1. Who Must Pay Personal Income Tax?

According to the law, PIT applies to both resident and non-resident individuals in Vietnam, with differences in the scope of taxable income.

• Individual residing in Vietnam: Are individuals who are present in Vietnam for 183 days or more in a calendar year or have a permanent residence. They must pay tax on all income, regardless of source, including salary, business, investment, etc.
• Individuals not residing in Vietnam: An individual who does not meet the residency criteria, is only required to pay tax on income generated in Vietnam, such as income from employment or business here.

The main legal bases include the Law on Tax Administration 2019, Decree 126/2020/ND-CP, and Circular 80/2021/TT-BTC, most recently updated in 2025, reflecting current regulations. However, it should be noted that Law 56/2024/QH15, effective from 1/1/2025, has amended some provisions related to PIT, and you should check the latest updates from the General Department of Taxation.

2. How to Calculate Personal Income Tax

How personal income tax is calculated depends on the type of income and residency status. Here are detailed instructions:

2.1. For Individuals residing in Vietnam

Global Income: Individuals residing in Vietnam must pay tax on all income, regardless of where it is paid or received.

Income from salary, employment: Individuals residing in Vietnam are subject to a progressive tax schedule, with tax rates ranging from 5% to 35%:

Unearned income

Unearned income, such as interest, dividends, stock sales, capital gains, and real estate sales, has specific tax rates:

In addition, business income has specific tax rates depending on the type, as follows:

Important note, individuals with business income under 100 million VND per year will not have to pay personal income tax on this income, an important point for small self-employed individuals.

Before applying the tax schedule, taxable income must be calculated by subtracting deductions from gross income. Deductions include:

• Personal deduction: 11 million VND/month.
• Dependent deduction: 4,4 million VND/person/month, if registered.
• Compulsory insurance contributions: Social insurance (8%), health insurance (1,5%), unemployment insurance (1%) are deducted from salary, not subject to tax.
• Other items: Charitable contributions, voluntary pension funds, etc.

Công thức tinh:

Taxable Income = Gross Income − VND 11 million − (Number of Dependents × VND 4,4 million) − Other Deductions

For example:

Suppose you have a gross salary of 20 million VND/month, no dependents, and pay a total of 2,1 million VND in insurance.

• Taxable income = 20 – 11 – 2,1 = 6,9 million VND.
• Apply tax schedule:
  • First 5 million: 5% = 250.000 VND
  • Next 1,9 million: 10% = 190.000 VND
• Total tax: 250.000 + 190.000 = 440.000 VND.

Accordingly, a notable detail is that there are non-taxable items, such as bank deposit interest, gifts between relatives, pensions from the Social Insurance Fund, which help reduce tax obligations.

2.2. For Individuals not residing in Vietnam

Income from employment

Non-resident individuals in Vietnam are subject to a flat tax of 20% on income from employment in Vietnam, with no deductions.

For example: If income is 20 million VND/month, tax = 20% * 20 = 4 million VND.

Unearned income

Unearned income, such as business, interest, dividends, sale of shares, etc., is taxed at the same rates as resident individuals, for example:

• Business income: 1% to 5%.
• Non-bank interest and dividends: 5%.
• Stock sale: 0,1% of revenue.
• Real estate sales: 2% of sales.

Double Taxation Agreement (DTA)

For individuals who are not residents of Vietnam, it is necessary to consider the DTA agreements that Vietnam has signed with other countries, such as the US, Japan, or EU countries, to avoid double taxation on the same income. For example, if an American works in Vietnam, the DTA agreement between Vietnam and the US may reduce taxes in Vietnam on certain types of income.

3. How Much Salary Must Be Taxed?

The taxable salary threshold depends on deductions.

• For single people with no dependents: If the gross salary is over 11 million VND/month (after deducting insurance), there will be positive taxable income, resulting in having to pay tax.
• For people with dependents: The threshold increases by VND 4,4 million for each dependent. For example, with 1 dependent and insurance contributions of VND 2,1 million, the threshold is VND 17,5 million.

Careful calculation is needed, as the threshold varies depending on individual circumstances, and this is a point to keep in mind to avoid confusion.

4. Personal Income Tax Settlement Process

Personal income tax settlement is the step of comparing taxes paid during the year with actual obligations, which can be done by organizations or individuals.

4.1. Who Must Make Settlement?

• The payroll organization must make settlements on behalf of authorized employees, according to Article 8, Decree 126/2020/ND-CP.
• Individuals with multiple sources of income, requesting a tax refund, or not authorizing an organization, must settle the matter themselves.

4.2. Term

• Organization: No later than March 31 of the following calendar year.
• Individual: By April 30 at the latest, if it falls on a holiday, it will be moved to the next working day (for example, in 4, it will be moved to May 2024).

4.3. Online Settlement

Individuals can make their own payments through the system at canhan.gdt.gov.vn, with the steps:

1. Log in with tax code.
2. Select “Tax settlement” and “Online declaration”.
3. Fill in information according to form 02/QTT-TNCN, according to Circular 80/2021/TT-BTC.
4. Submit the declaration, enter the OTP code to confirm.
5. Attach supporting documents such as tax deduction certificates.

Tax refund processing time is from 6-40 days, depending on the case (Article 75, Tax Administration Law 2019). Penalty for not submitting documents if tax debt: from 2-25 million VND for individuals, 4-50 million VND for organizations (Decree 125/2020/ND-CP).

5. Conclusion

Understanding how to calculate and settle personal income tax helps you comply with the law and optimize your tax obligations. This article provides detailed guidance, but note that Law 56/2024/QH15, effective from 1/1/2025, may have amended some regulations. 

So please check the latest updates from the General Department of Taxation or if you need further assistance or have questions to be answered, Contact Vieter tax experts today for quick, effective and completely free advice!