Foreign experts working in Vietnam are subject to an entirely new personal income tax (PIT) regime from 01/7/2026: the PIT Law 109/2025/QH15 (passed 10/12/2025, effective 01/7/2026; salary and business-income provisions for resident individuals apply from tax year 2026 — Articles 29.1, 29.2; Law 04/2007/QH12 expired at the same time — Article 29.3), with guiding Decree 253/2026/ND-CP (30/6/2026, effective 01/7/2026, replacing Decree 65/2013) and Circular 87/2026/TT-BTC (30/6/2026, effective 01/7/2026, replacing Circular 111/2013). This article covers PIT only — not visa or work-permit procedures.
Note on legal currency: Law 09/2026/QH16 (24/4/2026, effective 24/4/2026) amended several articles of four tax laws, including the PIT Law. Cross-check the latest consolidated text (VBHN) of the PIT Law before citing article numbers of Law 109/2025.
1. The first and most important step: resident or non-resident?
Every PIT calculation for a foreign expert starts with the residency test in Article 2.2 and 2.3 of Law 109/2025. A resident individual is one who: is present in Vietnam for 183 days or more in a calendar year or in 12 consecutive months from the first date of arrival; or has a regular residence in Vietnam (permanent registration or a fixed-term house lease). Failing these tests → non-resident individual.
Experts on long-term assignments with long-term leases are typically residents — and residents are taxed on worldwide income (arising inside and outside Vietnam). Getting this step wrong cascades into wrong tax computation, withholding, and finalization.
2. Non-residents: a flat 20% rate, no deductions, no progressive finalization
Article 21 of Law 109/2025 provides: PIT on salary/wage income of a non-resident equals total salaries and wages received for work performed in Vietnam × 20%, regardless of where the income is paid or received.
Three points that must never be confused: non-residents get no family circumstance deductions, no progressive finalization, and tax is computed on gross income (flat), not on taxable income after deductions. The detailed formula, including cases of simultaneous work in Vietnam and abroad where income cannot be separated, is in Article 64 of Decree 253/2026 — check the decree’s full text directly when applying it.
Never cite Circular 111/2013 for current practice — it was replaced by Circular 87/2026 from 01/7/2026. All detailed thresholds (housing benefits, children’s tuition, home-leave airfares, insurance…) must be checked against Decree 253/2026 and Circular 87/2026; do not copy figures from Circular 111/2013.
3. Residents: withholding by contract type and the new VND 5 million threshold
For resident experts, withholding at source depends on the contract type (Article 50.2 of Decree 253/2026):
- Labor contract of 03 months or more: withholding under the 5-bracket progressive table in Article 9 of Law 109/2025: 5% / 10% / 20% / 30% / 35% for brackets up to VND 10 million / over 10–30 million / over 30–60 million / over 60–100 million / over VND 100 million per month;
- No labor contract or a contract under 03 months: 10% withholding on each payment of VND 5 million or more — the threshold raised from VND 2 million to VND 5 million compared with the old Circular 111/2013.
New family circumstance deductions (Resolution 110/2025/UBTVQH15, effective 01/01/2026, applicable to tax year 2026; codified in Article 10 of Law 109/2025): the taxpayer VND 15.5 million/month (VND 186 million/year); each dependent VND 6.2 million/month; each dependent may be claimed by only one person. Timing note: finalization for 2025 still uses the old levels (VND 11 million / 4.4 million under Resolution 954/2020) — do not apply the new levels to 2025. Dependent registration: before 31 December of the tax year (Decree 253/2026); per Circular 87/2026, a dependent must have average monthly income not exceeding VND 3 million.
4. The special first-year finalization period and filing deadlines
Article 9 of Decree 252/2026/ND-CP addresses the special case: an individual present in Vietnam for under 183 days in the calendar year but 183 days or more in 12 consecutive months from the first date of presence has a first-year PIT finalization period of 12 consecutive months from that first date. The filing deadline: the last day of the 4th month from the last day of the month completing the 12 consecutive months (Article 10.5.c of Decree 252/2026).
Do not confuse the two deadlines: the paying organization finalizes by the last day of the 3rd month (31 March); an individual filing directly has until the last day of the 4th month (30 April). A resident expert ending the labor contract and departing: must finalize tax with the tax authority before departure or authorize another organization/individual to finalize — within 45 days from the contract termination date (Article 10.5.d of Decree 252/2026).
5. Finalization authorization: allowed, but two cases require self-filing
Article 51 of Decree 253/2026 allows an individual to authorize the paying organization to finalize on their behalf where: (a) they have only one source of salary/wage income from a labor contract of 03 months or more with one organization and are actually working there at finalization time; or (b) the same plus other income already subject to 10% withholding (averaging no more than VND 15 million/month).
However, two cases require self-finalization — no authorization (Article 51.3): the individual claims a tax reduction for natural disaster, epidemic, fire, accident, or critical illness during the period (Article 40); or claims medical or education deductions (Article 49).
Cases exempt from finalization (Article 51.1): tax payable is less than tax paid with no refund or carry-forward claim; or other-source monthly income averaging no more than VND 15 million already subject to 10% withholding.
One notable incentive: Article 4.20 of Law 109/2025 exempts salary/wage income of foreign experts working for programs or projects funded by non-refundable ODA or foreign non-governmental programs/projects in Vietnam. The specific “program/project” conditions and proof procedures must be checked against Decree 253/2026 and Circular 87/2026 — do not interpret expansively.
Related articles
- Personal income tax for foreigners in Vietnam: residency and finalization
- PIT finalization for departing foreign experts in Vietnam
Frequently asked questions
Is a foreign expert in Vietnam for 4 months a resident?
Not necessarily — the test is 183 days in 12 consecutive months from the first arrival date, or having a regular residence (fixed-term lease). Otherwise, the expert is a non-resident subject to a flat 20% on Vietnam-work income.
What is the current 10% withholding threshold?
VND 5 million per payment (Article 50.2 of Decree 253/2026) — raised from the VND 2 million under the old Circular 111/2013.
When must a departing expert finalize PIT?
Before departure, or authorize another organization/individual to finalize, within 45 days from the labor contract termination date.
Legal bases: PIT Law 109/2025/QH15 (Articles 2, 4, 9, 10, 21, 29; amended by Law 09/2026/QH16 — check the latest VBHN); Decree 253/2026/ND-CP (Articles 50, 51, 64); Circular 87/2026/TT-BTC; Tax Administration Law 108/2025/QH15; Decree 252/2026/ND-CP (Articles 9, 10); Resolution 110/2025/UBTVQH15.
Does your company employ foreign experts and need a review of PIT withholding, filing, and finalization obligations? Reach us via the Contact page of FLAT Law Firm for tax compliance advice for foreign workers.
For reference only, not legal advice.
The legal content of this article is reviewed by FLAT’s AI Legal Council and submitted to the owner for approval; it is not an opinion of a licensed lawyer and does not replace legal advice for specific cases.
