A reader sent a question to the Tax Department with the content: "My company pays the salary on the 10th of the following month. In case the employee terminates the labor contract from April 1st, will the salary of March paid by the company on April 10th be deducted personal income tax according to the progressive tax schedule or deducted 10%?
Regarding this content, the Tax Department responds as follows:
Based on the provisions of Clause 2, Article 8 and Clause 1, Article 25 of Circular No. 111/2013/TT-BTC dated August 15, 2013 of the Ministry of Finance:
“2. Taxable income from salaries and wages
a) Taxable income from salaries and wages is determined by the total amount of salaries, wages, remuneration, and other incomes of salary and wage nature that taxpayers receive in the tax period according to the guidance in Clause 2, Article 2 of this Circular.
b) Time to determine taxable income.
The time to determine taxable income for income from salaries and wages is the time when organizations and individuals pay income to taxpayers...".
Article 25. Tax deductions and tax deduction vouchers
1. Tax deduction
b) Income from salaries and wages
b.1) For resident individuals who sign labor contracts for three (03) months or more, organizations and individuals paying income shall deduct tax according to the progressive tax schedule, even in cases where individuals sign contracts for three (03) months or more in multiple locations.
i) Tax deduction for some other cases
Organizations and individuals paying wages, remuneration, and other expenses to resident individuals who do not sign labor contracts (according to the guidance at points c, d, clause 2, Article 2 of this Circular) or sign labor contracts for less than three (03) months with a total income payment of two million (2,000,000) VND/time or more, must deduct tax at a rate of 10% on income before paying to individuals...".
Based on the above regulations, for the case of enterprises and individuals receiving income from salaries and wages after the labor contract has been terminated, the enterprise deducts at a rate of 10% from the income before paying that individual.
Currently, this content has been specifically stipulated in Clause 2, Article 50 of Decree 253/2026/ND-CP stipulating tax deduction as follows:
Tax deduction
...
2. Organizations and individuals paying salaries, wages, remuneration, and other expenses to resident individuals who do not sign contracts or sign labor contracts for less than 03 months (including cases of paying salaries and other income to employees who have terminated labor contracts) with an income payment level of 05 million VND/time or more, must deduct tax and pay the deducted tax amount of the individual at a rate of 10% on income before paying income to the individual. In case the income payment level is less than 05 million VND/time, the organization or individual paying income is entitled to deduct tax at a rate of 10% when the individual requests it.
In case an individual only has income subject to tax deduction according to the above rate but estimates that the total taxable income of the individual after family deduction is not yet at the level to be taxed, the individual with income makes a commitment (according to the form issued with the guiding document on tax management) to send to the income-paying organization for the income-paying organization to temporarily make a basis for not deducting personal income tax. The individual making the commitment must be responsible for its commitment, in case fraud is detected, it will be handled according to the provisions of tax management law and other relevant laws.
Based on the commitment of the individual, the income-paying organization does not deduct tax. At the end of the tax year, the income-paying organization must still summarize the list and income of individuals who have not reached the tax deduction level according to the form issued with the tax management guidance document and submit it to the tax authority.
For individuals residing and signing labor contracts for 03 months or more, organizations and individuals paying income shall deduct tax according to the progressive tax schedule according to the provisions of Clause 1 of this Article, even in cases where individuals sign contracts for 03 months or more in multiple locations.
Accordingly, in cases where enterprises pay salaries, wages or other incomes to employees after that person has terminated their labor contract, this income is no longer deducted according to the progressive tax schedule.
Instead, it can be seen that the salary paid after the employee terminates the labor contract will have to deduct 10% PIT if the income payment level is from 05 million VND/time or more and pay the deducted tax amount of the individual at a rate of 10% on income before paying income to the individual.
In essence, this regulation is inherited from Circular 111/2013/TT-BTC. However, Decree 253/2026/ND-CP has stipulated more clearly when directly adding the case of "paying salary and other income to employees who have terminated labor contracts" to the subjects subject to the 10% deduction level, thereby helping businesses to apply it more easily in practice.
