OFFICIAL LETTERS GUIDING THE WITHHOLDING OF PERSONAL INCOME TAX (“PIT”) ON PAYMENTS MADE AFTER TERMINATION OF THE LABOUR CONTRACT

Following the effect of Decree 253/2026/NĐ-CP detailing a number of articles of, and measures for the organization and implementation of, the Law on Personal Income Tax, a number of local tax authorities have issued guidance on the 10% PIT withholding applicable to the amounts paid to employees after termination of the labour contract.

The guidance is not yet consistent as to the tax base: same determine it on the total income paid, while others determine it on taxable income after excluding tax-exempt amounts, compulsory insurance and deductions as prescribed. Specifically:

The official letters reflect differing interpretations and do not clearly set out the basis for the 10% PIT withholding. Pending unified guidance from the central tax authority, enterprises should refer to the guidance of their directly managing tax authority and retain complete documentation and grounds for application in order to mitigate compliance risk.