What payments may employees receive during the 2025 Tet holiday in Vietnam? Are additional payments for working overtime during the 2025 Tet holiday subject to personal income tax in Vietnam?

What payments may employees receive during the 2025 Tet holiday in Vietnam?

Besides enjoying leave with full pay during the 2025 Tet holiday as stipulated in point b, clause 1 of Article 112 of the Labor Code 2019, employees may receive additional bonuses and extra wages. Specifically:

(1) Tet holiday Bonus

Pursuant to Article 104 of the Labor Code 2019, the regulations on bonuses are as follows:

Bonus

1. A bonus is a sum of money, assets, or other forms awarded by the employer to employees based on production and business results as well as the level of task completion by employees.

2. The bonus policy is decided and publicly announced by the employer at the workplace after consulting with the grassroots labor union representative at locations where this representative exists.

Thus, the Tet holiday bonus is not mandatory and typically based on company results and individual performance. Therefore, during the 2025 Tet holiday, depending on company policies, employees may receive a Tet holiday bonus.

(2) Overtime Pay

According to Article 107 of the Labor Code 2019, overtime work is defined as work performed beyond normal working hours as prescribed by law, collective labor agreements, or labor regulations.

Additionally, enterprises can employ overtime work under the following conditions:

- Employee consent is required.

- Ensure overtime does not exceed 50% of regular working hours in a single day.

If applying the normal working time per week rule, the total regular plus overtime must not exceed 12 hours in a single day or 40 hours in a month.

- Ensure overtime does not exceed 200 hours per year, except as provided in clause 3, Article 107 of the Labor Code 2019.

Pursuant to Article 98 of the Labor Code 2019, regulations regarding overtime pay are as follows:

Overtime and Night Work Pay

1. Overtime pay is calculated based on the unit price or the actual pay of the work being performed as follows:

a) On regular days, at least 150% of the pay;

b) On weekly rest days, at least 200%;

c) On holidays, Tet, or paid leave days, at least 300% in addition to the holiday or leave pay for employees paid on a daily basis.

2. Night work is compensated with at least 30% more than the unit price or the actual pay for regular daytime work.

3. Employees working overtime at night are entitled to an additional 20% over the unit price or the daytime rate for normal workdays or weekly rest days, or holidays, and Tet.

4. The Government of Vietnam provides detailed regulation of this Article.

Thus, for working overtime during the 2025 Tet holiday, wages will be at least three times the regular daily wage, not including holiday pay for daily wage earners. If working during the night, there is an additional 20% compensation based on the regular daily wage rate.

Hence, during the 2025 Tet holiday, employees are entitled to holiday leave with full pay and possibly a festive bonus (if offered), along with overtime pay if applicable.

What payments can employees expect during the 2025 Tet holiday in Vietnam? (Image from the Internet)

Are additional payments for working overtime during the 2025 Tet holiday subject to personal income tax in Vietnam?

Pursuant to point i, clause 1, Article 3 of Circular 111/2013/TT-BTC, regulations on tax-exempt income are as follows:

Tax-Exempt Income

1. Pursuant to Article 4 of the Personal Income Tax Law and Article 4 of Decree 65/2013/ND-CP, tax-exempt income includes:

...

i) Income from wages and salaries for working at night and overtime paid higher than regular daytime or normal work hours according to the Labor Code. Specifically:

i.1) The portion of wages and salaries paid higher for night work or overtime is exempt from tax, calculated as the actual wages and salaries paid minus (-) the regular daily wage.

Example 2: Mr. A's regular daily wage according to the Labor Code is 40,000 VND/hour.

- For overtime on regular days, if paid 60,000 VND/hour, the tax-exempt income is:

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

- For overtime on rest days or holidays, if paid 80,000 VND/hour, the tax-exempt income is:

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

i.2) Organizations or individuals paying income must compile records clearly reflecting the time worked at night/overtime and the additional wages paid. These records must be retained by the payer and presented upon request by tax authorities.

...

Thus, additional payments for working overtime during the 2025 Tet holiday are exempt from personal income tax only for the portion of income exceeding regular daytime wages, as stipulated in the Labor Code 2019. Regular daytime wages remain subject to personal income tax.

Can enterprises include Tet holiday bonuses for employees as deductible expenses for corporate income tax in Vietnam?

According to point b, clause 2.6, Article 4 of Circular 96/2015/TT-BTC (amended by clause 2, Article 3 of Circular 25/2018/TT-BTC), regulations on non-deductible expenses for tax purposes include:

Deductible and Non-Deductible Expenses for Taxable Income

...

2. Non-deductible expenses include:

...

2.6 Wage, salary, and bonus expenses for employees not specified in any of the following documents, as applicable:

a) Wage, salary, and other payable expenses accounted in the business costs but not actually paid or without payment documents as regulated by law.

b) Wage, bonus not specifically detailed in terms of eligibility and amount in documents such as: Employment contracts; Collective labor agreements; Financial regulations of the company/corporation/group; Bonuses authorized by the Board Chairman, General Director, or Director under company/corporation financial regulations.

- For foreign labor employment contracts indicating education expense payments for foreign employees' children in Vietnam, from preschool to high school, such expenses, with valid invoices, can be deductible for corporate income tax purposes.

- For contracts specifying housing cost payments for employees, such expenses, with valid invoices, can be deductible for corporate income tax purposes.

- For Vietnamese enterprises covering housing expenses for foreign experts during their stay in Vietnam, the accommodation expenses paid by the Vietnamese company can be deductible for corporate income tax purposes.

Therefore, Tet holiday bonuses are deductible for corporate income tax purposes if detailed and specified as to eligibility and amount in any of the enterprise's official documents:

- Employment contracts;

- Collective labor agreements;

- Corporate financial policies;

- Company bonus policies.