PIT: Exemption for the 35% night-work wage premium, self-finalization when claiming medical and education expense deductions, and 10% withholding for employees who have left

On 9 September 2026, the Ninh Binh Provincial Tax Authority issued Official Letter No. 11805/NBI-QLDN1 in response to MCNEX VINA Co., Ltd. on three personal income tax (PIT) matters under Decree No. 253/2026/ND-CP dated 30 June 2026: night-work wages, deductions for medical and education – training expenses, and tax withholding for employees who have left the company. This guidance is a useful reference for enterprises that pay a night-work wage premium above 30%, have employees requesting that medical or education – training expenses be deducted before tax is calculated, or make wage payments to employees who have left.

1. Night-work wages: a 35% premium remains tax-exempt

Legal basis:

• Clause 1, Article 26 of Decree No. 253/2026/ND-CP: PIT exemption applies to wages and remuneration for night work and overtime work at the workplace that comply with the conditions and working-time rules under labor law.
• Clause 3, Article 26 of Decree No. 253/2026/ND-CP: the portion of night-work wages, overtime wages and wages paid for untaken leave days that exceeds the level prescribed by law is included in the individual's taxable income.
• Clause 2, Article 98 of the 2019 Labor Code: an employee working at night is paid an additional at least 30% of the wage of a normal working day. Clause 3, Article 98: an employee working overtime at night is paid a further 20%.

Guidance of the tax authority: The Company's payment of a night-work premium equal to 35% of the wage of a normal working day is consistent with Clause 2, Article 98 of the 2019 Labor Code. Accordingly, this additional wage is exempt from PIT under Clause 1, Article 26 of Decree No. 253/2026/ND-CP.

Note: Under Article 106 of the 2019 Labor Code, night working hours are counted from 10:00 p.m. to 6:00 a.m. the following day.

2. Deductions for medical and education – training expenses: the employee must self-finalize

Legal basis:

• Clause 1, Article 50 of Decree No. 253/2026/ND-CP: the income payer withholds tax based on monthly assessable income and the partially progressive tax tariff under Article 9 of the Law on Personal Income Tax.
• Clause 3, Article 51 of Decree No. 253/2026/ND-CP: an individual who requests a tax reduction under Article 40, or who has deductions under Article 49 and requests that they be deducted from income before tax is calculated, must self-finalize tax.

Guidance of the tax authority:

• Where an employee incurs medical or education – training expenses that satisfy the conditions in Article 49 of Decree No. 253/2026/ND-CP and requests the deduction: the Company determines the deductible amount based on the dossier, invoices and supporting documents provided by the employee.
• Such an employee must finalize PIT directly under Clause 3, Article 51 and is not eligible to authorize the Company to finalize on his or her behalf.
• When filing the 2026 PIT finalization as the income payer, the Company declares using the forms prescribed at Point 7.1, Appendix I issued together with Circular No. 89/2026/TT-BTC dated 30 June 2026 of the Ministry of Finance.
• The presentation of this deduction on the PIT withholding certificate follows Article 23 of Decree No. 254/2026/ND-CP dated 30 June 2026 of the Government on e-invoices and e-documents.

3. Employees who have left: 10% withholding on payments of VND 5 million or more

Legal basis: Clause 2, Article 50 of Decree No. 253/2026/ND-CP: payments to resident individuals without a labor contract or with a labor contract of less than 03 months, including employees whose labor contracts have been terminated, of VND 5 million or more per payment are subject to 10% withholding before payment. For payments below VND 5 million per payment, the income payer may withhold 10% at the individual's request.

Guidance of the tax authority:

• Wage payments of VND 5 million or more to employees who have left: withhold 10%.
• At finalization, declare using the return forms in Appendix I of Circular No. 89/2026/TT-BTC: individuals taxed under the partially progressive tariff are listed in Schedule 05-1/BK-QTT-TNCN; individuals taxed at the flat rate are listed in Schedule 05-2/BK-QTT-TNCN.

💡 Recommendations for enterprises

1. Review the tax treatment of night-work wage premiums paid above 30%, and check it against the guidance in this official letter when preparing the 2026 PIT finalization.
2. Inform employees early: anyone wishing to deduct medical or education – training expenses must self-finalize and cannot authorize the company to do so.
3. Prepare a list of employees subject to self-finalization and a process for collecting medical and education – training invoices and supporting documents.
4. Check payments made after the termination date (final month's wages, untaken annual leave) to withhold 10% at the correct threshold and list them in the correct Schedule 05-2/BK-QTT-TNCN.

This newsletter is prepared by Crowe Vietnam for general information purposes only and does not constitute advice for any specific case. Enterprises should refer to the original legal instruments and consult professional advisors before applying the above to their particular circumstances.