Vietnam Tax and Compliance Reforms 2026

A News Summary for Vietnam Startups, and Foreign-Owned SMEs

Executive Summary

Vietnam is entering a decisive compliance reset between 1 January 2026 and 1 July 2026. A coordinated set of tax, labor, and enforcement reforms will reshape how foreign-owned companies, startups, and SMEs operate, hire, invoice, and pay tax.

Key points:

1. The business license tax is abolished, permanently reducing baseline compliance costs.
2. Personal Income Tax (PIT) is overhauled with higher deductions, fewer brackets, and broader exemptions.
3. Electronic labor contracts are formally recognized and institutionally supported.
4. Invoice timing violations now carry materially higher penalties.
5. Digital income and household business revenue are more tightly regulated and monitored.

These reforms reward operational discipline and penalize informal or poorly structured practices.

Why Vietnam Is Updating Tax Laws

Vietnam’s 2025–2030 policy agenda is explicitly focused on strengthening the private sector while modernizing tax administration. The National Assembly has framed these reforms as a shift away from fragmented enforcement toward a more consistent, technology-enabled system.

This direction is reflected across tax law amendments, labor regulations, and enforcement decrees, rather than isolated legal changes. Foreign entrepreneurs and SMEs should read this as a structural signal, not a short-term adjustment.

IMPLICATIONS FOR FOREIGN-OWNED COMPANIES IN VIETNAM

1. Vietnam is lowering friction for compliant businesses, not reducing scrutiny.
2. Cost relief comes with higher expectations on accuracy and documentation.
3. Companies that scale before fixing fundamentals will face disproportionate risk.

This is a regulatory environment designed to favor businesses that invest early in clean structures.

Vietnam Invoice Timing Penalties 

Vietnam has significantly tightened penalties for issuing invoices at the wrong time. This includes issuing invoices too early, too late, or misaligned with the actual transaction event.

Penalties now escalate based on volume and transaction type, with organizations facing higher fines than individuals.

IMPLICATIONS FOR FOREIGN-OWNED COMPANIES IN VIETNAM

1. Invoice timing errors are no longer treated as minor mistakes.
2. Operational teams and accountants must be tightly aligned.
3. Subscription, SaaS, service, and export businesses are particularly exposed.

Penalties for Companies with Incorrect Invoice Timing and Filing (Decree No. 310/2025/NĐ-CP)

Vietnam Personal Income Tax Reform (January 2026)

Vietnam’s revised Personal Income Tax framework simplifies brackets, increases deductions, and expands exemptions. While the top rate remains unchanged, the structure is materially more favorable for low- and middle-income earners.

The law takes effect fully on 1 July 2026, with salary-related provisions applying from 1 January 2026.

Under the revised Personal Income Tax framework, Vietnam significantly raises the income threshold below which individuals are not subject to Personal Income Tax. 

From 2026, individuals benefit from a personal deduction of VND 15.5 million per month, with an additional VND 6.2 million per month per dependent. In practical terms, this means an employee with no dependents earning up to approximately VND 17 million per month will not pay Personal Income Tax at all. 

An employee with one dependent remains tax-exempt at income levels of roughly VND 24 million per month, while those with two dependents can earn up to around VND 31 million per month before Personal Income Tax applies. 

For foreign-owned companies and SMEs, this materially improves net take-home pay for junior and mid-level staff without increasing gross payroll costs, and it creates more flexibility in structuring entry-level compensation while remaining fully compliant.

IMPLICATIONS FOR FOREIGN-OWNED COMPANIES IN VIETNAM

1. Higher deductions increase employee net income without raising gross cost.
2. Reduced pressure to gross-up salaries for key staff.
3. Improved competitiveness for SMEs hiring local talent.

Vietnam Updated PIT Tax Brackets (January 2026)

Vietnam Digital Income and Modern Revenue Streams

Vietnam is explicitly extending PIT coverage to digital platforms, e-commerce income, and certain modern assets. At the same time, tax authorities are enhancing data matching across banks, platforms, and reporting systems.

IMPLICATIONS FOR FOREIGN-OWNED COMPANIES IN VIETNAM

1. Digital income is no longer treated as a gray area.
2. Platform-based revenue requires stronger documentation.
3. Bank transfers are assessed by substance, not labels.

Abolition of the Business License Tax in Vietnam

From 1 January 2026, the annual business license tax is abolished for enterprises, household businesses, and individual business operators. This removes one of the most common fixed compliance payments faced by companies regardless of revenue or profitability.

The policy applies universally and does not require any declaration or procedural step from businesses after the effective date.

IMPLICATIONS FOR FOREIGN-OWNED COMPANIES IN VIETNAM

1. Lower fixed costs improve early-stage runway for startups.
2. Annual compliance calendars become simpler, especially for holding companies.
3. The removal of this tax signals a broader push to eliminate low-value administrative burdens.

Important constraint:

1. Outstanding license tax obligations before 2026 remain payable.
2. Penalties and late fees already incurred are not waived.

Electronic Labor Contracts in Vietnam

Vietnam now formally recognizes electronic labor contracts as legally equivalent to paper contracts. This change is not a mandate but a structural endorsement of digital HR practices, supported by a national electronic labor contract platform expected to be operational by 1 July 2026.

Existing contracts signed before 2026 remain valid without re-signing.

IMPLICATIONS FOR FOREIGN-OWNED COMPANIES IN VIETNAM

1. Faster onboarding for foreign, remote, and rotating staff.
2. Reduced friction when scaling headcount quickly.
3. Stronger alignment with digital payroll and HR systems.

Critical risk:

1. Electronic contracts must still comply with labor law, data protection, cybersecurity, and storage requirements.
2. Informal or poorly drafted digital contracts increase dispute exposure.

Conclusion

Vietnam’s 2026 reforms represent a deliberate shift toward a cleaner, more predictable compliance environment. Businesses that rely on informal practices, loose invoicing, or weak internal coordination will feel pressure quickly. Those that invest early in structure, systems, and clarity will benefit from lower friction and greater confidence.

If you are:

1. A foreign founder or SME operating in Vietnam
2. Planning to scale headcount, revenue, or cross-border operations
3. Unsure how these reforms affect your tax exposure or compliance risk

United works with foreign-owned companies and SMEs to translate regulatory change into practical, workable structures.

A short conversation now can prevent costly corrections later.