LEGAL UPDATES | Decree 253/2026/ND-CP: Important Changes to Personal Income Tax from July 1, 2026

On June 30, 2026, the Government issued Decree No. 253/2026/ND-CP guiding the implementation of Personal Income Tax Law No. 109/2025/QH15. The Decree takes effect from July 1, 2026, clarifying many new regulations on taxable income, tax-exempt income, deductions, tax withholding obligations, and tax finalization for individuals and income-paying organizations.

These changes not only affect employees but also require businesses to review their salary policies, benefits, ESOP programs, and personal income tax withholding procedures.

1. Unchanged Tax Calculation for Share Transfers

One of the most anticipated contents by the business community is the method of tax calculation for share transfer activities.

Previously, the draft Decree proposed applying a 20% tax rate on income from share transfers in unlisted joint-stock companies.

However, this provision was not retained in the official Decree.

According to Decree 253:

the transfer of shares of all joint-stock companies, including public and unlisted companies, continues to apply a tax rate of 0.1% on the transfer price.

This helps maintain the stability of tax policy for investment and M&A transactions, while avoiding increasing the tax burden on investors.

However, the Decree also stipulates that if an individual transfers 100% of the capital of a private enterprise or limited liability company and the transaction is associated with real estate, the transaction will be considered a real estate transfer to determine tax obligations.

2. Expanded Tax-Exempt Income Categories

Decree 253 supplements and clarifies many income categories not subject to personal income tax.

Mid-shift Meal Allowance

Cash meal allowances up to VND 1.2 million/month are tax-exempt.

The amount exceeding this limit is still subject to taxable income.

Overtime and Night Work Pay

Additional payments for:

overtime work;
night work;
payment for unused annual leave days

are not subject to tax if paid in accordance with labor law.

Severance and Job Loss Allowances

Allowances exceeding the minimum level stipulated by law are still tax-exempt if the enterprise has internal regulations or policies as a basis for payment.

This helps businesses be more proactive in developing welfare policies for employees.

Incentives for High-Tech Personnel

A notable new policy is personal income tax exemption for 05 years for income from salaries of qualified experts in the fields of:

digital technology;
high technology.

This policy aims to attract high-quality human resources to serve Vietnam's technology development strategy.

Income from Green Finance

The Decree also adds many tax-exempt income categories related to:

carbon credits;
green bonds;
results of greenhouse gas emission reduction.

This reflects the trend of encouraging the development of green finance and the carbon market in the coming period.

3. Clearer Regulations on Deductible Items

For the first time, the Decree stipulates a ceiling for certain deductible expenses when calculating tax.

Medical Examination and Treatment Expenses

Deductible up to a maximum of VND 23 million/year.

Education and Training Expenses

Deductible up to a maximum of VND 24 million/year.

These expenses apply to both:

taxpayers;
dependents,

provided that there are full invoices and valid documents.

Since individuals must directly prove these expenses, taxpayers cannot authorize businesses to finalize tax but must finalize tax directly with the tax authority if they wish to claim deductions.

4. Additional Guidance on Bonus Shares and ESOP

For Employee Stock Ownership Plan (ESOP) programs or bonus shares, the Decree stipulates that employees may incur two types of tax obligations:

tax on income from salaries;
tax on income from securities transfers.

Notably:

securities companies or depository banks will monitor the number of shares and withhold 10% personal income tax on income arising from bonus shares or ESOP;
individuals must still declare this income in their annual tax finalization dossier as regulated.

Businesses implementing ESOP programs should review their withholding procedures and coordinate with depository units to ensure compliance.

5. Changes to Tax Withholding Threshold for Individuals Without Labor Contracts

Another notable change is the increase in the tax withholding threshold.

According to the Decree:

the 10% withholding threshold for individuals without labor contracts or with contracts under 03 months is raised from VND 2 million to VND 5 million for each payment.

At the same time:

this regulation also applies to income paid by businesses after employees have terminated their labor contracts.

This change helps reduce the number of cases requiring tax withholding for small-value payments.

What Businesses Need to Prepare?

To ensure compliance with Decree 253/2026/ND-CP, businesses should:

review salary, allowance, and benefit policies;
update personal income tax withholding and finalization procedures;
re-evaluate ongoing ESOP or bonus share programs;
prepare complete documentation for tax-exempt allowances or expenses;
guide employees on cases where they must self-finalize tax with the tax authority.

OPLAW Insight

Decree 253/2026/ND-CP not only guides the implementation of the Personal Income Tax Law 2025 but also reflects the trend of expanding tax incentive policies for high-tech, green finance, and employee benefits, while clarifying the responsibilities of businesses in tax withholding and management.

For businesses, especially those with foreign employees, ESOP programs, or flexible welfare policies, updating payroll processes, reviewing internal regulations, and guiding employees to fulfill their tax finalization obligations correctly will be crucial factors in mitigating tax risks and ensuring compliance during the period of new regulation implementation.