PIT Withholding in Vietnam and 7 Payroll Errors to Fix Before 2027

PIT withholding in Vietnam means the company calculates an employee’s tax, holds it back before paying salary, then declares and pays that amount to the State. Under Article 50 of Decree No. 253/2026/ND-CP, the amount withheld for a person with a contract of 3 months or more is based on monthly income subject to tax and the progressive schedule. Non-residents are taxed at 20%, while people without a contract or with a contract under 3 months usually have 10% withheld when a payment reaches VND 5 million or more.

This guide is for payroll accountants, HR teams and finance managers. It follows the steps of PIT withholding in Vietnam through one pay period, gives hypothetical examples, then covers withholding documents, quarterly returns and annual finalisation. The changes under the new law are explained in our separate guide to PIT law changes in Vietnam; this guide focuses on the monthly work. Sources were checked on 4 November 2026.

Who Must Handle PIT Withholding in Vietnam

Article 67(1) of Decree No. 253/2026/ND-CP requires organisations and individuals paying income to withhold tax and pay the withheld amount before paying income to the individual. This group includes organisations paying income to non-residents and Vietnamese parties that reimburse salary costs to a foreign party. That second point makes PIT withholding in Vietnam important for staff seconded from a parent company.

How PIT withholding in Vietnam works depends on residence status and contract type. The table below summarises the three main groups.

Group	Withholding method	Legal basis
Resident individual with a labour contract of 3 months or more	Progressive schedule on monthly income subject to tax, even when contracts of 3 months or more are signed in several places	Article 50(1) and (2), Decree No. 253/2026/ND-CP
Resident individual without a contract or with a contract under 3 months	10% of income before payment if the payment is VND 5 million or more; below this level, tax may be withheld when the individual asks	Article 50(2), Decree No. 253/2026/ND-CP
Non-resident individual	20% of salaries and wages received for work in Vietnam, wherever paid	Article 21, Law on Personal Income Tax No. 109/2025/QH15; Article 64, Decree No. 253/2026/ND-CP

The second group has one exception to PIT withholding in Vietnam. If a person has only income subject to 10% withholding and estimates that total income after family deductions will not reach the taxable level, they may give a commitment on the prescribed form so that the payer temporarily does not withhold. At year end, the payer must still send the tax authority a list of these people and their income. The individual is responsible for the commitment.

A wrong residence status makes the whole PIT withholding in Vietnam calculation wrong. Under Article 4 of the Decree, a resident is a person present in Vietnam for 183 days or more in a calendar year or in 12 consecutive months from the first day of presence, or who has a regular place of residence in the stated cases.

Those cases include total rental days under housing contracts of 183 days or more in the tax year, including hotels or housing rented by the company for the employee. For foreign staff, check again when a new contract is signed or when the person travels often.

Steps for PIT Withholding in Vietnam in One Pay Period

For a resident individual with a contract of 3 months or more, the calculation under Article 46(2) of the Decree has the steps below. The order is the one we suggest for PIT withholding in Vietnam on a payroll.

Step	What to do	Note
1. Total income	Add salary, allowances, bonuses, and cash and non-cash benefits paid in the month	The time of determination is when salary is paid or the taxpayer receives the income
2. Remove non-taxable or exempt items	Separate items under Article 8 of the Decree and exempt overtime pay	Keep a statement or supporting documents
3. Deduct insurance	Deduct compulsory insurance paid by the employee	Supplementary pension, voluntary pension and life insurance have a deduction limit of VND 3 million per month
4. Deduct family deductions	VND 15.5 million per month for the employee and VND 6.2 million per month for each registered dependant	The personal deduction is taken at only one income payer at a time
5. Apply the schedule	Calculate bracket by bracket on the 5-bracket schedule	Do not multiply the whole amount by one rate
6. Record and pay	Hold back the tax and pay the rest	Show it clearly on the payroll

The monthly schedule under Article 9 of Law No. 109/2025/QH15 is: up to VND 10 million at 5%; over VND 10 million to VND 30 million at 10%; over VND 30 million to VND 60 million at 20%; over VND 60 million to VND 100 million at 30%; over VND 100 million at 35%. The rules on salaries of resident individuals apply from the 2026 tax period under Article 29(2) of the Law.

On step 4, Article 48(1)(b) of the Decree allows a person who has not received the full personal deduction to receive all 12 months at finalisation. PIT withholding in Vietnam each month is therefore a provisional figure, and the final figure is set at annual finalisation.

For PIT withholding in Vietnam on a net salary, Article 46(4) has a separate conversion method. Our guide to net salary contracts and gross-up explains that part in detail.

Hypothetical Examples of PIT Withholding in Vietnam

The three hypothetical examples below use the same company in Ho Chi Minh City in November 2026. They show how PIT withholding in Vietnam differs by group.

Case	Assumed facts	Calculation	Tax withheld (VND million)
A. Resident, 12-month contract	Taxable income 60; compulsory insurance assumed at 6.3; one dependant	60 − 6.3 − 15.5 − 6.2 = 32 income subject to tax; 10 × 5% + 20 × 10% + 2 × 20%	2.90
B. Non-resident	Salary for work in Vietnam 60	60 × 20%	12.00
C. Collaborator without a labour contract	One-off payment 6	6 × 10%	0.60

At the same VND 60 million, PIT withholding in Vietnam in cases A and B differs widely. That is why residence status should be settled before payroll is run. These figures only illustrate the calculation and do not determine any person’s obligation.

Documents for PIT Withholding in Vietnam

The withholding organisation must issue a tax withholding document at the time of withholding, under Article 24(1), (2) and (3) of Decree No. 254/2026/ND-CP, except in the stated cases. The main practical points on PIT withholding in Vietnam documents are:

• People with contracts of 3 months or more: only one withholding document is issued in a tax year.
• People without a contract or with a contract under 3 months: one document for each withholding, or one document for several withholdings in the year if the individual asks.
• Individuals who authorise finalisation: the organisation does not need to issue a withholding document.
• The document shows both parties’ details, the income item, the payment time, total taxable income, compulsory insurance, charity, humanitarian and study-promotion contributions and the tax withheld, under Article 23(1) of the Decree.
• Electronic documents use a digital signature.

Employees who leave mid-year usually need this record of PIT withholding in Vietnam to finalise their own tax or to declare to a new workplace. Companies should add this step to the resignation process.

Quarterly Returns and Annual Finalisation After PIT Withholding in Vietnam

PIT withholding in Vietnam happens every pay period, but declaration need not be monthly. Article 22(1)(a) of Circular No. 89/2026/TT-BTC provides that organisations paying salaries and wages declare the tax withheld quarterly and finalise annually. The table below sets out the main deadlines.

Task	Deadline	Legal basis
Quarterly return for PIT withheld	Last day of the first month of the following quarter	Article 10(3), Decree No. 252/2026/ND-CP
Payment of self-declared tax	Last day of the deadline for filing the tax return	Article 14(1)(a), Law on Tax Administration
Annual finalisation by the income payer	Last day of the third month after the end of the tax period	Article 10(5)(a), Decree No. 252/2026/ND-CP

If a deadline falls on a day off, Article 3(7) of Decree No. 252/2026/ND-CP moves it to the next working day. For the 2026 period, the fourth-quarter deadline is 31 January 2027, a Sunday, so it moves to 1 February 2027. The income payer’s annual finalisation deadline is 31 March 2027.

Late payment carries a charge of 0.03% per day under Article 16(2)(a) of the Law on Tax Administration. Amounts held back through PIT withholding in Vietnam should therefore be kept separate in the cash flow plan.

At finalisation, a person with one source of income from a contract of 3 months or more at one organisation, and still working there at the time of finalisation, may authorise that organisation, under Article 51(2) of Decree No. 253/2026/ND-CP. A person who wants to apply medical or education deductions must finalise their own tax under Article 51(3).

For 2026, Article 70(2) has a transitional rule: amounts declared under the old texts before the Decree took effect are not refiled in monthly or quarterly returns but are adjusted in the annual finalisation.

Reconciliation After Each PIT Withholding in Vietnam Run

We suggest three short reconciliations after each run. This is good management practice rather than a specific legal rule, and it keeps PIT withholding in Vietnam easy to explain at year end.

• The total tax column on the payroll against the balance of the PIT payable account in the books.
• The total for the three months of the quarter against the quarterly return.
• The staff list on the payroll against the list of registered dependants, tax codes and residence status.

If an error in PIT withholding in Vietnam is found after filing, Article 12(5) of the Law on Tax Administration allows a supplementary return within 5 years from the filing deadline of the period with the error, subject to limits for periods under inspection or audit.

7 Mistakes to Avoid in PIT Withholding in Vietnam

In our professional view, these are the errors in PIT withholding in Vietnam most worth checking.

• Using the progressive schedule for a non-resident, or 20% for someone who has become a resident.
• Multiplying all income subject to tax by the highest rate instead of calculating by bracket.
• Forgetting non-cash benefits, such as rent paid by the company.
• Deducting for a dependant who has not been registered.
• Not separating overtime pay, or exempting it without a statement or supporting documents.
• Withholding 10% from someone who already has a contract of 3 months or more.
• Not withholding on salary costs reimbursed to a foreign party for seconded staff.

A Monthly Checklist for PIT Withholding in Vietnam

In our professional view, a fixed routine prevents most of these errors. The checklist below is a practical order for PIT withholding in Vietnam, not a legal requirement.

• Before the run: confirm new joiners, leavers, contract types and residence status.
• Before the run: collect overtime statements and any new dependant registrations.
• During the run: separate exempt items, then apply deductions and the schedule by bracket.
• During the run: have a second person review any employee whose tax moved sharply from last month.
• After the run: post the tax to the PIT payable account and complete the three reconciliations above.
• At quarter end: agree the three months to the quarterly return before filing.

FAQ on PIT Withholding in Vietnam

Is a return needed if no one reaches the taxable level? Article 11(6) of Decree No. 252/2026/ND-CP generally removes the return for a quarter with no PIT withholding in Vietnam, with exceptions for the last quarter of the year in the stated cases.

How does PIT withholding in Vietnam treat a year-end bonus? Bonuses count as income from salaries and wages under Article 8(2)(i) of Decree No. 253/2026/ND-CP, so the bonus is added to the income of the month it is paid for withholding.

How does PIT withholding in Vietnam work if an employee has two companies? If the person has contracts of 3 months or more at both, each company withholds under the progressive schedule. The person chooses only one place for the personal deduction at a time.

Does PIT withholding in Vietnam apply during probation? It depends on the contract type and the payment level. Check the actual contract before choosing the method.

What if PIT withholding in Vietnam did not happen during the year? Article 67(2) of the Decree covers the case where the individual determines at year end that tax is payable and declares and pays annually. The responsibility of the income payer still needs separate review.

How Pham Consult Supports PIT Withholding in Vietnam

Pham Consult provides payroll services in Ho Chi Minh City. If you want to check PIT withholding in Vietnam on your current payroll, especially with both Vietnamese and foreign staff, ask for a specific scope. The actual scope is confirmed in the service contract.

To start, request a payroll review or call +84 909 660 105. Please tell us your headcount, the number of foreign staff and the software or spreadsheet you use.

Legal references checked on 5 November 2026. This article is for general information only and does not constitute legal, tax or accounting advice; regulations may change after the date of publication, so please seek professional advice for your specific situation before making any decision.