Vietnam tax guidance on PIT for post-employment salary payments

The Hanoi Tax Department has provided guidance regarding personal income tax (PIT) deductions for employees receiving salary payments after their employment has ended or during transitions between contract types.

According to Decree No. 253/2026/ND-CP, tax withholding for residents is determined based on taxable income. For employees who have terminated a 12-month fixed-term contract and no longer have an employment relationship with a company at the time of payment, the method of deduction depends on the specific circumstances of the payment and the nature of the income.

In cases involving transitions from probation to fixed-term labor contracts, the tax authority clarifies whether deductions should follow the progressive tax tariff or a flat 10% rate. The determination is based on the timing of the income payment and the type of labor contract held by the individual at the time the income is distributed.