How Is Personal Income Tax (PIT) Withheld from Salaries of Resident Individuals Under Employment Contracts of Three Months or More Under Decree No. 253/2026/ND-CP?
Pursuant to Clause 1, Article 50 of Decree No. 253/2026/ND-CP, resident individuals who enter into employment contracts of three (03) months or more, including those who have multiple employment contracts of three months or more with different employers, are subject to Personal Income Tax (PIT) withholding under the progressive tax rate schedule.
When paying employment income to a taxpayer, the income-paying organization or individual must withhold PIT and remit the withheld tax to the State budget based on:
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The individual’s monthly taxable income (for income paid directly or paid on behalf of the individual); and
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The progressive tax rate schedule prescribed in Article 9 of the Law on Personal Income Tax.
PIT Withholding in Other Cases
1. Resident Individuals Without an Employment Contract or With Contracts of Less Than Three Months
Organizations and individuals paying salaries, wages, remuneration, or other income to resident individuals without an employment contract or under an employment contract of less than three (03) months (including payments made after the employment contract has ended) must withhold PIT as follows:
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If the payment is VND 5 million or more per payment, PIT must be withheld at 10% of the gross income before payment.
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If the payment is less than VND 5 million per payment, the payer may still withhold PIT at 10% if requested by the individual.
2. Commitment for Temporary PIT Exemption
Where an individual’s income is subject to the 10% withholding rate, but the individual reasonably estimates that his or her total taxable income for the year, after family circumstance deductions, will not reach the taxable threshold, the individual may submit a written commitment (using the form prescribed in the tax administration guidance) to the income payer.
Based on this commitment:
- The income payer is temporarily not required to withhold PIT.
- The individual is fully responsible for the accuracy of the commitment.
- Any false declaration or fraudulent commitment will be handled in accordance with the Law on Tax Administration and other relevant laws.
At the end of the tax year, the income-paying organization must still prepare and submit to the tax authority a list of individuals whose income was not subject to PIT withholding based on such commitments, using the prescribed reporting form.
Resident Individuals with Employment Contracts of Three Months or More
For resident individuals who sign employment contracts of three (03) months or longer, the income-paying organization or individual must withhold PIT in accordance with the progressive tax rate schedule prescribed in Clause 1, Article 50 of Decree No. 253/2026/ND-CP.
This rule also applies to individuals who simultaneously sign employment contracts of three months or more with multiple employers.
Pursuant to Clause 3, Article 46 of Decree No. 253/2026/ND-CP, the taxable income date for employment income is determined as follows:
The time for determining taxable income from salaries and wages is the time when:
- The employer pays salaries or wages to the taxpayer; or
- The taxpayer receives the income,
including cash and non-cash benefits, allowances, subsidies, and other taxable income prescribed in Article 8 of Decree No. 253/2026/ND-CP, during the relevant tax period.
Accordingly, the taxable income date for PIT on salaries and wages is based on the actual payment or receipt of income, regardless of whether the income is paid in cash or provided in the form of benefits, allowances, subsidies, or other taxable income specified by law.
How Is the PIT Exemption for Overtime and Night Shift Wages Applied Under Decree No. 253/2026/ND-CP?
Pursuant to Article 26 of Decree No. 253/2026/ND-CP, Personal Income Tax (PIT) is exempt on wages and salaries paid for overtime work and night shift work performed at the workplace, provided that such work complies with the conditions and working hours prescribed by Vietnamese labor laws.
However, any portion of overtime or night shift wages that exceeds the statutory limits prescribed by labor regulations must be included in the employee’s taxable income for PIT purposes.
Employer’s Documentation Requirements
Organizations and enterprises paying employment income are required to prepare and maintain a detailed schedule clearly showing:
- The employee’s night shift working hours;
- The employee’s overtime working hours;
- The amount of wages paid for night work; and
- The amount of wages paid for overtime work.
This schedule must be retained by the employer and presented to the tax authority upon request.
Where No Separate Schedule Is Prepared
If a separate schedule is not prepared, the income-paying organization or enterprise is responsible for substantiating the exempt overtime and night shift wages through supporting documents, including:
- Payroll records;
- Timesheets or attendance records;
- Employment contracts; and
- Other lawful supporting documents as required by law.
This documentation serves as evidence that the PIT exemption has been applied in accordance with the provisions of Decree No. 253/2026/ND-CP.
