However, many experts have suggested lowering the cap and raising the taxable income thresholds to ensure fairness.

In the latest draft of the amended law, the Ministry of Finance (MOF) has submitted “Option 2” to the government, i.e., a minimum tax rate of 5 percent for taxable monthly income starting at VND10 million (after deductions for dependents and other allowances), and a maximum rate of 35 percent for income over VND100 million. The progressive tax system would be simplified from seven to five brackets.

According to MOF, this tax structure would result in a reduction of VND8,740 billion in state budget revenue.

Pham Manh Hung, deputy director of the Institute of Banking Science and Technology at the Banking Academy, told VietNamNet that reducing the tax brackets from seven to five would make the tax system simpler and reduce the steep “jumps” between income levels.

The threshold for the top tax rate has also been raised from VND80 million to VND100 million per month, meaning only individuals with very high income would be subject to the 35 percent rate. This change is considered favorable for investors and skilled professionals, as fewer people would fall into the highest bracket.

However, Hung noted that the 35 percent cap remains relatively high compared to other talent hubs like Singapore, where the top rate is currently 24 percent for residents and comes with many deductions and incentives. Therefore, for very high salaries, such a marginal tax rate may impact the country’s ability to attract and retain top-tier talent.

He suggested that the threshold for the 35 percent tax rate could be raised further, or that targeted deductions and incentives (such as for R&D, tech experts, or green finance) be expanded to enhance competitiveness in the region.

Among the public feedback on the draft law released by MOF, some proposals go further by recommending the top tax rate be reduced from 35 percent to 25 percent, along with wider spacing between tax brackets and higher taxable income thresholds.

The National Assembly delegation from Nghe An province agreed with the five-bracket structure in Option 2, but recommended adjusting the rates to ensure the highest does not exceed 25 percent, to encourage and motivate taxpayers.

Meanwhile, the delegation from Son La province urged further review of the impact of the 30 percent and 35 percent tax levels. They argued that these rates are quite high, even after deductions, and could affect taxpayer behavior, potentially increasing tax evasion or avoidance.

The HCMC Tax Advisory and Agent Association reported that most feedback supports removing the 35 percent tax bracket entirely, proposing a maximum of 30 percent instead. This change would create a more competitive working environment and help retain talent.

They also emphasized the importance of encouraging legitimate wealth creation, reducing tax evasion and transfer pricing, and attracting foreign professionals.

Regarding the tax brackets, the association supports Option 2 but suggested wider thresholds for the first two brackets - increasing by VND10–15 million compared to the current draft.

Taxable income threshold

Deloitte Vietnam pointed out that Vietnam currently ranks among the highest in Southeast Asia for PIT rates. The top rate of 35 percent matches Thailand and the Philippines, while Singapore’s top rate is only 24 percent, and Malaysia and Myanmar cap out at 30 percent.

The income thresholds for each bracket in Vietnam are relatively low compared to neighboring countries.

Deloitte recommended not only revising the progressive tax structure but also increasing the taxable income thresholds, especially at the highest bracket, to reflect economic growth and improve Vietnam’s competitiveness in attracting high-quality talent.

Vietcombank also suggested raising the thresholds for the second and third brackets to better reflect inflation in recent years. Specifically, they proposed:

Bracket 2: from VND15–45 million/month (or round up to VND50 million)

Bracket 3: from VND45–75 million/month (or round up to VND80 million)

For higher brackets (4 and 5), the bank suggested adjusting thresholds to better target high and very high-income groups.

In terms of tax rate design, Vietcombank recommended a clearer distinction between low- and high-income groups, rather than applying a flat 5 percent increase between brackets as in the current draft.

They also proposed that when merging previous brackets, the tax rates should be retained at earlier levels or lower. For instance, Bracket 2 (in the new structure) should be taxed at 10 percent or lower, or similar to the old Bracket 2, instead of 15 percent. Similarly, the new Bracket 3 (which merges old Brackets 4 and 5) should maintain the previous 20 percent rate or lower, instead of increasing to 25 percent.

Nguyen Le