Key updates under new Law on Personal Income Tax (“PIT”) No. 109/2025/QH15

The new Law introduces amendments to a number of regulations concerning taxpayers, taxable income, tax-exempt income, tax reductions, and the basis for PIT calculation.

Accordingly, the new PIT Law includes several notable updates on:

1. Income from salaries and wages
2. Income from business
3. Income from capital transfer
4. Income from winnings, royalties, inheritances and gifts
5. Additional taxable other incomes
6. Other cases of tax exemption and reduction

1. Income from Salaries and Wages

1.1. Expansion of PIT exempt income items

• Night shift, overtime and unused leave: Salaries and wages paid for night shift work, overtime work, and payments for unused annual leave in accordance with labor law regulations.
• Science, technology and innovation tasks: Income from salaries and remuneration from performance of science, technology and innovation tasks.
• Five-year exemption for technology professionals: A five-year personal income tax exemption shall be granted for salary and wage income earned by individuals who are high-quality digital technology professionals or high-tech professionals. They must be engaged in one of the following activities:
  • Investment projects in the digital technology industry at concentrated digital technology parks;
  • Research, development and production of key digital technology products, including semiconductor chips and artificial intelligence systems;
  • Training activities for the digital technology industry workforce; or
  • High-tech or strategic technology research and development activities that fall under the List of High Technologies Eligible for Priority Investment and Development, or the List of Strategic Technologies and the List of Strategic Technology Products, as prescribed by the Law on High Technology.

1.2. Adjustment to PIT tax rates

The progressive personal income tax schedule has been adjusted. The number of tax brackets is reduced from seven (7) brackets to five (5) brackets, and the taxable income ranges applicable to each bracket are widened. Specifically:

1.3. Increase in family relief

• New deduction levels: The deduction levels for taxpayers and dependents have been adjusted in line with the thresholds stipulated in Resolution No. 110/2025/UBTVQH15:
  • The personal deduction for taxpayers is VND 15.5 million per month (VND 186 million per year);
  • The deduction for each dependent is VND 6.2 million per month.
• Wider scope of dependents: The scope of eligible dependents for deductions has been expanded to include cases where the taxpayer’s child is a person who has lost civil act capacity.

1.4. Other deductions

In addition to family relief, taxpayers may be considered for additional deductions for certain expenses, including:

• Health care and education – training: Expenses for health care and education – training of the taxpayer and the taxpayer’s dependents. These expenses must be supported by invoices and proofs of payment in accordance with legal regulations and must not be reimbursed from other sources.
• Pension and life insurance: Contributions to supplementary pension insurance in accordance with the Law on Social Insurance, purchases of voluntary pension insurance, and life insurance premiums, within the limits prescribed by the Government.

2. Income from Business

The mechanism of tax declaration and payment for business individuals and household businesses has been fundamentally changed. The presumptive tax mechanism based on the assessment of revenue is abolished and switched to the declaration mechanism. In most cases, the payable PIT amount will be determined based on the actual amount of profits generated.

2.1. Non-taxable revenue threshold

The non-taxable revenue threshold for personal income tax has been increased from VND 200 million per year to VND 500 million per year.

2.2. Tax calculation mechanism for cases of turnover exceeding the non-taxable threshold

• Annual revenue exceeding VND 500 million up to VND 3 billion: Business individuals and household businesses may choose one of the following two tax calculation methods:
  • Applying a tax rate of 15% on profits generated; or
  • Applying a deemed tax rate ranging from 0.5% to 5% to the portion of revenue that exceeds the non-taxable threshold.
• Revenue exceeding VND 3 billion up to VND 50 billion: PIT shall be imposed on the profit generated with the applicable rate of 17%.
• Revenue exceeding VND 50 billion: PIT shall be imposed on the profit generated with the applicable rate of 20%.

Note:

• Real estate leasing: For income from real estate leasing activities (excluding accommodation business activities), PIT shall be calculated at a rate of 5% on the portion of revenue exceeding the non-taxable threshold, regardless of the actual revenue generated.
• Non-resident individuals: Non-resident individuals earning income from business activities shall only apply the tax calculation method based on a percentage (%) of revenue, in accordance with the specific business sector.

3. Income from Capital Transfer

Regulations on income from capital transfer have been standardized in terms of tax determination for both resident and non-resident individuals:

• Uniform rate: PIT shall be uniformly applied at a rate of 20% on the actual income derived from capital transfer activities, regardless of the individual’s residency status.
• Fallback rate: Where the acquisition cost and related expenses cannot be determined, PIT shall be calculated at a rate of 2% on the transfer price.

4. Income from Winnings, Royalties, Inheritances, and Gifts

Income from winnings, royalties and franchising continues to be subject to the same tax rates as previously applied. The taxable income thresholds have been adjusted in a manner more favorable to taxpayers: the deductible threshold prior to determining taxable income has been increased from VND 10 million to VND 20 million for each income occurrence.

5. Introduction of an additional category of taxable income – other incomes

The new Law adds five types of other taxable income:

1. Income from transfer of Vietnam’s top-level domains “.vn”;
2. Income from transfer of greenhouse gas emission reduction results and carbon credits;
3. Income from transfer of license plates purchased at auction as prescribed by law;
4. Income from the transfer of digital assets;
5. Income from the transfer of gold bars/gold bullion.

These items are taxed as follows:

• Domains, carbon credits and license plates (items 1–3): PIT shall be imposed at a rate of 5% on the portion of income exceeding VND 20 million per occurrence.
• Digital assets and gold bars/gold bullion (items 4–5): PIT shall be imposed at a rate of 0.1% on transaction value. For transfers of gold bars/gold bullion, implementation shall be subject to a roadmap and detailed guidance issued by the Government, including guidance on the taxable threshold.

6. Some other cases of tax exemption and reduction

Tax exemption for:

• Agriculture: Income from dividends distributed to members of agricultural cooperatives and cooperative unions. This also covers income earned by individual farmers who enter into contracts with enterprises to participate in large-scale farming schemes (“Cánh đồng lớn”), production forestry or aquaculture.
• Carbon credits and green bonds: Income from the first transfer of certified greenhouse gas emission reduction results by individuals and of carbon credits granted to individuals. This also covers interest income from green bonds and income from the first transfer of green bonds after issuance.
• Innovative startups and venture capital: Income earned by individual investors and experts from innovative startup projects, founders of innovative startup enterprises, and investors contributing capital to venture capital funds.
• Open-ended funds: Income from the transfer of open-ended fund certificates, where individuals hold the fund certificates for a full 02 years or more.

50% PIT reduction for:

• Dividends distributed from securities investment funds and real estate investment funds, within the period prescribed by the Government.

7. Effective date of the new Law on PIT

The PIT Law shall take effect on 01 July 2026. However, provisions relating to income from business activities, salaries and remunerations of resident individuals shall apply from the 2026 tax period. Accordingly:

• Resident individuals – business income, salaries and remunerations: These are subject to the new PIT provisions for the entire 2026 tax period.
• Resident individuals – other types of income: The new tax policies apply from July 2026.
• Non-resident individuals: The new tax policies apply to all types of income earned from July 2026 onward.

8. Conclusion

The information and analysis herein are of a generic nature and are quoted or interpreted from the regulations. We recommend that clients contact Forvis Mazars Vietnam’s advisors for further clarification and professional advice for each particular circumstance.

How can we help?

Contact our Tax team to discuss how the Law on PIT No. 109/2025/QH15 applies to your payroll, business income and investment income in Vietnam.