DRAFT DECREE GUIDING THE PERSONAL INCOME TAX (“PIT”) LAW
On March 27, 2026, the Ministry of Finance announced and sought public comments on the Draft Decree detailing certain provisions of the 2025 Personal Income Tax Law, with the orientation of reducing tax burdens, promoting innovation, and improving social security.
The notable contents of the Draft include:
2.1 Exemption of Personal Income Tax for Priority Sectors
The draft proposes exempting personal income tax (PIT) from 2026 on salaries and wages of individuals in the following groups, aiming to attract high-quality human resources, especially in the technology sector:
- Individuals engaged in scientific, technological, and innovation tasks.
- High-quality digital industry personnel and income from activities in research and development of high technology and strategic technologies, with a maximum preferential period of 5 years.
2.2 Raising the Threshold for Withholding Personal Income Tax on Irregular Income
The Draft proposes adjustments aimed at reducing tax obligations and administrative procedures, specifically:
- Raising the threshold for withholding 10% PIT on irregular income for resident individuals who do not sign labor contracts or sign labor contracts of less than 3 months, from 2 million VND per payment to 3 million VND per payment.
- Raising the threshold for exemption from tax finalization for income already subject to 10% withholding, from 10 million VND per year to 15 million VND per year.
2.3 Increasing the Cap on Meal Allowances (Mid-shift and Lunch)
According to the Draft Decree, mid-shift and lunch meal allowances are specifically identified as a benefit subject to tax consideration, with adjustments as follows:
- The cap is raised from 730,000 VND per person per month (under the previous regulation in Clause 4, Article 22 of Circular 26/2016/TT-BLĐTBXH, which was repealed by Circular No. 003/2025/TT-BNV) to 1.2 million VND per person per month for cash payments.
- In cases where enterprises organize mid-shift or lunch meals for employees (by directly cooking, purchasing meals, or providing meal vouchers), such expenses are not included in taxable personal income.
2.4 Increase in Maximum Deductible Contributions to Voluntary Pension Funds
The Draft proposes raising the maximum cap for supplementary pension insurance and life insurance contributions from 1 million VND to 3 million VND per person per month when determining taxable personal income.
2.5 Exclusion from Taxable Income of Severance and Job-loss Allowances (including excess amounts)
Taxpayers will receive greater support in cases of termination or job loss. If enterprises stipulate in their financial regulations, internal rules, labor contracts, or collective agreements that severance or job-loss allowances exceed the statutory levels under labor law, the actual payments above those levels will also not be included in the individual’s taxable income.
2.6 Exemption of Overtime, Night Work, and Work on Non-leave Days
Income from salaries and wages paid for night work, overtime, or work performed on non-leave days, in accordance with labor law, will be exempt from personal income tax. If payments exceed the statutory limits, the excess portion will be included in taxable personal income.
2.7 Adjustment of Taxable Income Thresholds for Certain Other Types of Income
The taxable threshold is raised from 10 million VND to 20 million VND per occurrence for certain types of income, including winnings, royalties, franchise income, inheritance, and gifts
2.8 Additional Deductions for Medical and Education Expenses
The Ministry of Finance has developed two options for adding deductions related to medical and education expenses of taxpayers and their dependents, provided that valid invoices and documents are available:
Option 1:
- Medical expenses: up to 20 million VND per year
- Education and training expenses: up to 21 million VND per year
Option 2:
- Medical expenses: up to 23 million VND per year
- Education and training expenses: up to 24 million VND per year
