The declaration and finalization of personal income tax (PIT) for foreigners working in Vietnam is an important legal process that requires thorough understanding and strict compliance with current regulations. Based on Official Letter No. 1296/CT-NVT of the Tax Department, the following article systematizes all regulations, procedures, and key notes for foreign individuals as well as income-paying organizations with foreign elements.

1. Principles for Determining Residency Status and the First Tax Period

Determining whether an individual is a resident is the foundation for establishing the tax period. For foreigners newly arriving in Vietnam, the presence time rule is specifically regulated:

An individual present in Vietnam in the first calendar year for less than 183 days, but present for 183 days or more within 12 consecutive months from the first day of presence in Vietnam, shall have the first tax finalization period as 12 consecutive months from the first day of presence in Vietnam.

2. Updated Policy on Family Circumstance Deductions and Progressive Tax Rates

For resident individuals, income from salaries and wages is subject to progressive tax rates and entitled to family circumstance deductions. The law stipulates important changes between the 2025 finalization period and the 2026 tax period:

• 2025 finalization period: Deduction for taxpayers is 11 million VND/month (132 million VND/year). Deduction for each dependent is 4.4 million VND/month. Income from salaries and wages of resident individuals is subject to progressive tax rates with 07 tax brackets.
• 2026 tax period (effective from 01/01/2026): Deduction for taxpayers is increased to 15.5 million VND/month (equivalent to 186 million VND/year). Deduction for each dependent is 6.2 million VND/month. The progressive tax rate is reduced to only 05 brackets. This adjustment helps increase the tax-free income threshold and reduce taxpayers’ obligations.

3. Cases Eligible for Authorization and Exemption from Tax Finalization

Individuals meeting statutory conditions may authorize income-paying organizations or be exempt from finalization procedures:

• Authorization for finalization: Individuals earning income from salaries and wages under labor contracts of 03 months or more at one place and actually working there at the time the organization/individual pays income and conducts tax finalization.
• Exemption from finalization: Individuals with additional PIT payable after finalization of 50,000 VND or less. Individuals whose PIT payable is smaller than the tax already temporarily paid and who do not request a refund or offset into the next tax declaration period.

4. Cases Where Individuals Must Directly Finalize Tax

Foreigners and individuals with international income must directly declare and finalize with the tax authority in the following situations:

• Exit cases: Foreigners terminating employment contracts in Vietnam must finalize PIT with the tax authority before departure.
• Income from abroad: Resident individuals earning salaries and wages paid from abroad without tax withheld during the year must directly finalize with the tax authority if additional tax is payable or if excess tax is refundable/offset.
• Income from special organizations: Resident individuals earning salaries and wages paid by international organizations, embassies, consulates without tax withheld during the year must directly finalize with the tax authority if additional tax is payable or if excess tax is refundable/offset.

5. Dossiers, International Evidence, and Dependent Registration

Direct finalization dossiers include PIT finalization declaration form No. 02/QTT-TNCN and Appendix of family circumstance deductions form No. 02-1/BK-QTT-TNCN. For dossiers with foreign elements, note:

• Foreign tax certificates: Copies (photocopies from originals) of documents proving tax paid abroad (if any).
• Bank documents as substitutes: Where foreign law does not issue tax payment certificates, individuals may submit copies of bank documents proving tax paid abroad with taxpayer’s confirmation.
• Income proof: Documents proving amounts paid by foreign income-paying organizations in case individuals receive income from international organizations, embassies, consulates, or abroad.
• Dependent registration: To enjoy deductions for dependents, taxpayers must register dependents according to regulations.

6. Place of Direct Tax Finalization Filing

Determining the tax authority receiving dossiers depends on the source of income:

• Individuals with both directly declared income and income withheld at source shall file at the tax authority where the largest income source in the year is located. If the largest source cannot be determined, individuals may choose to file at the tax authority managing the income-paying organization or at their place of residence.
• For online PIT finalization filing, the system automatically supports determining the tax authority based on information related to tax obligations arising during the year declared by organizations/individuals.

7. Global Income Management and Application of Tax Treaties

Tax authorities implement strict monitoring measures for individuals with foreign elements:

• Global principle: For resident foreigners or individuals with income arising inside and outside Vietnam, tax authorities control according to the global income principle.
• Residency review: Tax authorities review residency conditions, presence time in Vietnam, and global income declaration obligations.
• Double taxation treaties: Tax authorities check the application of double taxation avoidance treaties (if any) to ensure proper exemption/reduction, correct subjects, and prevent misapplication.

8. Deadlines, Online Filing Methods, and Automatic Refunds

• Filing deadline: The deadline for PIT finalization filing is no later than the last day of the 4th month from the end of the calendar year. If the deadline coincides with a statutory holiday, it is extended to the next working day.
• Electronic methods: Individuals may finalize via the Tax Department’s Administrative Procedure Information System, eTax Mobile application, or the National Public Service Portal.
• Automatic refunds: The system automatically processes PIT refund dossiers within 03 working days if conditions are met. Individuals must update and accurately verify bank accounts on eTax Mobile or the Tax Department’s Administrative Procedure Information System. Absolutely do not use accounts opened at securities companies, people’s credit funds, etc. to receive tax refunds.
• Safety warning: The Tax Department warns of impersonation of officials/tax authorities for fraud. Taxpayers must only access the tax authority’s official website to verify information.

Conclusion

Compliance with PIT declaration and finalization regulations is not only a mandatory legal obligation but also a solid basis for foreigners in Vietnam to protect their legitimate rights (such as tax refunds, avoidance of double taxation). With the latest adjustments from Official Letter No. 1296/CT-NVT, especially favorable changes in family circumstance deductions and automatic refund utilities, taxpayers should proactively review income sources, prepare valid documents, and complete dossiers on time to ensure maximum compliance with Vietnam’s tax laws.

HARLEY MILLER LAW FIRM

• Email: [email protected]
• Web: hmlf.vn
• Hotline: 0937215585
• Address: 14th Floor, HM Town Building, 412 Nguyen Thi Minh Khai Street, Ho Chi Minh City