Personal Income Tax Obligations of Vietnam Tax Residents Receiving Income From Foreign Enterprises

The rise of freelance work for foreign enterprises has raised practical questions regarding the personal income tax (“PIT”) obligations of individuals who are tax residents of Vietnam and receive income directly from overseas. Under Vietnamese tax law, payment from a foreign enterprise does not, in itself, exempt a Vietnam tax resident from PIT. The applicable tax treatment depends primarily on the individual’s tax residency status and the nature and source of the income.

1.     Income from Foreign Enterprises May Be Subject to PIT in Vietnam

Under Clause 1, Article 2 of the Law on Personal Income Tax No. 109/2025/QH15, tax residents of Vietnam are subject to PIT on taxable income derived both within and outside Vietnam. Tax residency is determined based on the individual’s period of presence in Vietnam and/or permanent place of residence, in accordance with Clause 2, Article 2 of the Law.

Accordingly, a Vietnam tax resident who performs work for a foreign enterprise and receives payment directly from that enterprise may remain liable for PIT in Vietnam. The absence of an office, branch or other commercial presence of the foreign enterprise in Vietnam does not, by itself, remove the relevant income from the scope of Vietnamese taxation.

2.     No Employment Contract Does Not Necessarily Mean No Tax Liability

For freelancers, PIT liability does not depend solely on whether an employment contract exists. Clause 2, Article 3 of the Law on Personal Income Tax No. 109/2025/QH15 defines income from salaries and wages to include salaries, wages, remuneration, payments of a similar nature, and monetary or non-monetary benefits.

Where an individual performs services independently and receives remuneration for such services, the relevant income must be assessed under the applicable rules on taxable income. If the underlying activities are, in substance, business activities, the corresponding tax treatment will instead be determined under the rules applicable to income from business.

The absence of an employment contract is therefore not, by itself, sufficient to establish that no PIT liability arises.

3.     Tax Filing Where Freelance Income Is Paid Directly by a Foreign Enterprise

A practical issue arises where the foreign enterprise does not withhold PIT in Vietnam. Under Point c.1.2, Clause 1, Article 22 of Circular No. 89/2026/TT-BTC, Vietnam tax residents receiving salary or wage income paid by overseas organizations or individuals are subject to direct tax filing with the Vietnamese tax authority.

Accordingly, where a Vietnam tax resident receives remuneration directly from a foreign enterprise and the income is subject to PIT, the individual is responsible for fulfilling the applicable tax filing and payment obligations in Vietnam. The individual should not assume that the absence of Vietnamese tax withholding by the foreign payer means that no tax is payable.

The applicable filing method, filing period and amount of PIT payable should be determined by reference to the nature of the income, the individual’s tax residency status and the tax administration rules in force when the tax liability arises.

4.     Income Level Relevant to PIT Liability

For Vietnam tax residents deriving income from salaries and wages, PIT is generally calculated on taxable income after applicable deductions, including qualifying insurance contributions and personal and dependent deductions.

An important update should also be noted in respect of information previously published by Tuổi Trẻ Online in November 2025. Under the Law on Personal Income Tax No. 109/2025/QH15, from the 2026 tax year, the personal deduction is VND 15.5 million per month, or VND 186 million per year. The deduction for each dependent is VND 6.2 million per month.

These thresholds should be taken into account when determining whether, and to what extent, PIT is payable on the individual’s taxable income.

Conclusion: Receiving freelance income directly from a foreign enterprise does not, in itself, create an exemption from Vietnamese PIT. For Vietnam tax residents, income derived from services provided to a foreign enterprise may be subject to PIT in Vietnam. The individual should first determine the legal and tax nature of the income, then comply with the applicable filing and payment requirements.

Individuals receiving freelance income from overseas should also maintain adequate documentation of their engagement, services performed and payments received. Such records may be relevant in determining the applicable tax treatment and supporting the individual’s tax position.

Legal Basis: Articles 2, 3, 8 and 10 of the Law on Personal Income Tax No. 109/2025/QH15; Article 22 of Circular No. 89/2026/TT-BTC.

Legal Counsel: Lawyer Lê Hà My – MY LEGAL COUNSEL.

Compiled and Edited by: Phan Kim Hoàng.

Source: This article is based on and adapted from the legal commentary provided by Lawyer Lê Hà My to Tuổi Trẻ newspaper.

Original Article: https://tuoitre.vn/lam-viec-tu-do-cho-cong-ty-nuoc-ngoai-co-phai-dong-thue-20251104092200726.htm