Vietnam's New PIT Law 2026: What Changed and What It Means for Expats

Vietnam's personal income tax rules changed significantly at the start of 2026. Law No. 109/2025/QH15, passed in late 2025, introduced the country's most substantial PIT reforms since 2012. If you are living and working in Vietnam, here is what you need to know.

The Core Change: Raised Deduction Thresholds

The most significant practical change for most expats is an increase in personal and dependent deduction amounts. These deductions reduce your taxable income before progressive rates are applied.

The previous personal deduction amount had not been updated since 2013, despite significant inflation and wage growth in Vietnam during that period. The 2026 reform acknowledges this gap.

What this means in practice: For expats earning in the mid-to-upper income range, the raised deductions will result in lower effective tax rates compared to 2025, even if gross income stays the same. The benefit is most pronounced for middle-income earners.

Exact deduction amounts will be confirmed in implementing decrees expected in mid-2026.

New Rules for Remote and Digital Income

The 2026 law introduces clearer language on income sourcing for remote workers - an area that was previously ambiguous. Key clarifications:

• Income is generally considered Vietnam-sourced if the work is physically performed from Vietnam, regardless of where the employer is located
• Income for work performed outside Vietnam (even if paid by a Vietnamese entity) is generally foreign-sourced
• The Ministry of Finance is expected to issue additional guidance specifically on remote worker taxation in 2026

The 183-day rule is unchanged. Spend 183+ days in Vietnam in a calendar year and you are a tax resident subject to progressive rates on worldwide income.

High-Tech and Innovation Sector Incentives

A new category of preferential tax treatment has been introduced for qualifying professionals working in high-technology sectors, digital businesses, and innovation. The specific qualifying criteria are to be defined by implementing decree.

If you work in technology, software development, or research and development, monitor this development - it could meaningfully reduce your effective tax rate.

What Did NOT Change

• The 183-day tax residency threshold - unchanged
• The progressive bracket structure - still 5% to 35%
• Non-resident flat rate - still 20% on Vietnam-sourced income
• The basic mechanics of how employment income is taxed - employer withholds monthly, annual reconciliation by April 30

What Expats Should Do Now

1. If you have a Vietnamese tax code and file annually: Your employer should be applying updated deduction amounts from January 2026. Check with your HR/payroll department that they have updated their calculations.

2. If you self-assess (remote workers, self-employed): Review your estimated liability for 2026 under the new deduction amounts. Consider whether your current setup remains optimal.

3. If you are on the 183-day borderline: The rules governing residency are unchanged. Keep tracking your days carefully.

4. If you are a US citizen: The 2026 PIT changes affect your Vietnamese obligations but your US filing requirements are unchanged. FEIE, FTC, FBAR, and FATCA all continue to apply.

Get Specific Advice

Tax reform creates both risks and opportunities. The specifics of how the 2026 changes apply to your situation depend on your employment structure, income sources, residency status, and home country tax treaty.

Our consultants can walk through your specific situation and help you understand what the 2026 changes mean for you.

Book a tax consultation or see our comprehensive Vietnam Tax Guide for Expats.

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Published January 2026. Implementing decrees for Law 109/2025 are expected mid-2026 and may clarify details noted above as pending.