When Must Foreign Employees Finalize Their Personal Income Tax Upon Termination of Employment?

Under what circumstances are foreign employees required to finalize their personal income tax (PIT) obligations when their employment contracts in Vietnam end? And in which cases can individuals avoid monetary penalties for late filing of PIT finalization returns?

1. When must foreign employees finalize their personal income tax upon termination of employment?

Point d, Clause 5, Article 10 of Decree No. 253/2026/ND-CP stipulates the deadlines for submitting tax returns as follows:

Deadline for submitting tax returns

...

5. For taxes subject to finalization, tax returns must be submitted within the following deadlines:

a) No later than the last day of the third month following the end of the tax finalization period;

b) No later than the 45th day from the date the taxpayer receives a decision on cessation of operations, dissolution, bankruptcy, contract termination, equitization of a state-owned enterprise, division, separation, merger or consolidation;

c) No later than the last day of the fourth month following the end of the calendar year, for personal income tax finalization returns filed directly by individuals earning income from salaries and wages.

Where an individual is present in Vietnam for fewer than 183 days in a calendar year but is present in Vietnam for 183 days or more during 12 consecutive months from the date of first arrival, the deadline for filing the PIT finalization return for the first year is no later than the last day of the fourth month following the end of the month in which the 12-month period is completed.

d) Before departure from Vietnam, for resident foreign individuals whose employment contracts in Vietnam have ended, but no later than 45 days from the date of contract termination.

6. For crude oil extraction and sales, including domestic sales and exports, tax returns and other applicable payments must be filed no later than 35 days from the date of sale. The sale date is the date on which crude oil delivery is completed at the designated delivery point.

...

Accordingly, under the above provisions, foreign tax residents whose employment contracts in Vietnam have ended must submit their PIT finalization returns before leaving Vietnam, and in any event no later than 45 days after the employment contract termination date.

When must foreign employees finalize their personal income tax upon termination of employment? (Source: Internet)

2. When can individuals avoid monetary penalties for late submission of PIT finalization returns?

Article 9 of Decree No. 125/2020/ND-CP, as amended by Clause 7, Article 1 of Decree No. 310/2025/ND-CP, specifies circumstances in which administrative penalties for tax and invoice violations do not apply, including:

Cases exempt from administrative penalties for tax and invoice violations

1. No administrative penalties shall be imposed for tax or invoice violations in cases exempted under the law on administrative violation handling.

Taxpayers who are late in completing electronic tax or invoice procedures due to technical failures of the information technology system officially announced on the tax authority's electronic portal are considered to have committed violations due to force majeure events, as provided for in Clause 4, Article 11 of the Law on Handling of Administrative Violations.

2. No administrative penalties shall be imposed for tax violations, and no late-payment interest shall be charged, where taxpayers commit violations by following written guidance or handling decisions issued by tax authorities or other competent state agencies concerning the determination of their tax obligations, including documents issued before the Decree takes effect. This exemption does not apply where a subsequent inspection or examination identifies violations that were not detected during an earlier inspection at the taxpayer's premises.

3. No administrative penalties shall be imposed for incorrect tax declarations where taxpayers voluntarily file supplementary tax returns in accordance with tax administration laws and pay the full amount of tax due before the tax authority announces an inspection decision, before another competent authority announces an inspection or examination at the taxpayer's premises, or before the violation is otherwise detected by the relevant authorities.

4. No penalties shall be imposed for violations of tax filing procedures where individuals filing their own PIT finalization returns submit them late but are entitled to a tax refund. The same exemption applies to household businesses and individual business operators whose tax liabilities have been assessed under Article 51 of the Law on Tax Administration.

5. No penalties shall be imposed for violations of tax return filing deadlines during an approved extension of the filing deadline.

Accordingly, individuals who submit their PIT finalization returns late may be exempt from monetary penalties in the following circumstances:

• Force majeure events: For example, technical failures of the electronic tax system officially announced by the tax authority.
• Compliance with official guidance or decisions: Where the tax violation results from following instructions or decisions issued by a competent state authority.
• Tax refunds due: Where an individual files a PIT finalization return directly and is entitled to a tax refund.
• An approved filing extension: Where the late submission falls within the officially extended filing period.

3. What types of income are subject to personal income tax?

Under Article 3 of the Personal Income Tax Law 2025, taxable personal income includes the following categories:

(1) Income from business activities, including:

• Income from the production and trading of goods and the provision of services;
• Income from independent professional practice by individuals holding licenses or professional certificates as required by law;
• Income from agency, brokerage and business cooperation activities with organizations;
• Income from e-commerce and digital platform-based business activities.

(2) Income from salaries and wages, including:

• Salaries, wages and other payments of a similar nature;
• Remuneration and benefits in cash or in kind, regardless of form;
• Allowances, subsidies and other income, except for statutory exemptions. Exemptions include certain benefits for people with meritorious service, national defense and security allowances, hazardous-duty allowances, attraction and regional allowances, specified overseas living expenses paid by Vietnamese agencies, certain hardship and social insurance benefits, severance and job-loss allowances, and other non-wage payments prescribed by the Government.

(3) Income from capital investment, including:

• Interest on loans;
• Dividends;
• Income from other forms of capital investment.

(4) Income from capital transfers, including:

• Transfers of capital contributions in economic organizations;
• Securities transfers;
• Transfers of capital in other forms.

(5) Income from real estate transfers, including:

• Transfers of land-use rights and assets attached to land;
• Transfers of home ownership or residential use rights;
• Transfers of land lease rights and water-surface lease rights;
• Other income arising from real estate transfers in any form.

(6) Income from prizes and winnings, including:

• Lottery winnings;
• Promotional prizes;
• Betting winnings;
• Prizes from games, competitions and other prize-winning activities, except casino winnings.

(7) Income from royalties, including:

• Income from the transfer or licensing of intellectual property rights;
• Income from technology transfers.

(8) Income from commercial franchising.

(9) Income from inheritances and gifts in the form of securities, capital contributions in economic organizations or business establishments, real estate, and other assets subject to ownership or use-right registration.

(10) Other income, including:

• Income from the transfer of Vietnam's national internet domain name “.vn”;
• Income from the transfer of greenhouse gas emission reduction results and carbon credits;
• Income from the transfer of vehicle license plates acquired through auctions, in accordance with the law;
• Income from the transfer of digital assets;
• Income from the transfer of gold bars.

_Collect_