Vietnam personal income tax revenue seen missing budget

The ministry said the decline mainly comes from raising the family deduction threshold, reducing the number of progressive tax brackets from seven to five under the Personal Income Tax Law No. 109/2025, and shifting filing from monthly to quarterly. After nine months, personal income tax collections had reached 65.7% of the full-year estimate, already down 12.7% from a year earlier.

For investors, the message is mixed: weaker personal income tax receipts point to softer government take from labor income, but the broader budget picture remains strong. Total state budget revenue is projected to exceed 3.055 quadrillion dong this year, 526.3 trillion dong above the estimate and up 14% from last year, helped by robust collections from non-state businesses, foreign-invested companies, land-use fees and crude oil.

Those gains suggest Vietnam still has fiscal room to support spending even as certain tax lines are reworked. Revenue from the domestic private sector is projected to reach 671.8 trillion dong, while crude oil receipts are seen at 62.3 trillion dong, boosted by an average realized price of about $85 a barrel, well above budget assumptions. By contrast, environmental protection tax revenue is expected to plunge because fuel tax rates have been cut to zero for gasoline, diesel and jet fuel.

The shift in personal income tax policy also has a clear market angle. Lower withholding can lift disposable income for workers and support consumption, but it reduces a stable source of budget revenue and increases the importance of other taxes and asset-related fees to fill the gap. That leaves investors watching how Vietnam balances household relief, fiscal discipline and spending demands into next year’s budget cycle.