DECREE NO. 253/2026/ND-CP: KEY HIGHLIGHTS ON PERSONAL INCOME TAX EFFECTIVE FROM 1 JULY 2026

On 30 June 2026, the Government issued Decree No. 253/2026/ND-CP ("Decree 253"), detailing and providing guidance on the implementation of a number of provisions of the Law on Personal Income Tax ("2025 PIT Law"). By providing detailed guidance on taxable income, tax-exempt income, deductible expenses, as well as the withholding and tax finalization obligations of taxpayers and income-paying organizations, Decree 253 has an immediate impact on companies' compensation and benefits policies, payroll administration, and tax withholding obligations from the tax period commencing on 1 July 2026.

Below, ATA Legal Services summarizes and highlights several notable changes introduced under Decree 253.

1. Expansion of Tax-Exempt Income

Compared with the previous regulations, the 2025 PIT Law and Decree 253 amend the provisions governing tax-exempt employment income as follows:

In addition, Decree 253 provides PIT exemptions for several other types of income and benefits, including:

• Employment income earned by qualified high-tech and digital technology professionals working in eligible projects or priority sectors (PIT exemption for five (05) years);
• Funeral and wedding benefits provided to employees;
• Non-salary benefits funded by trade union finances;
• Income derived from the first transfer of carbon credits and interest from green bonds;
• Interest income from bonds, deposits in Vietnamese Dong, gold and foreign currencies maintained with credit institutions;
• Income from the transfer of open-ended fund certificates held for at least two (02) years; and
• Capital investment income from innovative start-up enterprises and venture capital funds.

2. New Rules on Personal Income Tax Applicable to Real Estate

2.1. Narrower Scope of PIT Exemption for Transfers of Sole Residential Property

Under Decree 253, income derived from the transfer of an individual's sole residential house, residential land use right ("LUR"), and residential land-attached assets is exempt from PIT only if all of the following conditions are satisfied:

• The transferor owns only one residential house or residential LUR in Vietnam;
• The exemption does not apply to future-formed properties;
• If, at the time of transfer, the individual already owns one residential house or residential LUR and additionally owns a future-formed property, the exemption is unavailable;
• Where the residential property or residential LUR is co-owned, only the co-owner satisfying the sole-property condition is entitled to the exemption; and
• No exemption is available where only part of the residential house or residential LUR is transferred.

2.2. Certain Real Estate Authorization Arrangements Subject to PIT

Decree 253 provides that where a power of attorney grants the attorney-in-fact rights equivalent to ownership of the real estate, such authorization will be treated as a real estate transfer for PIT purposes (subject to PIT at 2% of the transfer price or the land price prescribed by the competent authority, as applicable).

Accordingly:

• Where the attorney-in-fact is granted full authority to execute the sale and receive the transfer proceeds, the principal may be required to pay PIT in relation to both the real estate transfer and the authorization transaction; and
• Where the authorization is limited to filing administrative documents for a service fee, the attorney-in-fact must declare and pay PIT on such service income.

3. New Tax Deductions

(a) Clarification of Dependent Deduction Rules

(b) Additional Personal Deductions

Resident taxpayers may deduct the following expenses incurred for themselves and their dependents from taxable employment income:

• Medical examination and treatment expenses incurred at domestic healthcare establishments for services covered by the national health insurance scheme, subject to an annual cap of VND 23 million; and
• Education and training expenses incurred at domestic educational institutions, subject to an annual cap of VND 24 million.

(c) Supplementary Pension, Voluntary Pension and Life Insurance

Previously, employer-paid life insurance premiums (excluding supplementary pension insurance and voluntary pension insurance) without an investment or savings component were not treated as taxable employment income.

Under Decree 253, where an employee participates in supplementary pension insurance, voluntary pension insurance and life insurance, the maximum deductible amount is VND 3 million per month, calculated based on the aggregate premiums contributed by both the employer and the employee.

4. Changes to PIT Declaration, Withholding and Finalization for Employment Income

Decree 253 introduces several notable changes, including:

• Increasing the withholding threshold applicable to individuals who do not enter into labor contracts or who enter into labor contracts with a term of less than three (03) months to VND 5 million;
• For payments exceeding VND 5 million per payment, a 10% PIT withholding applies at source. This rule also applies where income is paid after the employee has ceased employment;
• Where an individual derives only such income and reasonably estimates that his/her annual taxable income will remain below the PIT threshold after applicable deductions, the individual may submit a written commitment to the income payer to temporarily avoid withholding. The individual remains responsible for the accuracy of such commitment;
• For payments below VND 5 million per payment, withholding is required only upon the individual's request;
• At the end of the tax year, income-paying organizations must submit to the tax authority a list of individuals whose income did not reach the withholding threshold together with details of such income;
• Simplifying supporting documents for charitable, humanitarian and educational contributions. Taxpayers are now only required to provide a copy of either:
  • (i) a lawful receipt issued by the receiving organization, institution or fund; or
  • (ii) a non-cash payment document issued by a credit institution;
• Individuals receiving occasional income that has been subject to 10% withholding at source are exempt from annual PIT finalization in respect of such income where their average occasional income does not exceed VND 15 million per month; and
• Clarifying that where Vietnamese organizations or individuals reimburse overseas entities for salary and wage expenses, the Vietnamese party is responsible for withholding, declaring and remitting PIT in accordance with the applicable regulations.

5. Separate Tax Rate for Digital Products and Digital Content Services

Decree 253 generally retains the existing turnover-based PIT rates applicable to resident individuals carrying on business activities, including:

• Distribution and supply of goods: 0.5%;
• Services and construction activities not involving the supply of materials: 2%;
• Leasing of assets, insurance agency services, lottery agency services and multi-level marketing: 5%.

Notably, Decree 253 establishes a separate business category for the provision of digital information content products and services, including entertainment content, online games, digital films, digital images, digital music and digital advertising, which are subject to a 5% PIT rate.

In light of the above significant changes, ATA recommends that businesses proactively monitor and update the latest PIT regulations and implementing guidance issued by the competent authorities to ensure timely compliance and mitigate potential legal risks.

Businesses should also promptly update their payroll systems to reflect the new thresholds and review internal policies, including financial regulations, internal rules and collective labor agreements, particularly those relating to employee welfare, severance benefits and job-loss allowances exceeding statutory requirements.

Decree 253 takes effect on 1 July 2026.

The provisions governing business income and employment income of resident individuals apply from the 2026 tax year, except for the new regulations on mid-shift meal and lunch benefits, which take effect from 1 July 2026.