From 01/07/2026: 10% personal income tax withholding only applies to casual income of vnd 5 million or more per payment
On 01 July 2026, Decree No. 253/2026/ND-CP guiding the implementation of the Law on Personal Income Tax officially came into effect. The Decree contains various notable provisions concerning tax registration, tax declaration, tax withholding, and tax administration applicable to individuals and organizations. Among these, one of the new points directly affecting enterprises and employees is the increase of the personal income tax withholding threshold for casual income from VND 2 million to VND 5 million per payment. The following article analyzes the changes that enterprises should note when implementing personal income tax withholding from VND 5 million.
1. Policy before 01 July 2026
Under Point i, Clause 1, Article 25 of Circular No. 111/2013/TT-BTC, organizations and individuals paying salaries, remuneration, or other income to resident individuals who do not enter into labor contracts or enter into labor contracts of less than 03 months must withhold 10% personal income tax before making payment if the payment is VND 2,000,000 or more per payment.
Accordingly, once a payment reaches VND 2 million or more per payment, the enterprise is obliged to withhold tax before making payment to the individual, except where the individual is eligible to submit a commitment for temporary non-withholding of tax in accordance with regulations.
2. New policy from 01 July 2026
Under Clause 2, Article 50 of Decree No. 253/2026/ND-CP, the tax withholding threshold is increased from VND 2 million to VND 5 million per payment.
Specifically, an organization or individual paying income to a resident individual who does not enter into a labor contract or enters into a labor contract of less than 03 months is only required to withhold 10% personal income tax when the payment is VND 5 million or more per payment.
For payments of less than VND 5 million per payment, the income-paying organization is not required to withhold tax. However, if the individual wishes to have tax withheld (for example, for the purpose of subsequent tax finalization), the income-paying organization may still withhold tax at the rate of 10% at the individual’s request.
3. Other regulations on tax withholding for casual income remain unchanged
In addition to increasing the withholding threshold, Decree No. 253/2026/ND-CP retains the mechanism previously applicable to individuals with low income.
Accordingly, if an individual only has income subject to 10% withholding and estimates that their total taxable income after personal and dependent deductions is below the taxable threshold, the individual may still submit a Commitment Form using the form issued by the tax authority so that the income-paying organization temporarily does not withhold tax.
At the same time, the income-paying organization remains responsible for compiling a list of these individuals and their income and submitting it to the tax authority at the end of the year, similar to the previous regulations.
For individuals entering into labor contracts of 03 months or more, the tax withholding method remains unchanged. Enterprises shall continue to withhold tax according to the progressive tax rates applicable to each income bracket, including cases where an employee simultaneously enters into labor contracts of 03 months or more with multiple employers.
4. Key new points of Decree No. 253/2026/ND-CP
| Content | Circular No. 111/2013/TT-BTC | Decree No. 253/2026/ND-CP |
|---|---|---|
| Tax withholding threshold for casual income | From VND 2 million per payment | From VND 5 million per payment |
| Payments below the threshold | No withholding required | No withholding required, unless requested by the individual |
| Withholding rate | 10% | 10% (unchanged) |
| Commitment mechanism | Applicable | Continues to apply |
The increase in the withholding threshold is intended to reduce the number of cases in which personal income tax withholding is required for low-value casual income. This thereby reduces administrative procedures for both enterprises and employees.
Therefore, from 01 July 2026, enterprises should proactively review and update their income payment procedures, tax withholding procedures, payroll software, and internal forms to ensure that the implementation of personal income tax withholding obligations complies with the new regulations, while minimizing risks arising during the tax declaration and finalization process.
Should you require specialized legal assistance, please contact:
Legal Specialist: Pham Nguyen Xuan Quang
- – Email: info@bizlawyer.vn
- – Tel.: 086.885.1900
Sincerely.
