New challenges for workforce data and HR management with PIT changes

The 2026 amendments to the Personal Income Tax (PIT) Law represent a significant step towards aligning tax policy with current economic conditions and living standards.

For employees, these changes create opportunities to increase take-home pay. For businesses, they provide an opportunity to review workforce data and align compensation policies to meet compliance requirements while enhancing the employee experience through greater transparency and accuracy in payroll administration.

Vo Ngoc Thuy An, partner, PwC Vietnam

The most notable change is the increase in the family circumstance deduction from VND11 million ($420) to VND15.5 million ($590) per month for taxpayers, and from VND4.4 million ($165) to VND6.2 million ($235) per month for each dependent. For families with young children or other dependents, the positive impact on take-home income may be felt as early as the first payroll cycle of 2026.

The new law also broadens the scope of tax-exempt income, including compensation for overtime work, night shift work, payments for unused annual leave, and a five-year personal income tax exemption for employment income earned by qualified experts in the digital technology and high-tech sectors.

From an employee perspective, these changes send an important message: personal income tax is no longer merely a tool for income redistribution. It is increasingly becoming a mechanism that supports social welfare, encourages highly skilled talent, and better reflects taxpayers’ actual ability to contribute.

The changes introduced under the PIT Law also place greater demands on how businesses manage their workforce data. As tax authorities continue to accelerate digitalisation and data integration, organisations need to ensure that employee information, dependent records, and other relevant data, such as overtime hours and annual leave balances, are accurately maintained, consistently recorded, and supported by appropriate documentation.

In addition, companies employing foreign workers or managing a workforce operating across multiple locations should pay particular attention to determining tax obligations and fulfilling withholding and reporting responsibilities. As work arrangements become increasingly diverse, risks relating to tax residency status, income allocation, and reporting obligations are likely to increase. This requires businesses to establish robust data governance frameworks rather than relying on manual, case-by-case processes.

Businesses with complete, consistent, and standardised workforce data will be better positioned to adapt to regulatory changes and mitigate compliance risks. By contrast, organisations that continue to rely heavily on manual processes, fragmented data sources, or limited coordination across functions may face growing compliance pressures as tax administration becomes increasingly digital.

Based on PwC’s experience supporting organisations with tax and workforce matters, many businesses remain primarily focused on updating payroll systems to reflect changes in tax calculations, while the wider implications of the new law for workforce policies are often not fully evaluated.

In practice, the availability of tax exemption or incentive treatment for certain employee-related payments, such as meal allowances or severance payments, often depends on whether these benefits are clearly defined within company policies, regulations, or internal documentation.

Photo: PwC Vietnam

As a result, this is an opportune time for businesses to review their compensation and benefit structures. Conducting impact assessments and scenario analyses before implementing policy changes will become increasingly important. A well-designed reward strategy not only helps reduce compliance risks but also enhances the employees’ experience and strengthens the organisation's employer brand.

As new tax regulations introduce more practical requirements for businesses, PwC Vietnam continues to support the business community through in-depth technical updates and practical knowledge-sharing sessions. Drawing on our experience in tax consulting, HR policy, benefits design, and payroll processes, PwC helps businesses fully assess the impact of changes to the Corporate Income Tax Law and the PIT Law, strengthen workforce data management, and enhance HR policy management.

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