Vietnam PIT 2026: What Foreign Employers Need to Know About Meal Allowances

At first glance, a meal allowance may seem like a relatively minor item in an employee's compensation package.

Under Vietnam's new Personal Income Tax framework, however, the way an employer provides that benefit can have a different tax treatment.

From 1 July 2026, cash mid-shift or lunch allowances are not included in an employee's taxable income up to VND 1.2 million per person per month. The portion exceeding that amount is subject to PIT.

But there is another detail that may be more relevant for employers planning their Vietnam payroll.

Cash allowance and meals provided in kind are treated differently

The VND 1.2 million threshold applies to cash meal allowances.

Where an employer directly provides the meal, purchases meal portions, or provides meal vouchers, the benefit is not included in the employee's taxable income under the new rule.

That means the question for an employer is not simply:

"How much meal allowance can we give?"

It may also be:

"How do we want to structure the benefit?"

This distinction can become relevant when a foreign company is designing its Vietnam employment package.

Why this matters when building a Vietnam team

For a single employee, the difference may appear relatively small.

At workforce level, the numbers become more meaningful.

For example, a company with 100 employees providing the maximum VND 1.2 million monthly cash allowance would have:

in annual meal-allowance payments within the monthly threshold.

This is an illustrative calculation, not a statement of tax savings. The actual PIT impact depends on the employee's circumstances, the structure of the allowance, and compliance with the applicable requirements.

For foreign companies entering Vietnam, this is where payroll planning becomes more than simply transferring a salary figure into a local payroll system.

Compensation structures often include allowances, benefits, overtime and other employee-related payments. Each may need to be reviewed against local tax and employment rules.

A broader point for market entry

Vietnam's new PIT framework introduces several changes affecting employment income, including rules covering overtime and night-shift pay, dependant eligibility, and certain deductions.

For an investor preparing to hire in Vietnam, these changes are worth considering alongside the company's employment and payroll setup.

The practical question is not only how much an employee will earn.

It is also how the overall employment package is structured, documented and processed locally.

That is one reason employment planning deserves a place in the market-entry discussion — rather than being treated as something to address only after the company has been incorporated.

Key takeaway

The VND 1.2 million threshold is a tax rule.

But for employers, the more useful question is what that rule means for the way employee benefits are designed and administered.

When entering Vietnam, small payroll details can become operational decisions once they are applied across an entire workforce.

Sources: Law No. 109/2025/QH15 on Personal Income Tax; Decree No. 253/2026/ND-CP; Circular No. 87/2026/TT-BTC.

This article is provided for general informational purposes only and does not constitute legal or tax advice. Employers should assess their specific circumstances and applicable requirements before implementing payroll or compensation changes.