Issue of December 2025 – Amended Personal Income Tax Law

Dear Valued Clients,

The National Assembly of Vietnam officially adopted the Fourth Draft of the Law on Personal Income Tax (Amended) (“Amended PIT Law”) on 10 December 2025 at the 10th Session of the 15th Legislature, with an approval rate of 92.6% (438/443 deputies). The Law consists of 4 Chapters and 30 Articles, effective from 1 July 2026, aiming to reduce the tax burden on low-income individuals and small business households.

In this Legal Newsletter, we would like to highlight the new provisions relating to tax brackets, family circumstance deductions, and other notable points of the Amended Personal Income Tax Law.

As always, we hope that our Clients find this article useful and we look forward to working with you in the future.

1. Supplementation of Taxable Personal Income Categories[1]

The Amended PIT Law supplements categories of taxable personal income, including:

• Income from agency, brokerage, and business cooperation activities with organizations;
• Income from e-commerce business activities and digital platform-based business activities;
• Remuneration, monetary or non-monetary benefits in any form;

Other income, including:

• Income from the transfer of Vietnam’s national internet domain name “.vn”;
• Income from the transfer of greenhouse gas emission reduction results, carbon credits;
• Income from the transfer of vehicle license plates obtained through auction in accordance with law;
• Income from the transfer of digital assets;
• Income from the transfer of gold bullion

The Government shall stipulate the threshold value of taxable gold bullion, the time of tax collection, and the adjustment of personal income tax rates applicable to the transfer of gold bullion in conformity with the roadmap for gold market management.

2. Supplementation of Tax-Exempt and Tax-Reduced Income^[2]                                                                                                                        

The Amended PIT Law supplements tax-exempt income categories, including:

• Income from dividends of members of agricultural cooperatives, unions of agricultural cooperatives, and individuals being farmers entering into contracts with enterprises participating in “Large Field” projects, engaging in production forest planting, and aquaculture.
• Income from salaries and wages of foreign experts working in programs and projects funded by non-refundable ODA, foreign non-governmental programs and projects in Vietnam; Vietnamese individuals working at representative offices of international organizations under the United Nations system in Vietnam; individuals participating in United Nations peacekeeping forces.

In addition, Article 5 of the Amended PIT Law supplements further cases of tax exemption and reduction, such as:

• Exemption from personal income tax for a period of 05 years for income from salaries and wages of individuals being high-quality digital industry human resources in the following cases:
• Income from digital industry projects in centralized digital technology zones;
• Income from research and development projects, production of key digital technology products, semiconductor chips, artificial intelligence systems;
• Income from activities of training digital industry human resources.
• Exemption from personal income tax for a period of 05 years for income from salaries and wages of individuals being high-tech human resources engaged in research and development of high technology or strategic technology under the List of prioritized high technologies for investment and development or the List of strategic technologies and strategic technology products as prescribed by the Law on High Technology.
• Exemption from personal income tax for the transfer of open-ended fund certificates established under the Law on Securities, held for 02 years or more from the date of purchase.
• Reduction of 50% of personal income tax on dividends distributed to individual investors from securities investment funds and real estate investment funds established under the Law on Securities within the period prescribed by the Government.

3. Changes to Personal Income Tax on Business Income^[3] 

3.1. Changes to the Revenue Threshold Exempt from Personal Income Tax[4]

The revenue threshold exempt from personal income tax from the 2026 tax period is increased fivefold compared to the VND 100 million/year threshold applicable in 2025.

The Amended PIT Law allows resident individuals engaged in production and business activities with annual revenue of VND 500 million or less not to be subject to personal income tax. The revenue threshold exempt from personal income tax shall also be subject to change and adjustment to conform to the socio-economic conditions of each period.

3.2. Households and Individual Businesspersons Permitted to Deduct Expenses for Tax Calculation Similar to Enterprises[5]

Personal income tax on business income of resident individuals with annual revenue exceeding VND 500 million shall be determined by taxable income multiplied (×) by the applicable tax rate. Specifically:

• Taxable income = revenue from goods and services sold minus (–) expenses related to production and business activities during the tax period;
• Resident individuals with annual revenue from VND 500 million to VND 3 billion: tax rate 15%;
• Resident individuals with annual revenue over VND 3 billion to VND 50 billion: tax rate 17%;
• Resident individuals with annual revenue over VND 50 billion: tax rate 20%.

3.3. Revenue from VND 500 Million to VND 3 Billion/Year Eligible for Choice of Tax Calculation Based on Revenue or Taxable Income[6]

Resident individual businesspersons with annual revenue exceeding VND 500 million up to VND 3 billion may choose to pay tax based on taxable income or pay tax calculated as tax rate multiplied (×) by taxable revenue. Taxable revenue and tax rates are determined as follows:

Taxable revenue is determined as the portion of revenue exceeding VND 500 million/year.

Applicable tax rates are stipulated as follows:

• Distribution and supply of goods: tax rate 0.5%;
• Services, construction without supply of raw materials: tax rate 2%. For asset leasing, insurance agency, lottery agency, and multi-level sales agency activities: tax rate 5%;
• Production, transportation, services associated with goods, construction with supply of raw materials: tax rate 1.5%;
• Provision of digital information content products and services relating to entertainment, electronic games, digital films, digital images, digital music, digital advertising: tax rate 5%;
• Other business activities: tax rate 1%.

4. Changes to Progressive Tax Brackets for Salary and Wage Income^[7]

The Amended Personal Income Tax Law stipulates a new progressive tax schedule. Specifically, the current 7-bracket progressive tax schedule is replaced with a 5-bracket schedule. This schedule has been revised to reduce tax rates at certain brackets to ensure rationality, avoid sudden increases, and create incentives for employees, as follows:

Accordingly, in addition to reducing the number of brackets, the new progressive tax schedule under the Amended PIT Law reduces tax rates at certain brackets compared to the current regulations: the tax rate of 15% at bracket 2 is reduced to 10%, and the tax rate of 25% at bracket 3 is reduced to 20%. At the same time, the taxable income thresholds at each bracket corresponding to the applicable tax rates are adjusted.

For example, the starting threshold for personal income tax at the current 5% rate is up to VND 5 million/month (equivalent to VND 60 million/year), whereas under the new PIT schedule effective from 1 July 2026, the threshold is up to VND 10 million/month (equivalent to VND 120 million/year)

5. Changes to Family Circumstance Deductions^[8]

The Amended Personal Income Tax Law revises the principle for adjusting family circumstance deductions. On 17 October 2025, the Standing Committee of the National Assembly promulgated Resolution No. 110/2025/UBTVQH15 on the adjustment of family circumstance deductions under the Personal Income Tax Law, whereby the deduction for the taxpayer is increased from VND 11 million/month to VND 15.5 million/month, and the deduction for each dependent is increased from VND 4.4 million/month to VND 6.2 million/month.

According to calculations, under this new family circumstance deduction:

An individual (without dependents) with income of VND 17 million/month shall not yet be subject to tax.

An individual with 01 dependent and income of VND 24 million/month shall not yet be subject to tax.

An individual with 02 dependents and income of VND 31 million/month shall not yet be subject to tax.

In addition, the Amended PIT Law revises the principle for adjusting family circumstance deductions. Under the current PIT Law, the Standing Committee of the National Assembly is authorized to adjust family circumstance deductions when the consumer price index fluctuates by more than 20%. However, the principle of adjustment based on CPI fluctuation exceeding 20% under the current PIT Law is no longer appropriate given the volatility of prices and incomes. In practice, waiting for the CPI to increase by more than 20% before adjusting family circumstance deductions may take more than 5 years, while costs, prices, and incomes of the population fluctuate significantly. Therefore, such deductions may be adjusted based on these factors without waiting for CPI fluctuation exceeding 20%. Accordingly, the Amended PIT Law stipulates that the Government shall adjust family circumstance deductions based on fluctuations in prices and incomes to meet practical requirements.

6. Effectiveness^[9]

The Amended PIT Law shall take effect from 01 July 2026. However, provisions relating to business income and salary and wage income of resident individuals shall apply from the 2026 tax period, i.e., from 01 January 2026.

From the effective date of the Amended PIT Law, the Personal Income Tax Law No. 04/2007/QH12, as amended and supplemented by Law No. 26/2012/QH13, Law No. 71/2014/QH13, Law No. 31/2024/QH15, Law No. 48/2024/QH15, Law No. 56/2025/QH15, Law No. 71/2025/QH15, and Law No. 93/2025/QH15, shall cease to be effective. For provisions relating to business income and salary and wage income of resident individuals, the effective termination date shall be from the 2026 tax period.

In cases of discrepancies in tax incentive policies between this Law and the Capital Law, resolutions of the National Assembly, or solutions stipulated at Point h, Clause 8, Article 10 of the Law on Organization of the Government, priority shall be given to the Capital Law, resolutions of the National Assembly, or the aforementioned solutions.

If the Amended PIT Law provides higher incentives, taxpayers shall have the right to choose to apply the most favorable incentive for themselves.

As always, we hope you find this Update helpful and look forward to working with you in the near future.

Best Regards,

ENT LAW LLC

[1] Article 3, Amended PIT Law

[2] Article 4, 5, Amended PIT Law

[3] Article 7, Amended PIT Law

[4] Article 7.1, Amended PIT Law

[5] Article 7.2, Amended PIT Law

[6] Article 7.3, Amended PIT Law

[7] Article 9, Amended PIT Law

[8] Article 10, Amended PIT Law

[9] Article 30, Amended PIT Law