Update on Personal Income Tax Regulations in Vietnam for 2025

Jun 12

Personal Income Tax (PIT) is a significant component of individual tax obligations in Vietnam. With the important changes in PIT regulations effective from 2025, taxpayers need to understand these updates to ensure compliance with the law. This article provides an overview of the key changes in PIT regulations, from personal deductions to taxation on e-commerce activities.

1. New Personal Deductions in PIT

1.1. Deduction for Taxpayers

Starting in 2025, the personal deduction for taxpayers has been adjusted. Specifically, the deduction for the taxpayer is VND 11 million/month (VND 132 million/year). This adjustment aims to reduce the tax burden on individuals with moderate incomes and encourages fair tax participation in society.

1.2. Deduction for Dependents

The deduction for dependents has also been updated, with a rate of VND 4.4 million/month for each dependent. This change supports individuals responsible for nurturing and caring for family members, thereby minimizing the tax amount payable.

2. Changes in PIT Regulations for Residents

2.1. PIT for Salary Earners

Individuals earning income from salaries and wages must declare and pay taxes according to a progressive tax rate system, ranging from 5% to 35%, depending on income levels. These tax brackets have been updated to align with actual income levels.

2.2. PIT for Short-Term Contracts

For individuals without labor contracts or with contracts shorter than 3 months, the income-paying organization will withhold 10% tax on the income. This simplifies procedures and enhances tax collection efficiency for individuals with unstable incomes.

3. PIT for Non-Residents

Individuals who do not reside in Vietnam but earn income here are also subject to PIT regulations. While the tax rates for non-residents differ, understanding the applicable processes and rates is essential for ensuring proper tax obligations.

4. PIT for Business Households and Individuals

4.1. Taxable Revenue Threshold

According to new regulations, from 2025, business households with annual revenue under VND 200 million are exempt from PIT. This adjustment helps small-scale businesses maintain operations without facing excessive tax pressure.

4.2. E-Commerce Activities

Business households and individuals operating on e-commerce platforms will have taxes withheld based on a percentage of revenue from online transactions. The tax rate ranges from 0.5% to 5%, depending on the type of goods or services provided.

5. PIT Finalization Process for 2025

5.1. Finalization Deadlines

The deadlines for PIT finalization in 2025 are as follows:

For organizations authorized to finalize PIT: The deadline is March 31, 2025.
For individuals self-finalizing PIT: The deadline is May 5, 2025 (since April 30 and May 1 are public holidays).

5.2. Required Documents

Individuals need to prepare the following documents for PIT finalization:

PIT finalization declaration (Form 02-QTT-TNCN).
List of deductions for dependents.
Documents proving taxes already withheld and paid during the year.

6. Conclusion

The PIT regulations in Vietnam for 2025 introduce significant changes affecting various groups, from salaried employees to business households, especially those operating on e-commerce platforms. With adjustments in personal deductions, tax rates, and finalization procedures, taxpayers need to proactively update themselves to ensure compliance with the law. These changes not only optimize tax collection but also create a more favorable environment for individuals and businesses to fulfill their tax obligations.

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