Taxes in Vietnam: a comprehensive guide for US expats

Vietnam offers US expats an attractive combination of low cost of living, rich culture, and favorable tax opportunities.

This article will guide you through the Vietnamese tax system – essential knowledge for Americans living or working in this fast-growing Southeast Asian nation.

This article is brought to you by Taxes for Expats (TFX) – a top-rated tax firm serving US citizens, residents, and anyone with US tax obligations, both at home and abroad. Planning to move to Vietnam and need help with your US return or tax planning? Learn more about our tax services or contact us. Learn more about our tax services or contact us.

Tax residency in Vietnam

Vietnam determines tax residency through specific criteria that foreigners must understand. You become a tax resident if you meet any of these conditions:

• You reside in Vietnam for 183 days or more within a calendar year or any consecutive 12-month period from your first arrival date.
• You maintain a permanent residence in Vietnam (including registered residence recorded on permanent/temporary residence card).
• You have a rented house in Vietnam with a lease term of 183 days or more in a Vietnam tax year (for foreigners) and unable to prove tax residence in another country.

Tax residents face worldwide taxation under the Vietnamese tax system. They must pay personal income tax on both Vietnamese-sourced and foreign-sourced income.

Non-tax residents are individuals who don't meet any of the criteria described above but may still have Vietnamese tax obligations. Non-tax residents only pay taxes on Vietnam-sourced income.

Personal income tax rates 2026 in Vietnam

Vietnam uses a progressive PIT system for residents, with rates from 5% to 35%:

To see how this plays out in practice, here is a realistic 2026 calculation for a resident expat earning VND 20,000,000 per month:

Gross Income: 20,000,000 VND

Less Social Insurance (9.5%): 1,900,000 VND

Less Personal Relief: 15,500,000 VND

Taxable Income: 2,600,000 VND

Tax: (2,600,000 5%) = 130,000 VND

Non-residents pay a flat 20% rate on Vietnamese employment income. For business income, rates range from 1% to 5% depending on the activity type.

Tax deductions and personal relief

Before calculating your taxable income, Vietnamese tax law allows several deductions that can significantly reduce your personal income tax liability. These deductions apply automatically if you meet the relevant conditions.

• Personal relief: Each tax resident is automatically entitled to a monthly personal deduction of VND 15,500,000 (effective from 1 January 2026). This amount is deducted from gross income before applying the progressive PIT rates.
• Dependent relief: In addition to the personal allowance, you may claim VND 6,200,000 per month for each qualified dependent, such as children under 18 or elderly parents who meet statutory criteria. Dependents must be properly registered with the tax office for the deduction to apply.
• Insurance contributions (SHUI): Mandatory employee contributions to social insurance and health insurance (and unemployment insurance for Vietnamese employees) are deductible before personal income tax is calculated.
• Charitable donations: Contributions to approved charitable, humanitarian, or educational organizations are deductible, provided you retain valid supporting documentation in accordance with Vietnamese tax regulations.

Which income is taxable in Vietnam?

Vietnam recognizes different categories of taxable income for residents and non-residents:

For tax residents:

For non-residents:

Non-taxable income and benefits for expats

Not everything your employer pays on your behalf becomes taxable income. Vietnamese tax law carves out specific categories of employer-provided benefits that are either fully exempt or subject to favorable treatment. Knowing these can make a real difference in your effective tax rate.

• School fees: Tuition paid by your employer directly to a school for your children, from kindergarten through high school, is not included in your taxable income.
• Relocation costs: A one-time payment to cover the cost of relocating to Vietnam is exempt from tax.
• Home leave flight: The cost of one round-trip airfare per year to your home country, paid by your employer, is non-taxable.
• Housing rental – important note: Rent paid by your employer is taxable, but not at the full amount. It is capped at 15% of your total taxable salary (excluding rent itself). This cap makes employer-provided housing one of the more useful tax planning tools available to expats in Vietnam.

How to file and pay taxes in Vietnam

Tax returns must be filed with the tax department at your place of residence or through your employer. The Vietnam tax year follows the calendar year (January 1 to December 31).

Key deadlines:

• annual tax finalization: March 31 of the following year
• monthly withholding: by the 20th of each month
• individual self-filing: April 30 for those with tax due, May 2 for overpayments

You can file taxes through online submission on government portals, with tax agents or professional services, or directly in local tax offices.

Penalties:

• Late payment incurs a 0.03% penalty per day on the unpaid amount.
• Incorrect declarations resulting in underpayment may trigger a 20% administrative penalty on the underpaid tax.
• More severe penalties, ranging from one to three times the evaded tax amount, apply for tax evasion.

 

Americans abroad must file their US tax return with the Internal Revenue Service (IRS) in addition to their taxes in Vietnam, if applicable.

American living in Vietnam? We can help you with your US tax return

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Other taxes on individuals in Vietnam

Beyond income tax, several other levies may apply depending on your situation in Vietnam.

• Stamp duty: Rates of 0.5% to 15% apply on property transfers, depending on the transaction value and property type.
• Real property tax: Municipal authorities impose taxes on real estate ownership and occupation.
• Inheritance/estate tax: Inheritances and gifts are subject to personal income tax at special rates, typically 10% on securities, capital contributions, and real estate.
• Social security contributions (SHUI): Vietnamese and foreign employees on local contracts both contribute 8% for social insurance and 1.5% for health insurance. The 1% unemployment insurance applies to Vietnamese employees only – foreigners are exempt, bringing their total contribution to 9.5% rather than 10.5%.

Vietnam corporate taxation

The general corporate income tax rate is 20%. Companies in oil, gas, and precious natural resources sectors face rates of 32% to 50%. Mining enterprises dealing with gold, silver, and gemstones are subject to 40% or 50% rates depending on location.

Residence: Corporations incorporated in Vietnam are considered tax residents.

Tax base: Residents pay tax on worldwide income; non-residents only on Vietnamese-source income.

Capital gains: No separate capital gains tax exists; gains are taxed at the standard 20% corporate rate.

Incentives: Preferential rates of 10% (for 15 years) and 17% (for 10 years) are available for encouraged investment projects.

Withholding tax

Vietnam applies withholding taxes on certain payments made to non-residents and individuals. Dividends paid to corporations are not subject to withholding tax, while a 5% rate applies to dividends paid to individual recipients.

Interest and royalties paid to non-residents are each subject to a 10% withholding tax. There is no branch remittance tax in Vietnam.

There is currently no Double Taxation Agreement (DTA) for income tax between the US and Vietnam. As a result, treaty-based reductions on withholding rates are not available to American taxpayers, and there is no treaty framework to resolve conflicts between the two systems. US expats must instead rely on the Foreign Tax Credit (FTC) to offset Vietnamese taxes against their US liability. Form 1116 is the key form for claiming this credit.

Other taxes on corporations

Beyond corporate income tax, businesses operating in Vietnam face several additional levies worth knowing about.

Municipal authorities levy real property tax on the occupation of real estate. Stamp duty ranges from 0.5% to 15% on property transfers. A special sales tax applies to luxury goods and services at various rates, covering items such as alcohol, cigarettes, entertainment services, and gambling.

Export-import tax applies to goods crossing the Vietnamese border. A natural resources tax is imposed on organizations and individuals exploiting natural resources.

On VAT: the standard rate is 10%, though temporary reductions to 8% are occasionally enacted by the government.

Anti-avoidance rules

• Transfer pricing: Rules apply, with documentation requirements for related-party transactions. Advanced Pricing Agreements (APAs) are available in Vietnam.
• Thin capitalization: Vietnam has no formal thin capitalization rules, but interest deductibility for companies with related-party transactions is capped at 30% of EBITDA. Non-deductible interest can be carried forward for up to five years.
• Controlled foreign companies: No specific CFC rules exist.
• Disclosure requirements: Companies must submit transfer pricing disclosure forms alongside the annual CIT return.
• Tax rulings: Taxpayers can seek clarification from local or national tax authorities on specific tax matters.

US-Vietnam tax treaty and double taxation

Currently, there is no Double Taxation Agreement (DTA) between the US and Vietnam. This does not mean you pay taxes twice – it just means the protection mechanisms are different from what a treaty would provide.

Foreign Tax Credit (FTC): Since Vietnam's tax rates can run higher than US rates – the progressive scale goes up to 35% – the FTC is usually the more advantageous tool. 

You pay your taxes in Vietnam, then claim a credit on your US return using Form 1116 to offset what you already paid. Done correctly, this reduces your IRS liability to zero on that income, making it more effective than the FEIE for most expats in Vietnam.

Social security: There is also no Totalization Agreement between the US and Vietnam. In theory, this could create issues of double contributions. In practice, expats working under Vietnamese labor contracts are required to pay into the Vietnamese social security system.

US tax obligations for Americans in Vietnam

If you are a US citizen or green card holder, you must file US tax returns even while living in Vietnam.

The filing threshold depends on your income level and filing status. For example, if you are single, you must file a return if your gross income exceeds $15,750 for the 2025 tax year (filed in 2026). The filing threshold is adjusted annually for inflation.

The standard US tax filing deadline is April 15. If you live outside the United States, you automatically receive a two-month extension (to June 15). If you need additional time, you can request a further extension until October 15.

US expats in Vietnam may need to file the following tax forms:

• Form 1040 – The standard income tax return required for all US citizens, regardless of location.
• Form 8938 (FATCA report) – Required if foreign assets exceed $200,000 on the last day of the tax year or $300,000 at any point ($400,000 and $600,000 for married taxpayers filing jointly).
• Form 2555 (Foreign Earned Income Exclusion FEIE) – Allows expats to exclude up to $130,000 (2025 limit, adjusted annually) of foreign income from US taxes.
• FBAR (FinCEN Form 114) – Required if the combined value of foreign bank accounts exceeds $10,000 on any day during the tax year. It must be filed separately from your tax return.

Need help with US taxes in Vietnam? Get professional help

Whether you're starting a business, working, or enjoying retirement in Vietnam, staying compliant with both US and Vietnamese tax obligations is essential for your peace of mind.

At Taxes for Expats, we bring over 20 years of experience helping Americans in Vietnam navigate complex tax situations. We provide personalized guidance tailored to your specific circumstances, ensuring you avoid costly mistakes while maximizing your tax benefits.

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