Vietnam Drafts Major Revisions to Personal Income Tax Regime

On 17 July 2025, the National Assembly released the Draft Personal Income Tax Law (“Draft”), introducing substantial policy changes intended to align with Vietnam’s broader reform agenda and the rapid transformation of the global economy. If adopted, the new law would reshape the scope of taxable income, revise tax brackets, and adjust key deductions, reflecting both fiscal and social policy objectives.

One of the most notable proposals is the expansion of taxable income categories to capture emerging asset classes and transactions that had previously fallen outside the tax regime, resulting in revenue leakage. Under the Draft, income from the transfer of Vietnam national internet domains, emission reduction certificates, carbon credits, green bonds, automobile license plates obtained via auction (together with the associated vehicles), and digital assets—including virtual and tokenized assets—would become taxable. While most such income would be taxed at 5% on the portion exceeding VND 10 million, digital asset transfers would instead be subject to a flat 0.1% levy on transaction value.

The Draft also seeks to restructure the personal income tax schedule by reducing the number of brackets from seven to five, thereby simplifying the regime. Two alternative schedules have been proposed, both maintaining a progressive structure but adjusting the thresholds for middle- and high-income earners. The Ministry of Finance is currently seeking public feedback on which schedule should be adopted.

In recognition of inflationary pressures and the need to support households, the Draft proposes to increase family circumstance deductions. Taxpayers could claim up to VND 15.5 million per month (VND 186 million annually), while deductions for each dependent would rise to VND 6.2 million per month. This adjustment is intended to ease the financial burden on employees, boost disposable income, and stimulate domestic consumption.

Another key proposal relates to real estate transfer taxation. Where purchase price, sale price, and related expenses are verifiable, taxable income would be subject to a rate of up to 20%. In cases where these figures cannot be determined, tax would be calculated based on the holding period of the property. A progressive approach is suggested, with shorter holding periods (under two years) taxed at higher rates—up to 10% of transfer value—to discourage speculative transactions and stabilize the property market.

At this stage, all provisions remain proposals. The Ministry of Finance, in coordination with the Government, will continue to study, refine, and collect feedback from stakeholders before finalizing the law. These reforms, if adopted, would not only expand Vietnam’s tax base but also promote equity, support living standards, and help guide sustainable economic development.