General Legal Framework of Individual Income Tax in Vietnam for Foreigners

General Legal Framework of Individual Income Tax in Vietnam for Foreigners

Foreign individuals living, working or investing in Vietnam may incur personal income tax (“PIT”) liabilities in respect of various types of income, including salaries and wages, income from the lease or transfer of real estate, dividends, investment returns and income from capital transfers.

Vietnam currently does not apply a single PIT rate to all foreign individuals. The PIT obligations of a foreign individual must be determined based on two main factors:

1. Whether the individual is a resident individual or a non-resident individual in Vietnam, also referred to as the individual’s “tax residency status”; and
2. Whether the income constitutes employment income, real estate income, income from capital investment or income from capital transfers.

A. TAX RESIDENCY STATUS

The first step in determining the PIT rate applicable to a foreign individual in Vietnam is to determine the individual’s tax residency status.

Under Article 2.2 of the Law on Personal Income Tax 2025, resident individuals and non-resident individuals are determined based on two main criteria: (i) the period of presence in Vietnam; and (ii) whether the individual has a regular place of residence in Vietnam. In particular:

“Article 2. Taxpayers

[...]

2. A resident individual means an individual who satisfies either of the following conditions:
3. a) Being present in Vietnam for 183 days or more in a calendar year or during 12 consecutive months from the first date of presence in Vietnam;
4. b) Having a regular place of residence in Vietnam, including a registered permanent residence or a rented house in Vietnam under a fixed-term lease agreement.
5. A non-resident individual means an individual who does not satisfy the conditions specified in Clause 2 of this Article.”

To assist individuals in determining their tax residency status, Article 4 of Decree No. 253/2026/ND-CP provides detailed guidance on the two conditions for determining whether an individual is a resident individual, as follows:

Article 4. Resident individuals

A resident individual means an individual who satisfies either of the conditions specified in Article 2.2 of the Law on Personal Income Tax, as further detailed below:

1. Being present in Vietnam for 183 days or more in a calendar year or during 12 consecutive months from the first date of presence in Vietnam.

For an individual entering or leaving Vietnam, the date of arrival is counted as one day and the date of departure is counted as one day. Where an individual enters and leaves Vietnam on the same day, that day is counted as one day of residence.

The dates of arrival and departure shall be determined based on the certifications made by the immigration authority in the individual’s passport, laissez-passer or other documents relating to the purpose of the individual’s entry into and departure from Vietnam.

An individual’s presence in Vietnam for the purposes of this Clause means the individual’s physical presence within the territory of Vietnam.

2. Having a regular place of residence in Vietnam in either of the following circumstances:
3. a) Having a registered permanent residence, in particular:

For a Vietnamese citizen, this means the place where the individual lives regularly and on a stable and indefinite basis at a particular residence and has registered for permanent residence in accordance with the law on residence.

For a foreign individual, this means the permanent residence stated in the individual’s permanent residence card or the temporary residence declared when applying for a temporary residence card issued by a competent authority under the Ministry of Public Security.

1. b) Having a rented house for residential purposes in Vietnam in accordance with the law on housing, under lease agreements with a term of 183 days or more in the relevant tax year, in particular:

An individual who does not have a regular place of residence as specified at Point a of this Clause, but whose total period of renting accommodation under one or more lease agreements is 183 days or more in the relevant tax year, shall also be regarded as a resident individual, including where the individual rents accommodation at several different locations.

Rented accommodation includes accommodation at hotels, guesthouses, hostels, lodging houses, workplaces or offices, regardless of whether the accommodation is rented directly by the individual or by the employer for the employee.

3. Where an individual has a regular place of residence in Vietnam as specified in Clause 2 of this Article but is physically present in Vietnam for fewer than 183 days in the relevant tax year, and the individual is unable to prove that they are a tax resident of another country, the individual shall be treated as a resident individual of Vietnam.

Tax residency in another country shall be established based on a certificate of tax residence. Where an individual is from a country or territory that has entered into an agreement on the avoidance of double taxation and the prevention of tax evasion with Vietnam, but that country or territory does not issue certificates of tax residence, the individual shall provide a copy of their passport to demonstrate the relevant period of residence.

In practice, rented accommodation for the purpose of determining tax residency may include hotels, guesthouses, hostels, lodging houses, workplaces or offices, regardless of whether the accommodation is rented directly by the individual or by the employer for the employee.

The implementing regulations clearly set out how to determine the tax residency status of both Vietnamese citizens and foreign individuals. Once the individual’s tax residency status has been correctly determined, the scope of income subject to PIT in Vietnam is as follows:

Tax residency status	Scope of income taxable in Vietnam
Resident individual	Taxable income arising both inside and outside Vietnam, regardless of where the income is paid or received
Non-resident individual	Taxable income arising in Vietnam, regardless of where the income is paid or received

Accordingly, as a general principle, a foreign individual who qualifies as a resident individual may be required to declare in Vietnam salaries, dividends or investment returns received from overseas.

By contrast, a non-resident individual is subject to PIT only on income arising in Vietnam.

B. PIT APPLICABLE TO CERTAIN COMMON TYPES OF INCOME

1.  Income from salaries and wages

Regarding with Resident individuals

A resident individual is subject to PIT on all income from salaries and wages arising both inside and outside Vietnam, regardless of where the income is paid or received.

Taxable income is determined after deducting insurance contributions, personal and dependent deductions and other eligible deductions. The remaining taxable income is then subject to progressive PIT rates ranging from 5% to 35%.

The progressive tax schedule is determined based on annual taxable income and is specified in Article 9 of the Law on Personal Income Tax 2025 as follows:

“Article 9. Progressive tax schedule

1. The progressive tax schedule shall apply to taxable income specified in Article 8.2 of this Law.
2. The progressive tax schedule is as follows:

Tax bracket	Annual taxable income (VND million)	Monthly taxable income (VND million)	Tax rate
1	Up to 120	Up to 10	5%
2	Over 120 and up to 360	Over 10 and up to 30	10%
3	Over 360 and up to 720	Over 30 and up to 60	20%
4	Over 720 and up to 1,200	Over 60 and up to 100	30%
5	Over 1,200	Over 100	35%

Accordingly, salaries paid by a foreign company or transferred to an overseas bank account may still be subject to PIT declaration and payment in Vietnam if the individual qualifies as a resident individual.

Regarding with Non-resident individuals

Under Article 21 of the Law on Personal Income Tax 2025, a non-resident individual is subject to PIT at a rate of 20% on income derived from work performed in Vietnam, regardless of whether the income is paid in Vietnam or overseas. Non-resident individuals are not entitled to apply the progressive tax schedule or claim personal and dependent deductions in the same manner as resident individuals.

Where an individual works both in Vietnam and overseas, but the income arising from work performed in Vietnam cannot be separately determined, taxable income shall be allocated based on the individual’s working time or period of presence in Vietnam in accordance with the applicable regulations.

“Article 21. Personal income tax on income from salaries and wages

Personal income tax on income from salaries and wages earned by a non-resident individual shall be determined by multiplying the total salaries and wages received by the non-resident individual for work performed in Vietnam by the tax rate of 20%, regardless of where the income is paid.”

2.  Income from the transfer of real estate

Although foreign individuals are not permitted to own land or hold land use rights in the same manner as Vietnamese citizens, they may own certain types of commercial housing in housing development projects if they satisfy the conditions and restrictions prescribed in Articles 16 to 21 of the Law on Housing 2023.

Foreign individuals may therefore derive income from leasing or transferring residential property that they lawfully own in Vietnam.

Where a foreign individual derives income from a transfer of real estate, the applicable PIT treatment shall continue to be determined based on the individual’s tax residency status, as follows.

Regarding with Resident individuals

For real estate leasing activities, a resident individual whose annual revenue from leasing activities in Vietnam does not exceed VND 1 billion is not required to pay PIT. Where the annual revenue exceeds this threshold, PIT is calculated as follows:

PIT payable = (Rental revenue − VND 1 billion) × 5%

For a transfer of real estate, PIT is calculated at 2% of the transfer price, regardless of the actual profit earned from the transfer:

PIT payable = Transfer price × 2%

Because resident individuals are subject to PIT on worldwide income, income from real estate located outside Vietnam may also need to be declared in Vietnam, depending on the applicable double taxation agreement and tax credit, i.e. the amount of tax already paid overseas.

Regarding with Non-resident individuals

A non-resident individual is subject to PIT only on income derived from real estate located in Vietnam. Income from leasing real estate is, in principle, subject to PIT at 5% of revenue. The VND 1 billion threshold applicable to resident individuals does not apply to non-resident individuals.

For income from a transfer of real estate, PIT is calculated as follows:

PIT payable = Transfer price × 2%

In practice, the transfer price is generally determined based on the relevant transfer agreement and the PIT declaration submitted in connection with the transfer.

3. Income from investment in companies

(1)  Regarding with Resident individuals

A foreign individual who qualifies as a resident individual may be subject to PIT at 5% on dividends, distributed investment returns, interest on loans and other income from capital investment arising either inside or outside Vietnam.

For a transfer of a capital contribution, PIT is calculated at 20% of the difference between the transfer price and the acquisition price, after deducting reasonable expenses:

PIT payable = (Transfer price − Acquisition price − Reasonable expenses) × 20%

If the acquisition price and relevant expenses cannot be determined, PIT is calculated at 2% of the transfer price:

PIT payable = Transfer price × 2%

A transfer of securities is subject to PIT at 0.1% of the transfer price for each transaction:

PIT payable = Securities transfer price × 0.1%

(2)  Regarding with Non-resident individuals

A non-resident individual is subject to PIT at 5% on dividends, investment returns and other income received from investing capital in Vietnamese organisations or individuals. For a transfer of a capital contribution in a Vietnamese company, PIT is calculated at 20% of the taxable income:

PIT payable = Taxable income from the capital transfer × 20%

If the acquisition price and related expenses cannot be determined, PIT is calculated at 2% of the transfer price:

PIT payable = Transfer price × 2%

The transfer may remain subject to PIT in Vietnam even if the relevant agreement is signed and the payment is made outside Vietnam. A transfer of securities is subject to PIT at 0.1% of the transfer price.

4.  Conclusion

In conclusion, the PIT treatment of a foreign individual in Vietnam primarily depends on two factors: the individual’s tax residency status and the nature of the relevant income.

A resident individual is generally subject to PIT on taxable income arising both inside and outside Vietnam, while a non-resident individual is generally subject to PIT only on income arising in Vietnam. The applicable tax rates and calculation methods also vary depending on whether the income is derived from employment, real estate, capital investment or capital transfers.

Accordingly, determining the individual’s tax residency status and correctly classifying each type of income are essential to identifying the applicable PIT treatment in Vietnam.