Taxation in Vietnam
A tax code rewritten from top to bottom between 2025 and 2026 — corporate, VAT, personal, all four
Dollar equivalents throughout are rounded, at VND 26,100 to USD 1, and are given for orders of magnitude only. The Vietnamese figures are the operative ones.
Vietnam has replaced its four principal tax laws in fifteen months. Corporate income tax, value added tax, personal income tax and the special sales tax were all superseded between June 2025 and January 2026, the implementing decrees and circulars were rewritten by 30 June 2026, and a new National Assembly now numbers its statutes /QH16. The practical consequence is blunt: almost every English-language summary of Vietnamese tax written before mid-2026 is wrong in several places, including some usually reliable ones. This note is written against the texts in force in August 2026 and says where each figure comes from.
The company
Corporate income tax is governed by Law 67/2025/QH15 of 14 June 2025, in force 1 October 2025 and applicable from the 2025 tax period, with Decree 320/2025/ND-CP and Circular 20/2026/TT-BTC, as amended by Law 09/2026/QH16.
| Situation | Rate | What governs it |
|---|---|---|
| Standard | 20 % | Art. 10.1. No provincial layer. |
| Turnover above VND 3bn and up to VND 50bn about USD 115,000 to USD 1.9m | 17 % | Art. 10.2.b |
| Turnover up to VND 3bn about USD 115,000 | 15 % | Art. 10.2.a |
| Turnover below VND 1bn about USD 38,000 | Exempt | Law 09/2026/QH16 and Decree 141/2026/ND-CP, from 1 January 2026 — widely unnoticed outside Vietnam |
| Oil and gas; rare and precious resources | 25–50 % | Art. 10.4, contract by contract |
The threshold is the total turnover of the immediately preceding tax period. A company with VND 20bn of taxable profit can qualify for 17 % if its turnover stayed under VND 50bn — a net margin above 40 %, unusual but ordinary enough for a services or licensing company. It cannot qualify for 15 %, which would require VND 3bn of turnover for VND 20bn of profit.
An anti-fragmentation rule closes the obvious route: a company that is a subsidiary or related party of an entity failing the threshold is refused the reduced rate. Check the group before relying on it.
| Other corporate charges | Rate and basis |
|---|---|
| Value added tax | 10 % standard, 5 % on a listed schedule, 0 % on exports. A temporary two-point reduction to 8 % runs to 31 December 2026 and excludes telecoms, finance, insurance, real estate, education and medical services. Assume a return to 10 % on 1 January 2027 unless an extension is adopted. |
| Foreign contractor tax | Deemed corporate and VAT percentages on the gross, by nature of supply, on payments to foreign suppliers without a Vietnamese entity. |
| Dividends abroad | No withholding where the shareholder is a foreign company. 5 % where the shareholder is an individual. |
| Interest, royalties abroad | 5 % and 10 % respectively under the contractor tax; reducible under more than eighty treaties, the procedure now in Circular 95/2026/TT-BTC. |
| Capital transfer by a foreign corporate seller | 2 % of the sale price, direct and indirect transfers alike, since 15 December 2025 — replacing 20 % on the net gain. A structural change for exits. |
What the 2025–2026 rewrite changed for the company
| Item | Rate and basis |
|---|---|
| Licence tax | Abolished with effect from 1 January 2026. |
| R&D | Super-deduction up to 200 % of qualifying expenditure, provided it does not create a tax loss; internal R&D fund endowment deductible up to 20 % of annual pre-tax profit. |
| Losses | Carried forward five years. No carry-back. |
| Deductibility of payments | Non-cash payment evidence required from VND 5m — under USD 200 — per transaction, down from VND 20m, since 15 December 2025. A common cause of disallowance. |
No withholding does not mean no formality. Profit may be remitted annually after the year end, and only once the company has met all its obligations to the State, filed audited financial statements and the annual corporate tax finalisation. Notice must be given at least seven working days before the transfer. And distribution or remittance is prohibited while accumulated losses remain unabsorbed, even in a profitable year. Decree 252/2026/ND-CP.
A worked example — an LLC with VND 20bn of taxable profit
| Scenario | Rate | Tax (VND) | Effective |
|---|---|---|---|
| Standard | 20 % | 4,000,000,000 USD 153,000 | 20.00 % |
| Reduced rate, turnover under VND 50bn | 17 % | 3,400,000,000 USD 130,000 | 17.00 % |
| Incentivised project, standard incentive rate | 10 % | 2,000,000,000 USD 76,600 | 10.00 % |
| Same project, during the exemption years | 0 % | 0 | 0.00 % |
| With VND 2bn of qualifying R&D, at 200 % | 20 % | 3,600,000,000 USD 138,000 | 18.00 % |
Quarterly instalments must reach at least 80 % of the final liability by 31 January following the year end, failing which interest runs on the shortfall. And if the company belongs to a group with consolidated revenue above €750 million, the Vietnamese qualified domestic minimum top-up tax lifts an effective 10 % — or 0 % — back to 15 %. The incentive is then economically spent, subject to the transitional safe harbours available to 31 December 2026.
The individual — a scale rebuilt, and allowances raised by two fifths
Personal income tax is governed by Law 109/2025/QH15 of 10 December 2025, in force 1 July 2026. Its transitional clause is the point most often misread: the provisions on employment income apply from the 2026 tax period, that is to the whole of calendar 2026, not to the second half only.
| From the 2026 tax period — five bands | ||
|---|---|---|
| Monthly taxable income | ≈ USD | Rate |
| up to VND 10m | 380 | 5 % |
| 10m to 30m | 380 – 1,150 | 10 % |
| 30m to 60m | 1,150 – 2,300 | 20 % |
| 60m to 100m | 2,300 – 3,830 | 30 % |
| above 100m | above 3,830 | 35 % |
| Allowances | ||
|---|---|---|
| Per month | 2026, VND | ≈ USD |
| Personal | 15,500,000 | 590 |
| Each dependant | 6,200,000 | 240 |
| Medical expenses, per year | 23,000,000 | 880 |
| Education, per year | 24,000,000 | 920 |
| Voluntary pension, per month | 3,000,000 | 115 |
The personal and dependant allowances rose by 41 % for the 2026 period, and the Government may now adjust them with prices and incomes rather than waiting for inflation to exceed 20 %. Entry into tax begins at VND 17m a month with no dependants, 24m with one, 31m with two — roughly USD 650, 920 and 1,190. A dependant must have income of VND 3m a month or less, and must be registered by 31 December of the tax year — a deadline missed every year.
A worked example — an expatriate on VND 250m a month
Tax resident for the whole of 2026, gross VND 3,000,000,000 a year — about USD 115,000, married with one dependent child, tax borne by the employee.
| Old scale (2025) | New scale (2026) | |
|---|---|---|
| Personal income tax due (VND) | 848,446,800 USD 32,500 | 765,428,700 USD 29,300 |
| Effective rate on gross | 28.28 % | 25.51 % |
| The reform is worth VND 83,018,100 — about USD 3,180 — a year to this employee, about 9.8 % of the bill. | ||
| Sensitivities | Tax due (VND) | Effective |
|---|---|---|
| Two dependants rather than one | 739,388,700 USD 28,300 | 24.65 % |
| With the new medical and education allowances | 722,938,700 USD 27,700 | 24.10 % |
| Non-resident, same Vietnamese-source pay | 600,000,000 USD 23,000 | 20.00 % |
A non-resident pays a flat 20 % on Vietnamese-source employment income, with no allowances at all. A resident pays the progressive scale with allowances. The two curves cross at roughly VND 175–180m a month, about USD 6,700 to 6,900, with one dependant — below that residence is better, above it the flat rate is. It is a point worth raising before the assignment is structured, not after the first finalisation.
A contract expressed net changes the picture entirely: the gross-up at a 35 % marginal rate raises the employer’s cost by roughly 54 %.
Social contributions — and why they matter less here
Under the Social Insurance Law 41/2024/QH15, in force 1 July 2025, the employer pays 17.5 % for social insurance and 3 % for health insurance; foreign employees are outside unemployment insurance. The contribution base is capped, and the cap is what makes the arithmetic favourable: on our VND 3bn package, the employer’s total 2026 contribution is about VND 119.8m, some USD 4,600, — a supplement of 4 % on the payroll cost. Compared with China, where uncapped-in-practice bases and a sixth housing fund apply, this is a material competitive feature of Vietnam for senior pay.
What this framework’s newness costs, and how we handle it
We re-verify the governing text and the competent authority for every file rather than working from the last one, because both have moved: the 2025 reorganisation of ministries changed which body decides what, and a dossier addressed to a superseded authority is returned. We check the reduced-rate threshold against the prior year’s turnover and against the group, since that is where the rate is lost. We settle residence and the shape of the package — gross or net, resident or not — before the assignment letter, because the crossover point is real money. We diarise the two dates that will move on their own: the 8 % VAT reverting to 10 % on 1 January 2027, and the transitional Pillar Two safe harbours ending on 31 December 2026. And where a figure is recent enough to be amended again, we say so rather than presenting it as settled.