The proposal is included in a draft decree detailing several provisions and implementation measures under the Law on Personal Income Tax that the ministry recently submitted to the government.

Under the draft decree, organizations and individuals paying salaries, wages, remuneration or other payments to resident individuals without labor contracts, or with labor contracts shorter than three months, would be required to withhold 10% personal income tax before payment if the amount reaches VND5 million ($192) or more per payment.

The regulation would also apply to income payments made to workers after their labor contracts have ended.

If the payment is below VND5 million per occurrence, the paying organization or individual may still withhold 10% tax at the request of the income recipient.

The Ministry of Finance has proposed raising the threshold for 10% personal income tax withholding on occasional income.

Individuals whose only income falls under the 10% withholding category but whose estimated taxable income, after family circumstance deductions, remains below the taxable threshold may submit a written commitment form to the income payer.

This document would serve as the basis for temporarily exempting them from tax withholding.

Based on the recipient’s declaration, the paying organization would not deduct tax.

At the end of the tax year, however, organizations must still compile and submit lists of individuals who were exempted from withholding to tax authorities.

Individuals making such commitments would be legally responsible for the accuracy of their declarations.

Any fraudulent declarations would be handled in accordance with tax administration laws and other relevant regulations.

For resident individuals signing labor contracts lasting three months or longer, income-paying organizations would continue withholding tax according to Vietnam’s progressive tax schedule, including cases where individuals work for multiple employers simultaneously.

Earlier drafts of the decree had proposed increasing the withholding threshold from VND2 million ($77) to only VND3 million ($115) per payment.

Speaking with VietNamNet, Le Van Tuan, director of Keytas Accounting and Tax Co. Ltd., said the withholding threshold should be set at a level that does not disadvantage vulnerable groups.

“From 2026, the personal deduction level will be VND15.5 million ($596) while the dependent deduction will be VND6.2 million ($238). Workers only incur tax obligations when their income exceeds these deduction levels,” Tuan said.

“Based on the new deduction framework, the threshold for applying the 10% withholding tax should be VND10 million ($385) per payment. That level would reduce disadvantages for workers and avoid negative impacts on policy implementation,” he added.

The draft decree also proposes raising the threshold for exempting occasional income from annual tax finalization from VND10 million ($385) to VND15 million ($577) per month, provided the income has already been subject to 10% withholding at source and the taxpayer does not request tax finalization.

Nguyen Le