PERSONAL INCOME TAX LAW 2025: MAJOR CHANGES IMPACTING RESIDENT INDIVIDUALS AND BUSINESS HOUSEHOLDS

Tax Exemption for Resident Individuals with Low Revenue

Pursuant to Clause 1, Article 7 of the Personal Income Tax Law 2025: “Resident individuals engaged in production and business activities with an annual revenue of 500 million VND or less are not required to pay personal income tax. The Government shall submit to the National Assembly Standing Committee adjustments to the tax-exempt revenue threshold to suit the socio-economic situation in each period.”

Thus, resident individuals with business activities generating 500 million VND or less annually are exempt from PIT. This point helps reduce the administrative and tax burden for business households.

Clear Tax Rate Provisions for Each Income Type

Pursuant to Clauses 2, 3, and 4, Article 7 of the Personal Income Tax Law 2025, the following is specifically regulated:

1. Tax rates applied based on annual revenue

- Above the threshold specified in Clause 1 up to 03 billion VND: 15%;

- Above 03 billion VND up to 50 billion VND: 17%;

- Above 50 billion VND: 20%.

Note: Income from real estate leasing (specified in Clause 4) does not apply this method but is calculated as: 5% x excess revenue.

2. Business individuals with annual revenue above the threshold in Clause 1 up to 03 billion VND may choose one of two tax payment methods

- Calculate tax based on taxable income multiplied by the tax rates in Clause 2;

- Calculate tax based on the tax rate multiplied by taxable revenue (where taxable revenue is the portion exceeding the threshold in Clause 1).

3. Tax rates by business sector

- Distribution and supply of goods: 0.5%;

- Services, construction without material supply: 2% (specifically for property leasing, insurance agencies, lottery, and multi-level marketing: 5%);

- Production, transportation, services associated with goods; construction with material supply: 1.5%;

- Business of digital content products and services (entertainment, electronic games, digital movies, photos, music, digital advertising): 5%;

- Other business activities: 1%.

Adjustments to the Progressive Tax Scale

The progressive tax scale has been simplified, reducing the tax brackets from 7 to 5 brackets for income from salaries and wages (Pursuant to Article 9).

Tax Bracket	Taxable Income/Year (Million VND)	Taxable Income/Month (Million VND)	Tax Rate (%)
1	Up to 120	Up to 10	5
2	Over 120 to 360	Over 10 to 30	10
3	Over 360 to 720	Over 30 to 60	20
4	Over 720 to 1,200	Over 60 to 100	30
5	Over 1,200	Over 100	35

- Bracket 2 reduction: From 15% to 10% (for monthly taxable income from 10 to 30 million VND).

- Bracket 3 reduction: From 25% to 20% (for monthly taxable income from 30 to 60 million VND).

This adjustment significantly reduces the tax burden for employees.

Significant Increase in Family Circumstance Deductions

Pursuant to Clause 1, Article 10, the deductions are specified as follows:

- For the taxpayer: 15.5 million VND/month (186 million VND/year);

- For each dependent: 6.2 million VND/month.

This increase helps lower the taxable income and the actual tax amount payable by individuals.

Conclusion: The Personal Income Tax Law 2025 not only focuses on adjusting tax rates but also aims to expand exemptions, simplify procedures, and ensure social fairness. In the coming time, the implementation of guiding Decrees and Circulars will play a vital role. Taxpayers, especially business individuals and employees, should proactively update these regulations to timely adjust financial plans and comply with tax obligations.

 

The information contained in this article is general and intended only to provide information on legal regulations. DB Legal will not be responsible for any use or application of this information for any business purpose. For in-depth advice on specific cases, please contact us.

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