DECREE NO. 253/2026/ND-CP: KEY CHANGES TO PERSONAL INCOME TAX FROM JULY 1, 2026

On June 30, 2026, the Government issued Decree No. 253/2026/ND-CP providing detailed regulations on certain articles and measures for the organization and implementation of the Law on Personal Income Tax. The Decree takes effect from July 1, 2026.

Various changes directly affecting employees and enterprises

Decree No. 253/2026/ND-CP is one of the important legal documents guiding the application of personal income tax policies under the new regulations. Key areas of interest include the determination of taxable income, non-taxable income, deductions, tax withholding, and policies applicable to certain new types of income.

Notably, several provisions directly affect enterprises and employees, such as meal allowances, accommodation provided by employers, severance or redundancy allowances, contributions to pension funds and insurance schemes, as well as tax withholding applicable to individuals who do not enter into labor contracts or enter into short-term labor contracts.

In addition, personal income tax policies have been expanded to accommodate new transactions and types of assets, including digital assets, carbon credits, and certain types of income arising from transfers.

The following are the key new provisions and changes that enterprises and taxpayers should take into consideration.

1. New regulations on mid-shift and lunch allowances

One of the notable provisions concerns mid-shift and lunch allowances paid by employers to employees. Where an enterprise makes such payment in cash, the portion exceeding the prescribed limit shall be included in the employee's taxable personal income. Meanwhile, where meals are directly organized, meal portions are purchased, or meal vouchers are provided, the determination of tax obligations shall be made in accordance with the applicable regulations and specific conditions.

Enterprises should review and establish appropriate policies on mid-shift meal allowances to accurately determine the portion of income subject to tax for employees.

2. Clarification of accommodation, electricity, and water benefits provided by enterprises

The Decree continues to provide regulations on the determination of taxable income in respect of benefits provided by employers to employees.

Where an employer constructs accommodation to provide housing for employees working at the enterprise, housing benefits and related expenses shall be determined in accordance with regulations on income not subject to tax.

Where an enterprise pays rent, electricity, water, or related services on behalf of an employee, taxable income shall be determined based on the actual amount paid on behalf of the employee, subject to the prescribed limit.

Enterprises should note that the tax treatment differs between accommodation directly provided by the enterprise and rent paid on behalf of the employee.

3. Increase in the threshold for 10% PIT withholding applicable to certain payments

A notable change is the adjustment of the threshold for applying the 10% personal income tax withholding rate to certain individuals receiving income without entering into a labor contract or entering into a short-term labor contract.

The increase in this threshold reduces the number of cases in which tax withholding is required for low-value income payments and facilitates income-paying organizations in fulfilling their tax withholding obligations.

Enterprises should update their procedures for payments of wages, remuneration, and other payments to individuals falling within the applicable scope to avoid incorrect withholding rates or withholding from inappropriate recipients.

4. Supplementation and clarification of tax policies on severance and redundancy allowances

The Decree contains provisions concerning severance allowances and redundancy allowances received by employees.

When determining whether an allowance is subject to taxable income, consideration must be given to the basis for payment, labor law provisions, and the enterprise's lawful internal regulations and agreements, depending on each specific case.

Accordingly, enterprises with policies for paying allowances exceeding the ordinary levels should pay attention to completing their financial regulations, internal regulations, labor contracts, or collective labor agreements as a basis for determining tax obligations upon payment.

5. Adjustment of regulations on contributions to pension funds and insurance

Another matter of concern is the provisions relating to contributions to pension funds and certain types of insurance.

When determining taxable income, taxpayers may be entitled to deduct contributions that satisfy the prescribed conditions and limits. However, it is necessary to clearly distinguish between:

• Contributions made by employees themselves;
• Contributions made by employers;
• Amounts deductible when determining assessable income;
• Benefits treated as taxable income.

Correctly determining the nature of each contribution is necessary to avoid errors in calculating personal income tax.

6. Addition of new types of income subject to personal income tax

Under the new personal income tax policies, the scope of taxation has been expanded to cover certain types of income arising from new transactions and types of assets.

These include income related to:

• Transfers of Vietnamese national domain names “.vn”;
• Transfers of greenhouse gas emission reduction results and carbon credits;
• Transfers of vehicle license plates won through auctions;
• Transfers of digital assets in accordance with the law.

The addition of these provisions demonstrates that tax policies are being adjusted to better accommodate the development of the digital economy and the emergence of new types of assets and transactions.

7. Addition of deduction policies for certain expenses

One of the changes of particular interest to employees is the policy concerning deductions when determining assessable income.

Under the new regulations, deductions for certain expenses, including medical expenses and education and training expenses, are subject to specific conditions and limits prescribed by law.

Taxpayers should retain complete invoices, supporting documents, and relevant records as a basis for determining deductible amounts when filing and finalizing tax.

8. Clarification of tax policies on salaries paid for unused annual leave

For salaries and wages paid to employees for unused annual leave days, the determination of taxable income must be based on labor law provisions and the specific payment conditions.

Payments that satisfy the prescribed conditions and fall within the prescribed limits may be treated in accordance with the corresponding tax policies. Where the payment exceeds the prescribed limit or fails to satisfy the applicable conditions, the non-compliant portion may be included in taxable income.

Therefore, enterprises should not generally assume that all payments made for unused annual leave are tax-exempt.

9. Addition of tax policies on open-ended fund certificates

The new regulations also contain provisions concerning income from the transfer of open-ended fund certificates. The application of tax exemption or preferential tax treatment, if any, must be determined based on the holding period requirements and other conditions prescribed by law.

This is a matter that investors should take into consideration when transferring fund certificates and determining their personal income tax obligations.

10. Transitional provisions for the application of new PIT policies

Decree No. 253/2026/ND-CP takes effect from July 1, 2026. Therefore, the application of the new provisions must be considered together with the transitional provisions applicable to income arising before and after this date.

Enterprises and income-paying organizations should pay particular attention to the time income arises, the payment date, and the regulations applicable to each case in order to properly carry out tax declaration, withholding, and finalization.

What should enterprises and employees take into consideration?

It can be seen that changes to personal income tax from July 1, 2026 not only affect individuals earning income but also directly impact enterprises' management of payroll, benefits, and tax withholding.

For enterprises, the following policies should be reviewed:

• Mid-shift and lunch allowances;
• Accommodation, electricity, water, and other benefits;
• Severance and redundancy allowances;
• Insurance and pension fund contributions;
• Payments to individuals who do not enter into labor contracts;
• Procedures for PIT withholding, declaration, and finalization.

For taxpayers, understanding taxable income, tax-exempt income, and deductible amounts will help accurately determine tax obligations and ensure their entitlements when carrying out tax finalization.

It should be noted that, in addition to Decree No. 253/2026/ND-CP, the Ministry of Finance has also issued Circular No. 87/2026/TT-BTC providing detailed regulations on certain contents of the Law on Personal Income Tax and Decree No. 253/2026/ND-CP. Therefore, when applying the regulations in practice, enterprises should concurrently refer to the relevant guiding documents.

Conclusion

Decree No. 253/2026/ND-CP marks significant changes to personal income tax policies from July 1, 2026. The new regulations not only adjust the determination of certain types of taxable income but also update policies on employee benefits, deductions, and types of income arising in the context of the digital economy.

Enterprises and taxpayers should proactively update the new regulations, particularly those applicable to regular payments made to employees, in order to minimize errors in payroll calculation, tax withholding, tax declaration, and personal income tax finalization.