PIT-Exempt Salary Payments in Vietnam from 2026

Sep 01, 2026

HR & Payroll

PIT-Exempt Salary Payments in Vietnam from 2026

From the 2026 tax year, certain employment income items may be exempt from personal income tax in Vietnam, provided that they meet the conditions under applicable tax and labor regulations.

Under Decree No. 253/2026/ND-CP, the following salary and wage payments may qualify for PIT exemption:

Salary or wages for night work;
Salary or wages for overtime work;
Salary or wages paid for unused annual leave in specific cases.

For employers, the key point is that the exemption is not automatic. Companies must ensure that the payments are made in accordance with labor law and that supporting payroll records are properly maintained.

Table of Contents

Night work pay

Under the 2019 Labor Code of Vietnam, night working hours are from 10:00 p.m. to 6:00 a.m. of the following day.

If an employee works during this time frame at the workplace and the arrangement complies with labor law requirements on working conditions and working time, the salary or wages paid for night work may be exempt from PIT within the statutory limit.

Under Article 98 of the Labor Code, employees working at night must be paid an additional amount of at least 30% of the wage calculated based on the wage unit price or the actual wage paid for the work performed during a normal working day.

If an employer pays more than the statutory limit, the excess amount must be treated as taxable employment income.

Overtime pay

Salary or wages paid for overtime work may also be exempt from PIT if the overtime is performed at the workplace and complies with legal requirements on overtime conditions and limits.

Under the Labor Code, the minimum overtime pay rates are:

At least 150% for overtime on normal working days;
At least 200% for overtime on weekly days off;
At least 300% for overtime on public holidays, Tet holidays, or paid leave days, excluding the normal salary for those days if the employee is paid on a daily basis.

If overtime is performed at night, the employee is also entitled to additional payments for night work and night overtime as required by law.

Any amount paid above the statutory level must be included in the employee’s taxable income for PIT purposes.

Payment for unused annual leave

Under Clause 3, Article 113 of the 2019 Labor Code, when an employee resigns or loses his or her job and has not taken all annual leave days, the employer must pay salary for the unused annual leave balance.

From the 2026 tax year, this payment may be exempt from PIT if it falls within the conditions and statutory payment level prescribed by labor regulations.

The exemption does not apply broadly to all annual leave cash-out arrangements. It should be assessed based on the specific circumstances required by law, particularly cases of termination or job loss.

If the employer pays an amount exceeding the statutory level, the excess portion must be treated as taxable income.

Payroll documentation requirements

Employers should pay close attention to documentation when applying PIT exemption for overtime pay and night work pay.

Companies should prepare a separate record or clearly reflect the following information in payroll documents:

Overtime hours;
Night working hours;
Workplace or work location;
Salary or wages paid for overtime and night work;
Tax-exempt portion and taxable excess, if any.

These records should be retained by the employer and made available when requested by the tax authority.

If a separate record is not prepared, the employer must be able to substantiate the exempt income through other valid documents, such as:

Payroll reports;
Timesheets;
Electronic attendance data;
Payslips;
Employment contracts;
Salary and bonus policies;
Overtime request or approval forms;
Internal working time records.

In addition, each time salary is paid, the employer should provide the employee with a payslip or salary statement that clearly shows salary, overtime pay, night work pay, and any deductions.

If the employer cannot separate or prove the overtime or night work payment through proper records, the payment may not qualify for PIT exemption and may need to be included in the employee’s taxable income.

What should employers do?

To apply the PIT exemption correctly from the 2026 tax year, employers should:

Review timekeeping, overtime registration, and approval processes;
Update payroll formulas for overtime and night work pay;
Separate overtime pay and night work pay on payroll reports or payslips;
Maintain supporting records for overtime hours, night work hours, and payments made;
Review unused annual leave payments upon resignation or job loss;
Classify taxable and tax-exempt income correctly for monthly withholding and annual PIT finalization.

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