Vietnam Finance Ministry proposes higher personal income tax exemption and new withholding rules

The Ministry of Finance has submitted a draft decree to the Vietnamese Government proposing major changes to personal income tax. It raises the monthly income threshold for tax liability to VND 28.6 million (about 5% tax rate from that point) and introduces annual deductions of up to VND 47 million for health (max VND 23 million) and education (max VND 24 million) expenses. Together with existing personal and dependent allowances, a taxpayer with one dependent could reduce taxable income by roughly VND 307 million per year. The Ministry estimates the measures would cut state revenue by about VND 7,697 billion annually.

The draft also revises withholding requirements for one‑off payments. Income of VND 5 million or more per payment must be subject to a 10% tax withholding, while lower amounts are only subject to withholding if the recipient requests it. The rule applies to wages, fees and other payments from organizations or individuals without a formal contract of less than three months. The new provisions are slated to take effect on 1 July.