the key directives contained in Official Letter No. 15679/DON-QLDN1?
The main focus of Official Letter No. 15679/DON-QLDN1 is on classifying tax withholding obligations based on two specific income payment thresholds for employees who have left their jobs. The direct legal basis applied is Clause 2 of Article 50 of Decree No. 253/2026/NĐ-CP, which applies to individuals who have not signed an employment contract or have signed a contract for less than three months, including employees whose employment contracts have been terminated.
An enterprise that pays wages, salaries, fees, or other forms of income to employees whose employment contracts have been terminated must base its tax withholding obligations on the actual amount paid in each payment:
- Expenditures of 5 million VND or more per transaction: It is mandatory to withhold 10% personal income tax from total income before making a payment.
- Expenses under 5 million VND per transaction: Withhold personal income tax under Form 10% only when there is a specific request from the individual receiving the income.
Handling Cases Where Income Payments Are 5 Million Dong or More Per Transaction
In cases where a business pays wages or other forms of income to former employees in amounts of 5 million VND or more per payment, the paying entity is required to withhold personal income tax.
A fixed withholding rate of 10% is applied to total income before payment is made to an individual. The taxable income used as the basis for withholding is determined in detail in accordance with the provisions of Article 6 of Decree 253/2026/NĐ-CP.
For example, when the company pays Mr. A (who left the company last month) an additional bonus or back pay totaling 8,000,000 VND, the company must withhold 10%, which amounts to 800,000 VND. The actual amount paid to Mr. A is 7,200,000 VND.
Handling Cases Where the Income Payment Amount Is Less Than 5 Million Dong Per Payment
In cases where payments to employees whose employment contracts have been terminated amount to less than 5 million VND per payment, the new regulations provide greater flexibility for both businesses and employees.
Organizations and individuals paying income are permitted to withhold tax at the 10% rate when requested by the individual. If the employee does not make such a request, the employer must pay the full amount without being required to withhold personal income tax at the time of payment.
This regulation helps reduce unnecessary administrative procedures for small payments. At the same time, it allows workers to receive their full small earnings without having provisional taxes withheld when their income falls below the mandatory withholding threshold.
How is the timing for determining taxable income for personal income tax purposes defined?
The timing of determining taxable income is one of the most important legal technicalities where accountants frequently make errors. Circular No. 15679/DON-QLDN1 refers to Clause 3 of Article 46 of Decree No. 253/2026/NĐ-CP to clarify this issue.
The timing for determining taxable income from wages and salaries is consistently governed by the following principles:
- The time when the employer actually pays wages or salaries to the taxpayer.
- The time when a taxpayer receives income, including monetary and non-monetary benefits.
- This shall apply uniformly to all allowances, supplements, and other forms of income specified in Article 8 of Decree No. 253/2026/ND-CP that arise during the tax period.
The determination of the tax calculation date is based on the cash basis principle rather than the accrual basis of accounting. Even if the salary pertains to the month of work prior to resignation, the tax regulations must be applied and the tax return filed for the month or quarter in which payment is made.
From MAN’s perspective, a common mistake made by businesses is applying a partially progressive tax rate to employees who have left the company, on the assumption that this amount constitutes wages for the months they were still employed. Since the payment is made after the employment contract has been completely terminated, this payment is considered a payment to an individual who does not have a long-term employment contract, therefore requiring the application of the one-time payment rule specified in Clause 2 of Article 50 of Decree 253/2026/NĐ-CP.
List of Income Categories Excluded from Personal Income Taxable Income Starting in 2026
In addition to the guidelines on deductions, Official Letter No. 15679/DON-QLDN1 and Decree No. 253/2026/NĐ-CP also provide a detailed classification of income that is not in the form of wages or salaries. This category of income is not included in an employee’s personal income tax (PIT) base.
Pursuant to Clause 4 of Article 8 of Decree No. 253/2026/ND-CP, businesses should take note of the following 14 categories of expenses to ensure accurate allocation when calculating tax liabilities:
- Title Bonuses and Awards: Bonuses accompanying titles conferred by the State, emulation titles, and commendations granted in accordance with the law on emulation and commendations. Bonuses for nationally recognized awards and internationally recognized awards. Bonuses for inventions, innovations, and technical improvements recognized by the competent state agency. Rewards for detecting and reporting violations of the law.
- Subsidy for medical examinations and treatment of serious illnesses: The amount contributed by the employer to support medical examinations and treatment for serious illnesses for the employee and their family members (biological children, adopted children, stepchildren, spouse, biological parents, parents-in-law, step-parents, and foster parents). The list of critical illnesses is determined in accordance with the regulations of the Minister of Health. The amount exempt from taxable income is the actual amount of support as evidenced by invoices and receipts, but shall not exceed the total hospital expenses incurred by the employee and their dependents after deducting any amounts paid by the insurance provider (if any).
- Transportation options: Funds received under the transportation allowance program for government agencies, public service units, Party organizations, and mass organizations. Expenses for transporting employees from their residence to their workplace and back, in accordance with the unit’s regulations.
- Government Housing Policy: Amounts received under the government housing program in accordance with the law.
- Activities serving government agencies and organizations: Payments received in addition to salary for participating in or serving the activities of the Party, youth organizations, or the National Assembly; for drafting, providing input on, reviewing, or scrutinizing legal documents, resolutions, and political reports; for participating in inspection and oversight delegations, meeting with constituents, and receiving citizens; uniforms and other tasks directly serving central and local government agencies.
- Flight tickets for leave: The cost of airline tickets paid (or reimbursed) by the employer on behalf of foreign workers and Vietnamese nationals working abroad who return home on annual leave once a year from Vietnam to the country of their citizenship or where their family resides, and vice versa.
- Tuition for my child: Tuition fees for the children of foreign workers studying in Vietnam, and for the children of Vietnamese workers employed abroad who are studying abroad, from preschool through high school.
- Non-mandatory insurance with no premium accumulation: The amount a business pays for non-mandatory insurance products with no accumulated premiums (such as health insurance or non-refundable term life insurance) where the policyholder receives no accumulated premiums in addition to the insurance payout or compensation. This provision applies to purchases made from insurance companies not incorporated in Vietnam but authorized to sell insurance in Vietnam.
- Costs for advanced training: Expenses paid by the company in lieu of training costs to improve qualifications and skills in line with professional expertise, job duties, or the organization’s plan.
- Reimbursement of travel expenses and transfers: Payments made to suppliers or employees in connection with reassignments, transfers, or business trips, as provided for in decisions, financial or internal regulations, employment contracts, or collective bargaining agreements, and supported by invoices and supporting documents in accordance with regulations.
- Creating a work of art: Income received from associations and funding organizations for the creation of literary and artistic works that fulfill the State’s political tasks, funded from the budget or managed in accordance with regulations.
- Funeral and wedding expenses: Expenses for funerals and weddings incurred for the employee and their family in accordance with financial/internal regulations or a collective bargaining agreement, consistent with the deductible amount for corporate income tax purposes.
- Trade union funding sources: Money and benefits received from union funds are not considered wages or salaries under the Trade Union Law.
- Specialized Diet: Funds for nutritional support and special care programs to ensure women’s health and well-being, as stipulated in Articles 5 and 8 of Decree No. 349/2025/NĐ-CP, for members of sports teams participating in training camps and competitions.
Cases of personal income tax exemption for a period of five years under the new regulations
Pursuant to Article 5 of the 2025 Personal Income Tax Law, the government is implementing a policy granting a five-year personal income tax exemption to attract high-quality talent in cutting-edge technology sectors.
Businesses operating in the technology sector need to clearly understand the two groups eligible for these preferential policies in order to file their tax exemption claims accurately:
Group 1: High-quality digital technology workforce
Specific examples of cases in this group include:
- Individuals who earn income from wages or salaries while participating in digital technology industrial projects within concentrated digital technology zones.
- Individuals who derive income from research and development (R&D) projects, the production of key digital technology products, the production of semiconductors, or the development of artificial intelligence (AI) systems.
- Individuals who directly participate in and receive income from training activities for the digital technology industry workforce.
Group 2: High-tech workforce in R&D activities
The five-year tax exemption also applies to income from wages and salaries earned by individuals who are high-tech professionals engaged in research and development of high-tech or strategic technologies.
These technologies must be included in the List of High-Tech Technologies Prioritized for Investment and Development or the List of Strategic Technologies and Strategic Technology Products, in accordance with the provisions of the law on high technology.
Summary Table of Personal Income Tax Deduction Rules for Each Group of Taxpayers
To help the accounting department easily look up and apply these rules, MAN has summarized the personal income tax deduction regulations effective in 2026 in the table below:
| Groups of Individuals Receiving Income | Payment Limit per Transaction | Tax Deduction Rate | Applicable Legal Basis |
| Employees with employment contracts of 3 months or longer | Unlimited | Partially Progressive Tax Schedule (5% – 35%) | Section 1 of Article 50 of Decree No. 253/2026/ND-CP |
| Employees who have left the company / Did not sign an employment contract / Employment contract < 3 months | From 5 million VND or more | 10% (mandatory deduction before payment) | Clause 2, Article 50 of Decree 253/2026/ND-CP |
| Employees who have left the company / Did not sign an employment contract / Employment contract < 3 months | Less than 5 million dong | 10% (Deductions are made only at the individual's request.) | Clause 2, Article 50 of Decree 253/2026/ND-CP |
| High-Tech Workforce / High-Quality Digital Technology | Under the incentive program | 5-Year Tax Exemption | Article 5 of the 2025 Personal Income Tax Law |
The system of relevant legal documents that need to be monitored
When preparing final accounts and filing personal income tax returns, businesses should not rely solely on a single official document but should consider the matter within the broader context of the current tax legal framework.
| Document number | Date of issuance / Effective date | Main content summary |
| Personal Income Tax Law 2025 | Effective in 2026 | Legal Framework Governing Taxable Entities, Tax Exemptions, and Tax Rates |
| Decree 253/2026/ND-CP | Effective July 1, 2026 | Detailed regulations on taxable income, tax exemptions, and deduction rates |
| Official Letter No. 15679/DON-QLDN1 | Issued in 2026 | Specific Guidelines for Tax Deductions for Employees Who Resign, Earning Over or Under 5 Million |
| Official document 15676/DON-QLDN1 | Issued in 2026 | Guidelines for Personal Income Tax Treatment of Wages Paid for Days Not Taken as Vacation Leave Amounting to 5 Million or More |
| Official Letter No. 15677/DON-QLDN1 | Issued in 2026 | Guidelines for Issuing Invoices for Sample Products Provided to Customers for Free Trial Use |
| Decree No. 349/2025/NĐ-CP | Effective in 2025/2026 | Regulations on Nutrition and Health Care for Women in the Sports Sector |
Real-World Case Study: Analysis of a Situation Involving Payment to Employees Who Have Resigned
To better understand how to apply the guidelines in Official Letter No. 15679/DON-QLDN1, let’s examine a real-life scenario that arose at Company B during the 2026 tax year.
Situational context
Description of the incident at B Manufacturing Joint Stock Company:
- Mr. Tran Van M’s employment contract has ended, and he officially left the company on May 31, 2026.
- In August 2026, Company B finalized the second settlement and made additional payments to Mr. M to settle outstanding amounts.
- The payment items include: A performance bonus for previous work totaling 6,000,000 VND; and an allowance for relocating old files and documents totaling 2,500,000 VND.
How to Handle Common Business Mistakes
Company B’s accounting department combined the two expense items into a total of 8,500,000 VND and calculated the tax using the progressive tax schedule, on the grounds that this income was earned during the period when Mr. M was still employed by the company.
This practice constitutes a serious violation of the provisions of Article 46, paragraph 3, and Article 50, paragraph 2, of Decree No. 253/2026/ND-CP. At the time of payment (August 2026), Mr. M was an employee whose employment contract had already been terminated.
Differences in the processing procedures between the two methods:
- Incorrect handling: Aggregate the amount to 8,500,000 VND; a progressive tax rate applies. There is a risk of the tax authority imposing back taxes under Form 10% and late payment penalties.
- Correct handling: Classify each payment installment according to the nature of the income, and apply the 10% withholding tax on payments of 5 million VND or more.
Accurate treatment protocol in accordance with MAN expert guidelines
The precise solution recommended by the team of experts at MAN – Master Accountant Network is as follows:
- Regarding the bonus of 6,000,000 VND: This is a payment of 5 million VND or more per instance to an employee who has left the company. Company B is required to withhold 10% personal income tax before making the payment. Tax withheld: 6,000,000 × 10% = 600,000 VND. The actual amount paid to Mr. M: 5,400,000 VND.
- For the 2,500,000 VND subsidy (paid separately in a different installment): This payment is less than 5 million VND per transaction. Company B is not required to withhold 10%. If Mr. M does not request a withholding, Company B will pay the full amount of 2,500,000 VND.
- Tax Filing: Company B reported the tax amount of 600,000 VND that had been withheld on its August 2026 (or Q3 2026) personal income tax return, using the form prescribed in Decree No. 253/2026/ND-CP.
MAN Experts' Insights on Tax Risks and Corporate Governance Solutions
Our experience advising more than 500 businesses over the past year shows that violations related to personal income tax deductions for employees who have left the company rank among the top three most common tax violations subject to administrative penalties. Many businesses confuse the exemption from withholding tax on expenses under 5 million dong with the failure to report those expenses.
Another major risk is that a business may unilaterally issue a written commitment (when it does not yet meet the requirements) to refrain from withholding 10% from employees who have resigned. It should be noted that Clause 2 of Article 50 of Decree 253/2026/NĐ-CP clearly stipulates: Payments of 5 million VND or more per instance to former employees are subject to mandatory 10% withholding; the mechanism for submitting a written commitment to temporarily defer withholding—as was commonly applied in the past for contracts of less than three months—does not apply in this case.
The top risks businesses commonly face during tax settlement audits:
- Unilaterally apply a partially progressive tax schedule to individuals whose employment contracts have been terminated as of the date of payment.
- Do not apply the 10% deduction to payments of 5 million VND or more on the grounds that the employee has signed a commitment.
- Incorrect determination of the tax calculation date due to recording expenses based on the actual number of months worked rather than the actual date of payment.
To optimize tax costs in Vietnam and minimize legal risks, businesses need to standardize their HR and accounting processes. All payments made after the termination of an employment contract must be clearly separated in the accounting software. At the same time, the HR and Accounting departments must coordinate to accurately update the contract termination date in the system records.
Conclude
A thorough understanding of the guidelines in Official Letter No. 15679/DON-QLDN1 will help businesses proactively manage payroll costs and ensure proper compliance with personal income tax withholding regulations starting with the 2026 tax period. Clearly distinguishing between payment thresholds above and below 5 million VND for employees whose employment contracts have been terminated serves as the foundation for establishing a secure and effective internal control system.
If your business is facing challenges with tax file reviews, tax filings, or tax audits, MAN – Master Accountant Network is always here to support you. Our team of experts, with over 30 years of combined experience, provides a comprehensive range of high-quality solutions—including tax settlement services, tax accounting services, tax reporting services, and tax consulting services—to help maximize your business’s legitimate interests in the Vietnamese market.
Frequently Asked Questions About Official Letter No. 15679/DON-QLDN1 (FAQ)
Do payments of less than 5 million VND to former employees need to be reported for tax purposes?
Yes. Businesses are still required to report the total income paid to individuals on the annual personal income tax return, even though payments of less than 5 million VND per transaction are not subject to mandatory withholding under Form 10%.
Can former employees who received a severance payment of 5 million or more sign a written commitment to waive the 10% tax deduction?
No. Pursuant to Official Letter No. 15679/DON-QLDN1 and Decree No. 253/2026/NĐ-CP, payments of 5 million VND or more per transaction to individuals whose employment contracts have been terminated must be subject to a 10% withholding before payment.
When is the tax assessment date for back wages owed to employees who have left the company?
The tax calculation date is the date on which the business actually pays that amount to the employee, regardless of which past month the salary pertains to.
Are clothing allowances or wedding/funeral allowances for former employees subject to tax?
If expenses for weddings, funerals, or other similar events comply with the company’s financial regulations and corporate income tax regulations, they are excluded from taxable personal income under Clause 4 of Article 8 of Decree No. 253/2026/ND-CP.
If a company fails to withhold 10% when paying more than 5 million to an employee who has left the company, what penalties will it face?
The business will be required to pay 10% in back taxes that were not withheld, pay a late payment penalty (0.03% per day), and face an administrative fine for incorrectly or incompletely reporting its tax obligations.
