The subject of personal income tax is the central concept in all regulations on individual tax obligations in Vietnam. Correctly determining who is subject to tax, who is exempted, and when to declare will help employees, investors or business individuals proactively comply with the law, while optimizing legal income. The following article provides a comprehensive update on the subject of personal income tax according to the latest regulations in 2025, along with instructions on how to calculate tax, the salary payable and common cases of not having to pay tax.
Concept and legal basis of personal income tax payers
Personal income tax (PIT) is a direct tax levied on the income of resident or non-resident individuals who earn taxable income in Vietnam. According to the Personal Income Tax Law No. 04/2007/QH12, amended by Law No. 26/2012/QH13, all individuals with taxable income are obliged to pay tax, except in cases of exemption.
Legal basis includes:
- Current Personal Income Tax Law and amendments and supplements;
- Circular 111/2013/TT-BTC provides detailed instructions on calculation, deduction and settlement;
- Decree 126/2020/ND-CP on tax administration;
- Instructions from the General Department of Taxation and the Ministry of Finance.
Classification of personal income tax payers according to the latest regulations 2025
According to regulations, personal income tax payers include:
1. Individuals residing in Vietnam
- Present in Vietnam for 183 days or more within 12 months;
- Or have permanent residence (household registration or long-term rental);
- Tax liability: taxed on total worldwide income.
2. Non-resident individuals
- Staying in Vietnam for less than 183 days and having no permanent residence;
- Taxable only on income generated in Vietnam;
- Apply flat tax rate 20% (not progressive).
3. Income payment organization
- Responsible for deducting, declaring and paying personal income tax on behalf of employees;
- Provide deduction documents and income confirmation for individuals to settle.
| Criteria | Resident Individual | Non-resident individual |
|---|---|---|
| Time in Vietnam | ≥183 days/year | <183 days/year |
| Taxable income range | Global | Only in Vietnam |
| Applicable tax rate | Progressive Table (5% – 35%) | Fixed 20% |
| Family deduction | Have | Are not |
Is income from salaries and wages subject to personal income tax?
The answer is yes. According to Article 3 of the Personal Income Tax Law, salaries and wages are the most common types of income subject to tax. This is why most employees in businesses and agencies are paid by organizations that deduct personal income tax at source.
Income from salaries and wages includes:
- Fixed salary, bonus, allowance, overtime;
- Other benefits: company-provided housing, telephone charges, excess lunch;
- Severance pay, unemployment benefits exceeding prescribed limits.
When do I have to pay personal income tax?
Paying personal income tax depends on your income after deductions:
Family deduction level 2025:
- Taxpayer himself: 11 million VND/month;
- Each dependent: 4.4 million VND/month.
For example: Single person earns 15 million VND/month → taxable income = 15 – 11 = 4 million VND → starts paying tax.
If there is 1 dependent → tax threshold: 11 + 4.4 = 15.4 million → income below this level is not taxable.
Who does not have to pay personal income tax?
Not all individuals are required to pay taxes. Some cases that are not subject to personal income tax include:
Individuals with income below the deduction level
- Workers with income under 11 million VND/month (no dependents);
- People with dependents but total income is still < deduction level.
Non-taxable income (Article 4, Personal Income Tax Law)
- Retirement, work accident, death benefits;
- Scholarships from the state budget;
- Money from remittances, humanitarian aid, social insurance;
- Income from sale of sole residence (if eligible for exemption).
Which is not a taxpayer?
- Students have no income;
- Retirees do not generate new income;
- Individual residing abroad, with no income in Vietnam.
How to calculate personal income tax according to the progressive tax table
Income from salaries and wages of resident individuals is calculated according to the progressive tax table:
| Level | Taxable income/month | Tax rate |
|---|---|---|
| 1 | Up to 5 million | 5% |
| 2 | Over 5 - 10 million | 10% |
| 3 | Over 10 - 18 million | 15% |
| 4 | Over 18 – 32 million | 20% |
| 5 | Over 32 – 52 million | 25% |
| 6 | Over 52 - 80 million | 30% |
| 7 | Over 80 million | 35% |
General formula: Personal Income Tax = (Total Income – Deductions) x Corresponding Tax Rate
Real life example:
A single worker has an income of 25 million VND/month. After applying the personal deduction of 11 million VND, the remaining taxable income is 14 million VND.
This income will be taxed according to the following progressive tax schedule:
-
First 5 million × 5% = 250,000 VND
-
Next 5 million × 10% = 500,000 VND
-
4 million remaining × 15% = 600,000 VND
Total monthly personal income tax payable: 1,350,000 VND
Subjects exempted from and reduced from personal income tax
According to Article 5 Circular 111/2013/TT-BTC, tax-exempt or tax-reduced items include:
Tax Free:
- Transfer of single dwelling (qualifying);
- Individuals suffering from natural disasters, serious illnesses, accidents;
- Tuition and insurance are paid by the employer.
Tax reduction:
- Individuals in temporary difficult circumstances;
- Small business households pay lump-sum tax;
- Individuals receiving special support from the Government under administrative decisions.
Some special cases that are easy to confuse
Many individuals easily misunderstand personal income tax obligations in certain specific situations. For example, students who work part-time and have income below the deduction level will not have to pay tax, but they still need to monitor their total income to make a year-end settlement if additional income arises. In the case of receiving a Tet bonus, this amount is included in the income of the month the bonus is received, which can temporarily push the individual to a higher tax bracket. For those who have income from many sources, the settlement obligation is not completely transferred to the paying organization, but the individual must summarize it for declaration. Foreigners who work less than 183 days in Vietnam, even if they have a labor contract, are still identified as non-resident individuals and are subject to a fixed tax rate of 20% instead of a progressive tax rate.
Conclusion: Identify the correct personal income tax payer to avoid risks
Understanding and correctly identifying the taxpayers of personal income tax is a prerequisite for fulfilling tax obligations in accordance with regulations and avoiding administrative penalties. From 2025, along with the development of the electronic invoice and tax identification system, tax declaration - payment - settlement requires greater initiative and accuracy from the taxpayer.
Recommendation:
- Look up the exact regulations at https://luatvietnam.net;
- Keep records of deductions, employment contracts, dependent documents;
- Consult a tax professional if there are multiple sources of income or international elements.
The above article is for reference only and is not a substitute for personalized legal advice. To determine your tax obligations, please consult a professional or your direct tax authority.
