The concept of who is liable for personal income tax is central to all regulations regarding individuals' tax obligations in Vietnam. Accurately identifying who is subject to tax, who is exempt, and when to file tax returns will help employees, investors, and business owners proactively comply with the law and optimize their legitimate income. This article provides a comprehensive update on the subjects liable for personal income tax according to the latest regulations in 2025, along with guidance on tax calculation, taxable income levels, and common cases where tax is not payable.
The concept and legal basis regarding the subjects liable to personal income tax.
Personal income tax (PIT) is a direct tax levied on the income of resident or non-resident individuals who generate taxable income in Vietnam. According to the Personal Income Tax Law No. 04/2007/QH12, amended by Law No. 26/2012/QH13, all individuals with taxable income are obligated to pay tax, except in cases of exemption.
The legal basis includes:
- Current personal income tax law and its amendments and supplements;
- Circular 111/2013/TT-BTC provides detailed guidance on the calculation, deduction, and settlement of taxes.;
- Decree 126/2020/ND-CP on tax management;
- Guidelines from the General Department of Taxation and the Ministry of Finance.
Classification of personal income tax payers according to the latest regulations of 2025.
According to regulations, the subjects liable for personal income tax include:
1. Individuals residing in Vietnam
- Present in Vietnam for 183 days or more within a 12-month period;
- Or have a permanent residence (household registration or long-term rental);
- Tax obligations: subject to taxation on total global income.
2. Non-resident individuals
- Staying in Vietnam for less than 183 days and without a permanent residence;
- Only income earned in Vietnam is subject to tax;
- A fixed tax rate of 20% is applied (not according to the progressive tax rate schedule).
3. Income payment organization
- Responsible for deducting, declaring, and paying personal income tax on behalf of employees;
- Provide tax deduction certificates and income verification documents for individuals to settle their tax obligations.
| Criteria | Individuals residing in Vietnam | Non-resident individuals |
|---|---|---|
| Time spent in Vietnam | ≥183 days/year | <183 days/year |
| Taxable income range | Global | Only in Vietnam |
| Applicable tax rate | Progressive rate schedule (5% – 35%) | Fixed 20% |
| Personal deductions | Have | Are not |
Is income from salaries and wages subject to personal income tax?
The answer is yes. According to Article 3 of the Personal Income Tax Law, salaries and wages are the most common types of income subject to tax. This is why the majority of employees in businesses and organizations have their personal income tax withheld at source by the paying organization.
Income from salaries and wages includes:
- Fixed salary, bonuses, allowances, overtime pay;
- Other benefits include: company-provided housing, telephone expenses, and excess lunch allowance.;
- Severance pay/employment benefits exceeding the prescribed limits.
When do I have to pay personal income tax?
The amount of personal income tax payable depends on the income level after deducting allowances:
Personal allowance deductions in 2025:
- Taxpayer's own income: 11 million VND/month;
- Each dependent: 4.4 million VND/month.
Example: A single person earning 15 million VND/month → taxable income = 15 – 11 = 4 million VND → starts paying taxes.
If there is one dependent → tax threshold: 11 + 4.4 = 15.4 million → income below this level is not subject to tax.
Who is exempt from paying personal income tax?
Not every individual is required to pay taxes. Some individuals are not subject to personal income tax, including:
Individuals whose income is below the deduction threshold
- Workers earning less than 11 million VND/month (excluding dependents);
- People who have dependents but whose total income is still below the deduction threshold.
Income not subject to tax (Article 4, Personal Income Tax Law)
- Retirement benefits, work-related accident benefits, death benefits;
- Scholarships funded by the state budget;
- Money from remittances, humanitarian aid, and social insurance;
- Income from the sale of a sole residence (if eligible for exemption).
Which of the following is NOT a taxpayer?
- Students do not have an income;
- Retirees do not generate new income;
- Foreign residents who do not have income in Vietnam.
How to calculate personal income tax according to the progressive tax rate schedule.
Income from salaries and wages of resident individuals is calculated according to a progressive tax rate schedule:
| Level | Taxable income/month | Tax rate |
|---|---|---|
| 1 | Up to 5 million | 5% |
| 2 | Over 5-10 million | 10% |
| 3 | Over 10 – 18 million | 15% |
| 4 | Over 18-32 million | 20% |
| 5 | Over 32 – 52 million | 25% |
| 6 | Over 52 – 80 million | 30% |
| 7 | Over 80 million | 35% |
General formula: Personal income tax = (Total income – Deductions) x Corresponding tax rate
Here's a real-world example:
A single worker earns 25 million VND per month. After applying a personal deduction of 11 million VND, the remaining taxable income is 14 million VND.
This portion of income will be taxed according to the following progressive tax rate:
-
The first 5 million × 5% = 250,000 VND
-
The next 5 million × 10% = 500,000 VND
-
The remaining 4 million × 15% = 600,000 VND
Total monthly personal income tax payable: 1,350,000 VND
Individuals eligible for exemption or reduction of personal income tax.
According to Article 5 Circular 111/2013/TT-BTC, Tax-exempt or reduced items include:
Tax-exempt:
- Transfer of a single (eligible) residence;
- Individuals affected by natural disasters, serious illnesses, or accidents;
- The employer pays for the tuition and insurance portion of the costs.
Tax reduction:
- Individuals in temporary difficult circumstances;
- Small-scale businesses pay taxes on a fixed rate.;
- Individuals who receive special government support as per administrative decisions.
Some special cases are easily confusing.
Many individuals easily misunderstand personal income tax obligations in certain specific situations. For example, students working part-time who earn less than the tax deduction threshold are not required to pay tax, but still need to monitor their total income for year-end tax settlement if additional income is generated. In the case of Tet bonuses, this amount is included in the income of the month the bonus is received, which may temporarily place the individual in a higher tax bracket. For individuals with income from multiple sources, the tax settlement obligation is not entirely transferred to the paying organization; the individual must consolidate and declare their income. Foreigners working less than 183 days in Vietnam, even with an employment contract, are still considered non-residents and are subject to the fixed tax rate 20% instead of the progressive tax rate.
Conclusion: Identifying the correct individual income tax payers is crucial to avoiding risks.
Understanding and correctly identifying the individual taxpayer is a prerequisite for fulfilling tax obligations correctly and avoiding administrative penalties. From 2025 onwards, with the development of electronic invoicing and tax identification systems, tax declaration, payment, and settlement will require greater proactiveness and accuracy from taxpayers.
Recommendation:
- Find the exact regulations at https://luatvietnam.net;
- Keep records of deductions, employment contracts, and supporting documents;
- Consult a tax expert if you have multiple sources of income or international involvement.
The above article is for informational purposes only and does not replace personalized legal advice. To determine your tax obligations, consult a professional or your direct tax authority.
