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The first and final years are the two periods where expat personal income tax is most often miscalculated: the expert is not in Vietnam for the full year, the tax period may not match the calendar year, and finalization must be completed before they leave the country. This article walks through a hypothetical case with calculation tables. It was prepared by the accounting services team at ACCA Consulting Vietnam for payroll accountants in FDI companies.
1. Hypothetical case: expert K works 21 months in Vietnam
Expert K (illustrative example) is seconded by the group to serve as plant director in Ho Chi Minh City. Key facts:
| Item | Details |
|---|---|
| Arrival in Vietnam | 01/09/2026, continuous stay, temporary residence card issued |
| Departure from Vietnam | 31/05/2028, end of contract |
| Taxable salary | VND 120 million/month (≈ USD 4,700, approximate at VND 25,500/USD), paid by the Vietnamese company |
| Dependants | 1 child, registered from the first month |
| Insurance | Assumed no deductible insurance contributions, to keep the example simple |
In calendar year 2026, K is present for only 122 days, short of 183 days. However, K holds a temporary residence card, and counting 12 consecutive months from 01/09/2026, K is present for more than 183 days. K is therefore a resident individual. How to determine residence is explained in detail in PIT residence for foreign nationals.
2. Expat PIT in the first year: a tax period that differs from the calendar year
Under current guidance, if an individual is present for fewer than 183 days in the first calendar year but reaches 183 days within 12 consecutive months from the first day of presence, the first tax period is the 12 consecutive months starting from that first day. From the second year onward, the tax period follows the calendar year. The months that overlap between the first period and the second year are handled according to the guidance so that income is not taxed twice.
- 01/09/2026
Starts work; the company withholds personal income tax monthly under the progressive tax schedule.
- 01/09/2026 – 31/08/2027
First tax period of 12 consecutive months, finalized on this basis.
- 2027
Second tax period on a calendar-year basis; overlapping months handled per the guidance.
- 01/01/2028 – 31/05/2028
Final year: withholding continues; prepare the pre-departure finalization.
- Before 31/05/2028
Complete the PIT finalization before K leaves Vietnam.
3. Illustrative calculation of assessable income
Family deductions applicable from the 2026 tax period: VND 15.5 million/month for the taxpayer and VND 6.2 million/month for each dependant. The table below only goes as far as assessable income; the actual tax is calculated using the progressive tax schedule in force, as the schedule may change under amended legislation.
| Item | First period 09/2026–08/2027 | Final year 01–05/2028 |
|---|---|---|
| Months with income | 12 | 5 |
| Taxable income | 1,440 | 600 |
| Personal deduction | 186 (12 months) | 186 (if the full 12 months are allowed at finalization) |
| Dependant deduction | 74.4 (12 months) | 31 (5 months) |
| Assessable income | 1,179.6 | 383 |
Illustrative example. The final-year personal deduction assumes the full 12 months are allowed at finalization; check against current guidance.
View as table
| First period, 12 months | Final year, 5 months | |
|---|---|---|
| Taxable income | 1,440 million VND | 600 million VND |
| Total family deductions | 260.4 million VND | 217 million VND |
| Assessable income | 1179.6 million VND | 383 million VND |
In the final year, there are only 5 months of income, but the tax withheld each month is still calculated month by month. At finalization, if the full annual personal deduction is allowed, K may have overpaid tax. Conversely, if K receives an additional bonus or a termination payment, more tax may be payable.
4. Expat PIT finalization before leaving Vietnam
A foreign national whose employment in Vietnam ends must finalize their tax before leaving the country. In practice, the individual usually authorizes the company to do this on their behalf. The company should fix the schedule as soon as the termination decision is made, because once the expert has left it is very hard to obtain signatures and documents.
- Confirm all remaining income: final month's salary, bonus, unused leave, repatriation allowance.
- Collect foreign-sourced income for the period if K is a resident individual.
- Obtain the finalization authorization letter and bank account details for any tax refund.
- Confirm that dependants and supporting documents are still valid.
- Reconcile tax withheld against the withholding certificates issued.
- File the finalization return and pay any outstanding tax before the departure date.
- Notify the insurance and immigration authorities of the change if necessary.
5. Common mistakes with expat PIT in the first and final years
- Treating a first-year expat as non-resident simply because they have not reached 183 days in the calendar year.
- Omitting salary and bonuses paid abroad by the group while K is a resident individual. See expat salary paid from abroad.
- Not recalculating tax when the expat receives a large bonus just before leaving Vietnam.
- Letting the expat leave before finalization, leaving signatures and documents missing.
- Applying the previous year's tax schedule and deduction levels to tax periods from 2026.
FAQ
Is an expat who spends fewer than 183 days in Vietnam in the first year definitely non-resident?
Not necessarily. You also need to consider the 12 consecutive months from the first day of presence and the habitual residence criteria, such as a temporary residence card or a house lease.
Can the company finalize tax on behalf of an expat who has left the job?
The company may accept an authorization to finalize, subject to the statutory conditions. If the expat has income from other sources or from abroad, they usually have to finalize themselves or declare that income additionally.
How is overpaid tax from the final-year finalization handled?
The individual can request a refund to a registered bank account. Prepare the receiving account and the authorization letter before the expat leaves Vietnam.
Schedule your expat's tax finalization today
Send your expert's details to ACCA Consulting Vietnam for a free preliminary check of the tax periods. Accounting services based in Ho Chi Minh City, working bilingually.
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