[ULAW LEGAL INSIGHT] SỐ 2 | MIỄN THUẾ THU NHẬP CÁ NHÂN VỚI TIỀN LÀM THÊM GIỜ: HIỂU SAO CHO ĐÚNG?

[Music] New regulations on personal income tax officially take effect from January 1, 2026. Under these regulations, the portion of [music] salary paid for overtime or night work will be tax-exempt. The policy is expected to help increase real income for workers. But how to determine tax-exempt income remains a matter of great interest to many [music] people. So how should this regulation be correctly interpreted, and what should employees be aware of to ensure their rights are protected ? Join us in unraveling these noteworthy points in the "Du La Inside" program, produced by the Ho Chi Minh City High School for Gifted Students . Welcome to the La Ling Inside program, produced by the Ho Chi Minh City University of Law . Ladies and gentlemen, from May 1st, 2026, many new regulations of the law on personal income tax officially came into effect. In particular, the policy of exempting personal income tax on additional wages, overtime pay, and night shift pay is receiving great attention from both employees and businesses. This regulation is expected to contribute to increasing the real income of workers and at the same time encourage businesses to fully implement the prescribed wage payment system. However, many people still wonder which income is tax-exempt, how to determine the tax-exempt portion, and whether all employees are eligible for this policy. To answer these questions, today we will have a discussion with Dr. Phan Phuong Nam, Deputy Head of the Commercial Law Department, Ho Chi Minh City University of Law . First of all, I would like to thank you for accepting our invitation to participate in today's program . Hello to you and hello to everyone. Sir, the regulation exempting overtime and night shift wages from personal income tax is receiving a lot of attention from both employees and businesses. So, could you please tell me which types of income are tax-exempt, what the conditions are for employees to qualify for this policy, and whether employees will be exempt from tax on their entire income or only a certain portion? Well, it could be said that this is one of the new regulations in our personal income tax law, aimed at encouraging and supporting workers to increase their income and ensure that we meet the appropriate standards. This is stipulated in Clause 8, Article b of our Personal Income Tax Law of 2025 . What exactly is there? In our case, tax-exempt income includes money paid for overtime, night shifts, or even regular working hours, holiday hours, and so on. And in this case, the money we will be paid for the portion of our annual leave that we would have otherwise taken but did n't, and which the company pays them, is tax-exempt under government regulations . At the same time, in the cases where they are eligible for tax exemption, we need to note that the exemption will only apply if their income is paid in accordance with labor laws and regulations, within the company's work procedures, with receipts, documents, declarations, and work timelines to clearly confirm their wages and salaries, separating them from hourly wages according to the initial agreement in the employment contract. And in this case, they will be exempted—and we should note that they will be exempted from all of that income, not just the excess amount. That's the new regulation; in the old regulation, we only exempted the excess income, while in the new regulation, we exempt the entire amount, not just the extra pay compared to the normal hourly rate. Yes, thank you, sir. So, during implementation, what issues should both employees and businesses be aware of to ensure compliance with the policy? And what are some cases that might be easily misunderstood or not qualify for tax exemption? Oh right, you asked a question that sometimes is... what? Sometimes the workers themselves do n't notice, and neither do the businesses. And finally, in this case, our workers are being paid unfairly, while the state wants to give them something in return. So here's what we need to pay attention to. What is it? In this case, the business needs to clearly differentiate between overtime hours, night shifts, and regular working hours. Because we are exempt from the portion of overtime pay for working at night, on holidays, etc. Therefore, in this case, we need some basis for verification, such as time sheets. Along with that timesheet, we need to include the specific working hours we've stipulated, or within our unit, we've defined the working hours from what time, and we also have a basis in the regulations of the Civil Code, which stipulates overtime hours. That's what we need to pay attention to because sometimes businesses don't separate that part, and employees don't think about it either. They just think that in this case, the money they pay for overtime is exempt from the state. But why does the state still collect it? Because businesses don't separate it, and in this case, businesses support the workers. We need to have employee certificates attached, and besides just the timesheet, we also need to prove that in our labor activities, we agreed on working hours and rest periods, especially in cases where we also have an exempted amount of money, which is the income earned from the compensation for days that, according to regulations, we are entitled to rest. That's been the case every year, but now I don't think so. If the business pays, there must be clear agreements in the labor contract, in the collective bargaining agreement, or in the financial statements, like the company's financial regulations. And when needed, we can prove these issues to the tax authorities. If we don't address that issue, the tax authorities will simply assume that the money is just general salary and wages, and in principle, salaries and wages are still subject to tax according to our personal income tax regulations. And what else should people pay attention to? When we work, we do overtime, and so on, but that overtime must be within the limits permitted by labor law. For example, I can't work more than 12 hours of overtime in a day. In one month, I cannot work more than 48 or 40 hours of overtime, and in a year, I cannot work more than 200 hours, except in certain specific cases where the law allows it. What does that mean ? That means if you exceed the above amount, that portion will still be subject to personal income tax; the government cannot exempt it. The government only exempts overtime pay, night shift pay, and other related expenses; anything beyond that is not subject to tax, and we revert to the usual tax system. Yes. Those are some points that both employees and businesses need to take note of. Sir, from a legal and policy perspective, what is your assessment of these new regulations regarding workers, businesses, and the labor market? Specifically, in your opinion, what additional solutions do we need to implement to make this policy more effective in practice ? I think the government actually considered many factors before issuing this regulation. Clearly, that regulation is aimed at benefiting the beneficiaries, in this case our consumers, because we are exempting them from taxes to create more motivation for them to have an additional source of income to accumulate. And this is beneficial for businesses as well . From the perspective of the person being petitioned against, I think there are two things we need to pay attention to in this case. Firstly, for businesses, it's clear that the policies we benefit from actually benefit the workers. But if businesses want their employees to benefit from that, they have to do things well . In this case, businesses need to have time sheets and labor contracts clearly stating the above terms. Currently, we are implementing digitalization to benefit businesses. In this case, we need data to prove the situation, and at the same time, this digitalization reminds businesses that employees are only allowed to work a certain number of hours, and that any overtime will not be tax-exempt. From a certain perspective, I think there needs to be a policy of data exchange between the tax authorities and related agencies to provide data for comparison and ensure that other agencies can monitor whether the employer is using their labor correctly. If we learn those two things well, then our policy will be implemented more effectively in practice . Yes, thank you for your sharing, and hopefully, Dr. Phan Phuong Nam's insights in today's Z Law Lego Inside program will help you better understand the personal income tax exemption for overtime and night shift wages. Once again, thank you for participating in today's program. Ladies and gentlemen, the Law Ling Inside program, produced by the Ho Chi Minh City University of Law, concludes here. Thank you for your continued interest, support, and companionship. Hello and see you in the next issue. [music]