Dilinh Legal Update - December 2025
By Michael Lee, Khai Ho
December 2025 brings a cluster of landmark tax and labour law changes that will reshape how businesses in Vietnam manage payroll, corporate tax, and workforce compliance heading into 2026. This update covers the new Corporate Income Tax Law, the Draft Personal Income Tax Law, new minimum wages, the overhauled Employment Law, and a significant increase to personal income tax deductions.
1. New Corporate Income Tax Law: No. 67/2025/QH15
The Law on Corporate Income Tax No. 67/2025/QH15 ("Law on CIT 2025") was passed by the 15th National Assembly on 14 June 2025, took effect on 1 October 2025, and applies to the 2025 tax period. It introduces significant changes to the CIT regime — particularly for foreign enterprises — covering the scope of taxable income, tax-exempt income, deductible expenses, tax rates, and investment incentives.
CIT scope for foreign enterprises — Under the Law on CIT 2025, foreign enterprises subject to CIT in Vietnam fall into two categories:
- Enterprises with a permanent establishment (PE) in Vietnam are liable to CIT on taxable income arising in Vietnam and on income arising outside Vietnam that relates to the PE's operations.
- Enterprises without a PE in Vietnam — including those engaged in e-commerce or platform-based business activities — are liable to CIT on taxable income arising in Vietnam.
Critically, the Law on CIT 2025 adds "e-commerce platforms and digital platforms" to the definition of a permanent establishment. A foreign enterprise that operates such a platform in Vietnam to provide goods or services is treated as having a PE, and must fulfill CIT obligations accordingly. This brings a significant new category of cross-border digital businesses into the full PE tax net from 1 October 2025.
New tax-exempt income categories — The Law on CIT 2025 introduces several additional categories of income exempt from CIT:
- Income from innovation and digital transformation activities — exempt for up to 3 years.
- Sponsorships and funding received for scientific research, technology development, innovation, and digital transformation.
- Direct financial support from the State budget and from the Government's Investment Support Fund.
- Income from the first transfer of carbon credits, interest from green bonds, and income from the first transfer of green bonds.
Offsetting profits and losses — Enterprises engaged in real estate transfers or investment project transfers may now offset losses from those activities against taxable income from other income-generating business activities chosen by the enterprise (excluding activities already enjoying tax incentives). This is a meaningful relaxation from the previous rule, which limited such offsets to production and business activity profits.
One important exception: transfers involving investment projects in the exploration, mining, and processing of minerals must be declared and taxed separately. Profit-and-loss offsetting with other activities is not permitted for these transactions.
Expanded deductible expenses — The Law on CIT 2025 provides more explicit rules on deductible costs, adding:
- Expenditures for scientific research, technology development, innovation, and digital transformation.
- Business-related expenses, even when they do not directly match revenue generated in the same period — a relaxation of the previous strict revenue-matching requirement.
- Expenses for supporting the construction of public facilities that also serve the enterprise's business operations.
- Expenses related to reducing greenhouse gas emissions, achieving carbon neutrality or net zero, and reducing environmental pollution.
- Contributions to funds established under Prime Minister decisions or Government regulations.
CIT rates — The standard CIT rate remains 20%. Small-scale enterprises are entitled to preferential rates:
- 15% for enterprises with total annual revenue not exceeding VND 3 billion.
- 17% for enterprises with annual revenue above VND 3 billion and up to VND 50 billion.
These preferential rates do not apply to subsidiaries or enterprises in a related-party relationship where the related party does not itself qualify for the preferential rates.
Tax incentives: new investment projects — The Law on CIT 2025 expands the sectors eligible for CIT incentives. Newly added sectors include:
- Strategic and digital technology sectors: application of strategic technologies; cybersecurity products and services; key digital technology products and services; electronic devices under the digital technology industry law; new-technology products; semiconductor chip development, design, manufacturing, packaging, and testing; and data centers and AI facilities.
- Production for national defense and security, and industrial mobilization products.
- Key chemical industry and mechanical products.
- Crop products, plantation forests, livestock, farmed aquatic products, and processing of agricultural and marine products.
- Automobile manufacturing and assembly.
- Investment in and operation of technical infrastructure supporting SMEs, SME incubators, and shared working spaces for start-up SMEs.
Projects with a minimum investment capital of VND 6 trillion are no longer categorized as incentivized sectors under the Law on CIT 2025.
Incentive locations from 1 October 2025 include areas with "exceptionally difficult" or "difficult" socio-economic conditions, economic zones, high-tech zones, agricultural high-tech zones, and concentrated digital technology zones. Industrial zones are no longer listed as incentive locations — meaning new and expansion projects in industrial zones will not enjoy tax exemptions or reductions unless the zone itself falls within an incentive area.
Tax incentives: expansion investment projects — Additional income generated from expanding scale, increasing capacity, upgrading technology, or improving environmental outcomes for an ongoing project in an incentivized sector or location continues to enjoy the same tax incentives applicable to the existing project for the remaining incentive period. Taxpayers are not required to separately account for the expansion income and the existing project income.
Where the existing project has exhausted its incentive period, additional income from the expansion remains eligible for tax exemption or reduction if it meets the prescribed criteria for original cost, increased fixed assets, or increased design capacity. However, preferential tax rates do not apply to expansion income — only exemptions and reductions. These apply from the year the expansion investment is completed, based on registered capital.
Tax incentives: household business conversions — Micro-enterprises and small enterprises converted from household businesses are exempt from CIT for two consecutive years from the time they first generate taxable income.
What businesses must do — Foreign enterprises operating digital platforms or e-commerce businesses with Vietnamese market exposure should urgently assess their PE exposure under the new definition — this change applied from 1 October 2025. Enterprises planning new or expansion investments should map their sector and location against the revised incentive framework, particularly given the removal of industrial zones as an incentive location. Finance teams should also update deductible expense policies to capture the newly permitted categories, including digital transformation spend and green-related costs.
2. Draft Law on Personal Income Tax
On 17 July 2025, the Ministry of Finance released the Draft Personal Income Tax Law ("Draft PIT Law"), intended to replace the current PIT Law. It is expected to take effect in 2026. The draft is currently in the public consultation stage and its final form may change, but the key proposals merit close attention.
New and expanded taxable income categories — For business income, the revenue threshold below which income is not taxable is proposed to increase from VND 100 million/year to VND 200 million/year. New taxable income types added to the business income category include income from agency, brokerage, business cooperation, and organizational activities, as well as income from e-commerce and digital platform-based business activities.
For employment income, the draft adds:
- All remuneration payments and benefits in cash or in kind, in any form.
- Income from transferring the Vietnamese national domain name ".vn".
- Income from transferring emission reduction certificates, carbon credits, and green bonds.
- Income from transferring auctioned automobile license plates (together with the vehicles bearing such plates).
- Income from transferring digital assets — including virtual assets and tokenized assets.
- Income from the use, ownership, or transfer of other assets as prescribed by the Government.
New tax-exempt and special tax categories — The draft introduces PIT exemptions or special tax treatment for:
- Individuals and experts performing scientific, technological, and innovation tasks, or working on innovative start-up projects.
- Foreign experts working on non-refundable ODA-funded projects or foreign NGO programs in Vietnam; Vietnamese nationals at UN representative offices in Vietnam; and individuals in UN peacekeeping forces.
- High-quality digital technology personnel working in concentrated digital technology zones, on R&D or key digital technology product projects (including semiconductor chips and AI), or in digital technology personnel training activities.
- High-tech personnel in high-tech sectors, high-tech applications, information technology, science and technology, innovation, digital transformation, and other priority sectors.
- Owners of private enterprises or single-member LLCs who have already fulfilled their CIT obligations.
Simplified progressive tax schedule: seven brackets reduced to five — The draft proposes two alternative five-bracket schedules (down from the current seven), with the top rate maintained at 35% and the bottom rate at 5%. Both options reduce the overall PIT burden compared to the current schedule. Option 2 delivers a greater reduction than Option 1.
| Option 1 — Taxable Income (mil VND/month) | Rate (%) | Option 2 — Taxable Income (mil VND/month) | Rate (%) |
|---|---|---|---|
| Up to 10 | 5% | Up to 10 | 5% |
| > 10 – 30 | 15% | > 10 – 30 | 15% |
| > 30 – 50 | 25% | > 30 – 60 | 25% |
| > 50 – 80 | 30% | > 60 – 100 | 30% |
| Above 80 | 35% | Above 100 | 35% |
Both options retain the 5% entry rate and the 35% top rate. The key difference is that Option 2 widens the middle brackets — particularly the 25% and 30% bands — allowing more income to be taxed at lower rates compared to Option 1.
What businesses must do — The Draft PIT Law is still in consultation and its final form may differ. However, employers should begin assessing the impact of the expanded taxable income categories — particularly the broad capture of all cash and in-kind benefits under employment income, and the inclusion of digital asset transfers. HR and payroll teams should model the potential withholding implications under both proposed tax schedules for planning purposes.
3. New Minimum Wages Effective 1 January 2026: Decree 293/2025/ND-CP
Decree 293/2025/ND-CP ("Decree 293"), issued on 10 November 2025 and effective from 1 January 2026, sets the regional minimum wages applicable to employees working under labor contracts.
| Region | Monthly Minimum Wage (VND/month) | Hourly Minimum Wage (VND/hour) |
|---|---|---|
| Region I | 5,310,000 | 25,500 |
| Region II | 4,730,000 | 22,700 |
| Region III | 4,140,000 | 20,000 |
| Region IV | 3,700,000 | 17,800 |
Ho Chi Minh City and Hanoi fall within Region I. The new rates represent an increase from the 2025 minimums and reflect ongoing adjustments for cost-of-living and economic conditions.
What businesses must do — All employers must update payroll systems to apply the new minimum wage rates from 1 January 2026. Review all employment contracts where wages are set by reference to the statutory minimum, and adjust accordingly. Note that social insurance contribution bases are also calculated by reference to wages — updated minimum wages may affect social insurance and health insurance contribution calculations. Ensure all employment-related systems are updated before the January 1 effective date.
4. New Employment Law Effective 1 January 2026: No. 74/2025/QH15
The Employment Law 2025 (No. 74/2025/QH15) was passed by the National Assembly on 16 June 2025 and replaces the Employment Law 2013. It takes effect on 1 January 2026. The key changes concern unemployment insurance (UI) enrollment, contribution rates, and benefit regimes.
Expanded UI enrollment scope — The Employment Law 2025 significantly expands the categories of employees required to participate in UI:
- Employees working under a labor contract (or similar contract with wages and supervision) with a definite term of at least one month.
- Part-time employees under a labor contract (indefinite or at least one month) whose monthly salary is not lower than the minimum salary used as the basis for compulsory social insurance contributions.
- Enterprise managers, controllers, capital representatives, Board of Directors members, General Directors, Directors, Supervisory Board members, and controllers — all of whom receive salaries.
The Employment Law 2025 also clarifies groups exempt from UI participation:
- Employees who meet the conditions for pension entitlement — expanded from the previous rule which only excluded those already receiving a pension.
- Employees receiving social insurance benefits or monthly allowances as prescribed by the Government.
- Employees on probationary contracts.
UI contribution rate — The Employment Law 2025 converts the fixed 1% UI contribution rate under the Employment Law 2013 into a maximum cap of 1%. The Government now has the flexibility to set the rate below 1% when economic or social conditions warrant. In practice, the rate may remain at 1% initially, but the structural change gives the Government room to reduce it without legislative amendment.
Updated UI benefit regimes — The four UI benefit regimes are retained but clarified and expanded:
- Vocational training support — Expanded to "Support for employees participating in training and upskilling programs." Employees now also receive meal allowances during the training period, reducing financial hardship for unemployed individuals undergoing retraining.
- Unemployment allowance — Adds a provision that employees who leave work upon becoming eligible for pension benefits are not entitled to the unemployment allowance. The waiting period for allowance eligibility is reduced from 15 days to 10 working days.
- Support for employers to retrain employees to maintain employment — Renamed "Support for employers to train, retrain, and upgrade employees' skills to maintain employment." Key changes to this regime include:
- Force majeure is clarified to include: (i) natural disasters, fires, epidemics, or dangerous diseases; or (ii) implementation of State authority decisions requiring relocation or downsizing of business premises.
- The UI contribution eligibility threshold for employer support is increased to 12 months within the preceding 24 months, up from 9 months.
- A new requirement is added: a training or upskilling plan to maintain employment must be in place.
- The condition that employers must prove they lack sufficient financial resources to organize training programs has been removed.
What businesses must do — Employers must review their payroll and HR databases to identify newly enrolled UI participants — particularly part-time employees and salaried managers who were not previously covered. Update enrollment records with the relevant social insurance authority before 1 January 2026. Review any existing employer training support programs against the revised eligibility criteria, including the new 12-month contribution condition and the requirement for a written training plan.
5. Increased PIT Personal Deductions from 1 January 2026: Resolution 110/2025/UBTVQH15
Resolution 110/2025/UBTVQH15 ("Resolution 110"), issued by the Standing Committee of the National Assembly on 17 October 2025, increases the personal deductions applicable to personal income tax from the 2026 tax period onward.
| Deduction type | Amount (from 1 Jan 2026) |
|---|---|
| Personal deduction for taxpayers | VND 15.5 million/month |
| Deduction for each dependent | VND 6.2 million/month |
Resolution 110 takes effect on 1 January 2026 and applies from the 2026 tax period onward. The previous personal deduction was VND 11 million/month and the dependent deduction was VND 4.4 million/month — increases of approximately 41% and 41% respectively.
What businesses must do — Employers responsible for withholding personal income tax from employee salaries must update their payroll systems to apply the new deduction amounts from the first payroll cycle in January 2026. Employees who have dependents registered with their employer should confirm those registrations remain current. The higher deductions will reduce PIT withholding for most employees — communicate this change to staff proactively.
Summary: Key Actions and Timelines
| Change | Effective date | Action required |
|---|---|---|
| Law on CIT 2025 (No. 67/2025/QH15) | 1 Oct 2025 (2025 tax period) | Review CIT position, incentive eligibility, and e-commerce/platform PE exposure |
| Draft PIT Law | Expected 2026 (draft stage) | Monitor legislative progress; assess impact of new taxable income categories and bracket changes |
| Decree 293 — Minimum wages | 1 Jan 2026 | Update payroll to new regional minimum wage rates |
| Employment Law 2025 (No. 74/2025/QH15) | 1 Jan 2026 | Expand UI enrollment; update contribution and benefit processes |
| Resolution 110 — PIT deductions | 1 Jan 2026 (2026 tax period) | Update payroll withholding to reflect new personal and dependent deduction amounts |