Tax-free allowances in Vietnam

What allowances are tax-free in Vietnam?

A set of allowances paid with salary are exempt from personal income tax, each up to a limit: the mid-shift meal allowance (cash up to ₫1,200,000 a month, or fully exempt in kind), uniforms, a telephone allowance, receipted travel, the overtime premium and employer housing up to a 15% cap. The caps are set by Vietnam's 2026 PIT rules.1

These exemptions are set by the 2026 PIT instruments — Decree 253/2026/ND-CP and Circular 87/2026/TT-BTC — which carried the long-standing allowance rules forward from the replaced Circular 111/2013/TT-BTC and raised the cash meal cap. Each one holds only where the allowance is written into the labour contract or an internal policy and recorded separately from base salary. Whether an allowance is also stripped out of your social-insurance contributions is a separate test, covered below.

How much meal allowance is tax-free in Vietnam?

As of October 2026 a cash mid-shift meal allowance is tax-free up to ₫1,200,000 per person per month under Decree 253/2026/ND-CP and Circular 87/2026/TT-BTC. Pay more and only the excess is taxable: on a ₫1,500,000 cash allowance, ₫1,200,000 is exempt and ₫300,000 is added to taxable pay. A meal provided in kind is fully exempt.1

Where the employer provides the meal itself — an on-site canteen, a catered lunch, bought meal portions or vouchers — the whole benefit is exempt with no ceiling. The ₫1,200,000 cap replaced a lower figure used until mid-2026, so guides still quoting a smaller meal allowance are out of date.

What other allowances can be tax-free?

More allowances are exempt too. Cash for uniforms is tax-free up to ₫5,000,000 per person a year (uniforms in kind are fully exempt); a telephone or stationery allowance is exempt up to the flat amount set in the contract or policy; and only the premium part of overtime and night-shift pay is exempt.1

Receipted business travel is exempt in full, with a flat per diem exempt up to the company's set rate. Employer-paid housing is taxed, but the taxable value is capped: it is the lower of the actual rent and 15% of the employee's total taxable income (counted before the housing is added), and housing the employer builds at the workplace is fully exempt. Expatriate packages can also carry an exempt annual round-trip home-leave airfare, an exempt one-off relocation cost into Vietnam, and — for an expatriate's children at school in Vietnam from kindergarten to high school — exempt tuition where the employer pays or reimburses it against school invoices.15

How do exemptions change the tax bill?

An exempt allowance never enters the PIT calculation. For a resident, PIT starts by removing compulsory social, health and unemployment insurance, then the ₫15,500,000 monthly personal deduction (plus ₫6,200,000 for each dependant), and applies the 2026 five-band scale of 5% to 35% to what is left.2

A tax-free allowance comes out before any of that, so a ₫1,200,000 meal allowance keeps the whole amount untaxed, where ₫1,200,000 of extra salary would be cut by insurance, the deduction and the rate. For the bands, the deduction and the 183-day residence test, see Vietnam personal income tax for 2026 and the Vietnam tax-residency rules. Non-residents pay a flat 20% on Vietnam-sourced employment income, and the same allowance exemptions apply before that 20% is charged.2

Do tax-free allowances reduce social insurance too?

Usually yes — the same welfare allowances mostly sit outside the social-insurance base as well, so they earn their keep twice. The salary used for compulsory social insurance is the job or position salary, plus fixed salary allowances and other supplements that are determinable with the agreed salary and paid regularly each period (Social Insurance Law 41/2024/QH15).3

Left out of that base is a defined list of welfare items: bonuses under Article 104 of the Labour Code (the 13th-month bonus among them), initiative awards, the mid-shift meal, and allowances for petrol, telephone, transport, housing and childcare, plus support on a relative's death or wedding (Circular 06/2021/TT-BLDTBXH).34 So the welfare allowances that attract PIT relief are generally outside the employer social-insurance load too — but only if each is a real, separately recorded allowance, not base pay relabelled to cut contributions, which an audit will look through. For the rates, caps and filing behind that base, see Vietnam payroll and employer costs.

How does EOR Vietnam structure compliant allowances?

As the legal employer, EOR Vietnam itemises gross salary and each welfare allowance separately in the labour contract rather than bundling them into one figure. That is what makes the exemptions hold: the meal, phone and transport allowances are each recorded as the allowance they are, so the PIT exemptions apply and the social-insurance base is calculated on the correct salary line.1 We keep allowances within the current caps, provide meals in kind where that is cleaner, and file PIT and social insurance on the split figures — see employee benefits in Vietnam for the wider picture.

The service fee does not change with how the package is split: for a Vietnamese national it is a flat US$149 per employee per month, whatever the salary, allowances, role or headcount (as of October 2026), with no setup, onboarding, offboarding, contract or payslip fees. Salary, statutory contributions and agreed allowances are passed through at cost, and a refundable deposit of two months of the employee's employment cost is held for the engagement and returned at the end, less any unpaid amounts. A foreign national who needs a Vietnamese work permit is quoted separately. To model a package, use the EOR cost breakdown.