Taxable Allowances in Vietnam and How to Avoid Payroll Errors in 2026

Taxable allowances in Vietnam are the general rule, not the exception: under Article 8 of Decree No. 253/2026/ND-CP dated 30 June 2026 of the Government detailing a number of articles of, and measures to organise and guide the implementation of, the Law on Personal Income Tax, allowances, subsidies and benefits received by employees are all included in income from salaries and wages, except for the items listed.

Some items have a cap, such as a mid-shift meal allowance of VND 1.2 million per person per month, or rent paid by the company on the employee’s behalf, which is counted up to 15% of taxable income at the employer. For taxable allowances in Vietnam, the name on the payroll does not decide the outcome; the nature of the payment and the supporting documents do.

This article on taxable allowances in Vietnam is for HR, payroll accountants and business owners designing benefit packages at private companies, including foreign-invested companies. It classifies common items, has a separate section for foreign employees and covers the effect on the salary used for social insurance contributions. The scope is salaries and wages of employees at companies. Sources were checked on 04/11/2026.

General Principle of Taxable Allowances in Vietnam

Clause 3, Article 8 of Decree No. 253/2026/ND-CP states that allowances, subsidies and other income are included in income, except for a specific list. This list is mainly items set by law, such as subsidies for people with meritorious services, allowances for hazardous or dangerous work, subsidies under social insurance law and severance allowance. The last paragraph of this clause requires these items to be set by a competent state authority, and any amount received above the prescribed level must be included in taxable income, except for the exception in point h.

This means most allowances set by the company itself, such as responsibility allowance, attendance allowance or internal seniority allowance, are not on the list and are treated as taxable allowances in Vietnam. Conversely, some items are not allowances in the salary sense but costs of doing the work, and are handled under separate rules in Clauses 2 and 4 of Article 8.

Exempt income is a different group from taxable allowances in Vietnam. Clause 8, Article 4 of the Law on Personal Income Tax No. 109/2025/QH15 dated 10 December 2025 of the National Assembly exempts pay for night work and overtime, and pay for untaken annual leave as prescribed. Clause 3, Article 26 of Decree No. 253/2026/ND-CP states that any part above the prescribed level is still included in taxable income.

Common Items and Taxable Allowances in Vietnam

The table below classifies taxable allowances in Vietnam for employees of companies. All references are to Article 8 of Decree No. 253/2026/ND-CP unless stated otherwise.

Item	PIT treatment	Legal basis
Allowances set by the company (responsibility, attendance, concurrent duties)	Included in taxable income	Clause 3
Bonuses	Included in taxable income, including bonuses in securities, except the bonuses in point a, Clause 4	Point i, Clause 2
Mid-shift meal allowance paid in cash	The part above VND 1.2 million per person per month is included in taxable income; applies from 1 July 2026	Point g, Clause 2; point b, Clause 1, Article 69 of Decree No. 253/2026/ND-CP
Meals organised by the company, purchased meals, meal vouchers	Not included in taxable income	Point g, Clause 2
Lump-sum allowances for stationery, business travel, phone, uniforms	The part above the lump sum consistent with deductible expenses for corporate income tax is included in taxable income	Point dd, Clause 2
Business trips or assignments with a decision or regulation and with invoices and documents	Not included in taxable income	Point k, Clause 4
Shuttle transport between home and work under the employer’s regulations	Not included in taxable income	Point c, Clause 4
Rent paid by the company on the employee’s behalf	Counted at the actual amount paid, up to 15% of total taxable income at the employer excluding the rent	Point h, Clause 2
Housing built by the company for employees working there	Not included in taxable income	Point h, Clause 2
Non-compulsory health insurance with no accumulated premium	Not included in taxable income	Point h, Clause 4
Supplementary pension, voluntary pension and life insurance paid by the company	Included in income; contributions are deductible up to a total of VND 3 million per month as prescribed	Point e, Clause 2; point a, Clause 2, Article 46 of Decree No. 253/2026/ND-CP
Memberships, health, sports and entertainment services in an individual’s name	Included in taxable income; shared use not in a named individual’s name is not included	Point d, Clause 2
Job-related training paid by the company	Not included in taxable income	Point i, Clause 4
Funeral and wedding support under internal regulations, within the amount deductible for corporate income tax	Not included in taxable income	Point m, Clause 4
Severance and job-loss allowance	Not included, including any part above the statutory level if provided in internal regulations, contracts or collective agreements	Point h, Clause 3

When identifying taxable allowances in Vietnam, some lines depend on documents or internal regulations. An item without the required decision, regulation or invoice may not be treated as in the table above. Each item should therefore be set out in the contract or internal regulations before it goes on the payroll.

On lump sums, Decree No. 320/2025/ND-CP dated 15 December 2025 of the Government detailing a number of articles of, and measures to organise and guide the implementation of, the Law on Corporate Income Tax caps cash uniform spending at VND 5 million per person per year under point dd, Clause 8, Article 10, and allows lump-sum travel, accommodation and business-trip allowances if they follow the financial or internal regulations under point h, Clause 8, Article 10. Decree No. 320/2025/ND-CP does not set separate levels for stationery and phone.

Taxable Allowances in Vietnam for Foreign Employees

Benefit packages for foreign employees include many specific items when considering taxable allowances in Vietnam. The table below lists the main items in Decree No. 253/2026/ND-CP.

Item	Treatment	Legal basis
Rent, electricity, water and related services paid by the company on the employee’s behalf	Counted at the actual amount paid, up to 15% of total taxable income at the employer excluding these items	Point h, Clause 2, Article 8
Home-leave air ticket once a year	Not included, for the route between Vietnam and the country of nationality or where the family lives, and back	Point e, Clause 4, Article 8
School fees for children from preschool to upper secondary school in Vietnam	Not included if paid by the company on the employee’s behalf	Point g, Clause 4, Article 8
One-off relocation allowance	Not included, at the level stated in the decision, document, regulation, contract or collective agreement	Point l, Clause 3, Article 8
Tax advisory and tax filing services for a named individual	Included in taxable income	Point k, Clause 2, Article 8
Domestic helpers and family drivers	Included in taxable income	Point k, Clause 2, Article 8

For net salary contracts, taxable allowances in Vietnam and items paid by the company on the employee’s behalf go into the gross-up calculation under Clause 4, Article 46 of Decree No. 253/2026/ND-CP, where rent is also subject to the 15% limit. Our article on net salary contracts and gross-up explains this calculation.

Hypothetical Example of Taxable Allowances in Vietnam

Hypothetical example: in one month, a foreign employee in Ho Chi Minh City has a salary of VND 90 million, a responsibility allowance of VND 8 million, a cash meal allowance of VND 1.5 million, and rent of VND 20 million paid by the company on the employee’s behalf.

Item	Amount received (VND million)	Amount included in taxable income (VND million)
Salary	90.0	90.0
Responsibility allowance	8.0	8.0
Meal allowance: part above 1.2	1.5	0.3
Income excluding rent	99.5	98.3
Rent: up to 15% × 98.3	20.0	14.745
Total taxable income	119.5	113.045

The example only illustrates how to classify taxable allowances in Vietnam. The table is monthly for readability; at finalisation, the full-year figures and the rules on items paid on the employee’s behalf must be considered.

Effect of Taxable Allowances in Vietnam on Social Insurance

Taxable allowances in Vietnam and the salary used for social insurance contributions are two different questions. An item may be taxable but not subject to insurance contributions, or the reverse.

Under Clause 1, Article 7 of Decree No. 158/2025/ND-CP dated 25 June 2025 of the Government detailing and guiding a number of articles of the Law on Social Insurance regarding compulsory social insurance, the salary used for compulsory social insurance contributions is the monthly salary, made up of three parts.

Component	Content	Excludes
Salary level	Salary by job or title under the salary scale or table, agreed in the labour contract	Not applicable
Salary allowances	Amounts compensating for working conditions, job complexity, living conditions or labour attraction, agreed in the contract	Amounts that depend on or vary with productivity, work process and work quality
Other additional amounts	Amounts with a specific value determined together with the salary level, agreed in the contract and paid regularly and stably in each pay period	Amounts that depend on or vary with productivity, work process and work quality

Naming an item an allowance therefore does not by itself take it out of the contribution base. When designing a pay package, review each item from both angles: whether it is among taxable allowances in Vietnam, and whether it is part of the salary used for social insurance contributions. For foreign employees, social insurance participation must be determined separately under the applicable rules.

From 1 January 2027, the salary level also needs to be checked against the new minimum wage. Clause 1, Article 4 of Decree No. 399/2026/ND-CP dated 2 November 2026 of the Government on the minimum wage for employees working under labour contracts requires the salary by job or title of an employee who works full normal hours and meets the work norm to be no lower than the monthly minimum wage.

In our professional view, the review should look at the salary level line first, without adding allowances to reach the minimum.

Organising Taxable Allowances in Vietnam on the Payroll

In our professional view, a payroll that shows taxable allowances in Vietnam clearly should have:

• A separate code for each item, not grouped as other allowances.
• Three attributes for each code: taxable or not, the cap if any, and whether it is included in insurance contributions.
• An internal basis for each code: a contract clause, financial regulation or collective agreement.
• A list of documents required for items that depend on invoices.
• A review whenever a new benefits policy is issued.

From 1 July 2026, the meal allowance should have its own code to identify the part above VND 1.2 million. If the company pays the meal allowance together with other allowances in one line, this part of taxable allowances in Vietnam is hard to support at finalisation.

6 Mistakes to Avoid With Taxable Allowances in Vietnam

In our professional view, these are the mistakes on taxable allowances in Vietnam most worth checking.

• Treating an allowance set by the company as non-taxable just because it is called an allowance.
• Applying the meal threshold to meals organised by the company, or ignoring the threshold when paid in cash.
• Not including rent paid on the employee’s behalf in income, or including all of it without applying the 15% limit.
• Assuming that a tax-exempt item is also exempt from insurance contributions.
• Paying lump sums for business travel or phone without checking the lump-sum level.
• Having no internal regulation or contract that records a subsidy that requires one.

FAQ on Taxable Allowances in Vietnam

Is a fuel allowance taxable? Decree No. 253/2026/ND-CP has no separate line for this name. A lump sum for work purposes should be reviewed under point dd, Clause 2, Article 8, and business travel with documents under point k, Clause 4. If it is a fixed monthly amount not linked to specific work, it should be treated as one of the taxable allowances in Vietnam.

Does the 15% limit apply to a housing allowance paid in cash with salary? Point h, Clause 2, Article 8 of Decree No. 253/2026/ND-CP covers rent paid by the employer on the employee’s behalf. An amount paid directly in cash should be reviewed on the actual documents, and the 15% limit should not be applied by default.

Are Tet gifts included? Point k, Clause 2, Article 8 of Decree No. 253/2026/ND-CP lists other benefits, including spending on holidays and festivals. Tet gifts therefore need to be included in income, using the conversion in Article 17 of Decree No. 253/2026/ND-CP if they are not in cash.

Is severance above the statutory level taxable? Under point h, Clause 3, Article 8 of Decree No. 253/2026/ND-CP, the part above the statutory level is not included in income if it is provided in the employer’s internal regulations, contracts or collective agreements.

Do these rules differ by province? No. The rules on taxable allowances in Vietnam apply nationwide.

How Pham Consult Supports Reviews of Taxable Allowances in Vietnam

Pham Consult provides payroll services in Ho Chi Minh City. If your company is building a benefits package or wants to check taxable allowances in Vietnam on its current payroll, ask for a specific scope. The actual scope is confirmed in the service contract.

To start a review of taxable allowances in Vietnam, request a payroll review or call +84 909 660 105. Please tell us the list of items you currently pay, whether you have foreign employees and your current pay regulations.

Legal sources were checked on 04/11/2026. 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.