OFFICIAL LETTER 10049/NBI-QLDN1 FOR 10% PIT DEDUCTION IN CASES OF LABOR TERMINATION:
Official letter 10049/NBI-QLDN1 for 10% PIT deduction in cases of labor termination:
- Regarding the tax withholding method for wages paid after the termination of an employment contract: In the case of a resident employee whose employment contract terminated on June 30, 2026, and for whom the Company pays the June 2026 wages on July 10, 2026, this payment falls under the category of wages paid to an employee whose contract has ended. If the payment amount for each individual per occasion is VND 5 million or more, the Company must withhold Personal Income Tax (PIT) at a rate of 10% before making the payment. If the payment amount is less than VND 5 million per occasion, the Company is required to withhold 10% only if the individual requests it.
- Regarding the income serving as the basis for the 10% withholding: The Company withholds 10% from taxable income (wages and remuneration) prior to payment to the individual. Income exempt from tax under regulations—including pay for night work and overtime, as well as wages/remuneration for unused leave days within the limits of conditions, duration, and rates prescribed by labor law—is excluded from the income subject to withholding; however, any amount exceeding these statutory limits must be included in taxable income. Mandatory insurance contributions, family circumstance deductions, and other deductions serve as the basis for determining taxable income when applying the partially progressive tax schedule or during tax finalization; they are not deducted when performing the provisional 10% withholding prescribed in Clause 2, Article 50 of Decree 253/2026/ND-CP.
- Regarding the written commitment to defer tax withholding: An individual may only execute such a commitment if they are subject to the 10% tax withholding rate and estimate that their total taxable income for the year—after personal deductions—will fall below the tax payment threshold. Based on a valid commitment, the Company shall temporarily defer tax withholding and is responsible for compiling the list and income details of such individuals in accordance with regulations. If the individual subsequently earns additional income from business activities, wages, salaries, or other sources that results in a tax liability, they are responsible for declaring, finalizing, and paying the tax as prescribed and bear responsibility for the content of their commitment; any instances of fraud will be penalized in accordance with the law.
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