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4. How to calculate personal income tax (PIT)

Date: 2025.05.22

The formula for calculating PIT in Vietnam is as follows:

(1) Taxable income = Total income – Tax-exempt income
(2)Assessable income = Taxable income – Deductions
(3) Personal income tax payable = Assessable income × Progressive tax rate

*Deductions include = Personal deduction + Dependent deduction + Insurance deductions + etc

+Personal deduction: 11 million VND/month
+Dependent deduction: 4.4 million VND/month (Definition of dependents is available on this site)
+Insurance deductions: Mandatory state social insurance, health insurance, etc.

Some tax-exempt income items include:

As stipulated in Articles 2 and 3 of Circular 111/2013/TT-BTC, amended and supplemented by Circular 92/2015/TT-BTC, which regulate types of income not subject to PIT or exempt from PIT.
Examples include:
+Company-covered transportation (commuting and business travel) for Japanese employees
+Tuition fees for children of Japanese employees studying in Vietnam (only tuition is exempt; other related costs may be taxable)
+Business trip allowance for Japanese employees assigned to Vietnam
+One round-trip air ticket per year for Japanese employees to return to their home country (maximum once a year).

💡 Note: If the above allowances are not clearly stated in the labor contract or company’s internal policies, they may not be recognized as tax-exempt income.

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