Is overtime pay during Tet holiday in 2025 subject to personal income tax in Vietnam?

Is overtime pay during Tet holiday in 2025 subject to personal income tax in Vietnam?

According to point i, clause 1, Article 3 of Circular 111/2013/TT-BTC which stipulates exemptions of taxable income as follows:

Tax-free incomes

1. Pursuant to Article 4 of the Personal Income Tax Law and Article 4 of Decree No. 65/2013/ND-CP, tax-free incomes include:

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i) Income from night work or overtime pay that is higher than the day work pay as stipulated by the Labor Code. Specifically:

i.1) The portion of the salary or wage paid higher due to night work or overtime is tax-exempt based on the actual salary or wage paid for night work or overtime minus (-) the wage calculated by ordinary working days.

Example 2: Mr. A has an ordinary daily wage as stipulated by the Labor Code of VND 40,000/hour.

- In the case of working overtime on regular days, if an individual is paid VND 60,000/hour, the tax-exempt income is:

VND 60,000/hour – VND 40,000/hour = VND 20,000/hour

- In the case of working overtime on weekends or holidays, if an individual is paid VND 80,000/hour, the tax-exempt income is:

VND 80,000/hour – VND 40,000/hour = VND 40,000/hour

i.2) The organization or individual paying the income must compile a detailed record showing the overtime or night work time and the additional wages paid for such work to the employee. This record shall be kept at the income-paying unit and presented upon request by the taxation authority.

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Thus, employees will be exempt from tax on the portion of wages paid higher for overtime work during Tet 2025. The wages calculated at ordinary workday rates will still be subject to PIT.

Is overtime pay during Tet holiday in 2025 subject to personal income tax in Vietnam? (Image from Internet)

How to calculate overtime pay during Tet holiday in 2025 for employees in Vietnam?

According to Article 112 of the Labor Code 2019, the provisions are as follows:

Public Holidays and Tet

1. Employees are entitled to leave with full pay during the following public holidays and Tet:

a) New Year's Day: 01 day (January 1);

b) Lunar New Year: 05 days;

c) Victory Day: 01 day (April 30);

d) International Labor Day: 01 day (May 1);

đ) National Day: 02 days (September 2 and 01 adjacent day either before or after);

e) King Hung's Commemoration Day: 01 day (March 10, lunar calendar).

2. Foreign employees working in Vietnam are entitled to an additional day off for their traditional national New Year and National Day besides the holidays provided in clause 1 of this Article.

3. Annually, based on actual conditions, the Prime Minister of the Government of Vietnam shall specify the public holidays referred to in point b and point đ, clause 1 of this Article.

And Article 98 of the Labor Code 2019 stipulates as follows:

Overtime and Night Work Pay

1. Employees working overtime are paid according to the wage unit price or the actual wage of the work being performed as follows:

a) On ordinary days, at least 150%;

b) On weekends, at least 200%;

c) On public holidays, Tet, paid leave days, at least 300%, excluding holiday, Tet, or paid leave day wages for employees receiving daily wages.

2. Employees working at night are entitled to at least 30% extra pay based on the wage unit price or actual wage of the usual working day.

3. Employees working overtime at night, in addition to the pay stipulated in clauses 1 and 2 of this Article, are entitled to an additional 20% of the wage unit price or the daily work wage of a normal working day or weekend or holiday, Tet day.

4. The Government of Vietnam shall detail this Article.

Overtime pay during Tet 2025 for employees varies depending on whether the work is done during the day or night.

- Day work: at least 400% of the normal working day's wages.- Night work: at least 490% of the normal working day's wages.

What are the forms of overtime pay during the 2025 Tet holiday in Vietnam?

Pursuant to Article 54 of Decree 145/2020/ND-CP which regulates the forms of overtime pay during Tet 2025 as follows:

(1) Based on the nature of the work and production and business conditions, the employer and the employee agree on labor contracts on the form of payment by time, product, and contractual salary as follows:

- Time-based wage is paid to employees receiving time-based wages, based on working time by month, week, day, hour as agreed in the labor contract, specifically:

+ Monthly wage is paid for a working month.

+ Weekly wage is paid for a working week. If a labor contract agrees on monthly payment, the weekly wage is determined by multiplying the monthly wage by 12 months and dividing by 52 weeks.

+ Daily wage is paid for a working day. If a labor contract agrees on monthly wage, the daily wage is determined by dividing the monthly wage by the number of regular working days in the month according to the law as chosen by the enterprise. If agreed on a weekly wage, the daily wage is determined by dividing the weekly wage by the number of working days in the week as agreed in the labor contract.

+ Hourly wage is paid for an hour of work. If the labor contract is agreed on a monthly, weekly, or daily wage, the hourly wage is determined by dividing the daily wage by the number of normal working hours in the day as stipulated.

- Product-based wage is paid to employees receiving wages based on the product, based on the completion level of the quantity and quality of products according to labor norms and assigned product prices.

- Fixed-term wage is paid to employees receiving fixed-pay, based on the volume, quality of work, and the time to be completed.

(2) Employee’s wages under the forms of wage payment are paid in cash or transferred to the employee’s personal account opened at a bank. Employers must bear any fees related to opening accounts and transferring wages if paid through the employee's personal account.