Official Letter No. 1296/CT-NVT: Detailed Guidance on Personal Income Tax Finalization for the 2025 Tax Period
On 4 March 2026, the General Department of Taxation issued Official Letter No. 1296/CT-NVT (“Official Letter 1296”), providing detailed guidance on the declaration and finalization of personal income tax (“PIT”) for income derived from salaries and wages for the 2025 tax period, while also updating certain provisions applicable from the 2026 tax period. Key highlights include the following:
Personal deductions for income from salaries and wages
Effective from the 2026 tax period, the personal deduction threshold is increased from VND 11 million/month (equivalent to VND 132 million/year) to VND 15.5 million/month (equivalent to VND 186 million/year) for taxpayers, and from VND 4.4 million/month to VND 6.2 million/month for each dependent. This adjustment raises the non-taxable income threshold and reduces the tax burden on individuals.
Tax rates applicable to income from salaries and wages
For the 2025 tax finalization, resident individuals’ income from salaries and wages remains subject to the progressive tax tariff comprising seven brackets, with rates ranging from 5% (for taxable income up to VND 60 million/year) to 35% (for taxable income exceeding VND 960 million/year).
From the 2026 tax period, this tariff will be streamlined to five brackets, with the 5% rate applicable to taxable income up to VND 120 million/year, and the highest rate of 35% applicable to taxable income exceeding VND 1.2 billion/year.
Scope and subjects required to conduct PIT finalization
Official Letter 1296 clarifies the scope and subjects required to conduct PIT finalization. Income-paying organizations and individuals are responsible for declaring and finalizing PIT, including conducting finalization on behalf of individuals where valid authorization is provided.
For individuals, direct finalization obligations arise in cases such as: having income from multiple sources without meeting authorization conditions; foreign employees terminating their employment in Vietnam; or individuals receiving income from foreign entities, international organizations, or diplomatic missions where PIT has not been withheld during the year.
The Official Letter also specifies cases where PIT finalization is not required, including where no income is paid, business operations are suspended during the calendar year, or where the additional tax payable after finalization does not exceed VND 50,000, as well as cases where excess tax has been paid but the taxpayer does not request a refund or offset.
Authorization for PIT finalization
Official Letter 1296 further clarifies the circumstances under which individuals may authorize PIT finalization. Typically, this applies to individuals who have labor contracts of three months or more with a single employer and are still employed at the time of finalization; or those who earn additional irregular income from other sources not exceeding VND 10 million/month on average, which has already been subject to 10% withholding.
Conversely, individuals with multiple income sources, those with additional tax payable or refundable amounts, or specific cases such as foreign employees terminating employment in Vietnam, should assess whether they are required to directly finalize PIT with the tax authorities.
Online tools supporting PIT finalization
To facilitate taxpayers, the tax authorities have deployed various systems supporting electronic declaration and submission.
For income-paying organizations: software such as the Tax Declaration Support (HTKK) version 5.5.8, iTaxViewer version 2.6.3, and the tax authority’s administrative procedure processing system are used for declaration and submission of finalization dossiers.
For individuals: digital platforms such as the tax authority’s public service portal, the eTax Mobile application, and the National Public Service Portal support declaration, submission, and tracking of dossier status.
Automatic PIT refund mechanism for individuals
A notable development is the implementation of an automatic PIT refund mechanism for individuals conducting direct finalization. From 2025 onwards, taxpayers may submit refund dossiers electronically, and where the dossier satisfies all prescribed conditions, the system will automatically process the refund within approximately three working days. Official Letter 1296 also specifies the applicable conditions and provides guidance on required documentation and system functionalities.
Overall, Official Letter 1296 enhances the efficiency of tax administration, ensuring transparency and consistency in PIT finalization while reducing administrative burdens through increased digitalization. Accordingly, ALIAT recommends that enterprises:
- Proactively review employees’ authorization documents for PIT finalization;
- Identify cases where employees are required to directly finalize PIT with tax authorities;
Verify the proper withholding and issuance of tax withholding certificates.
