Tax threshold for non-salary foreign income raised to 5 million dong per occurrence, but freelancers still face pressure

Draft Decree guiding the Personal Income Tax 2025 proposed by the Ministry of Finance continues to suggest raising the threshold for foreign-sourced income subject to personal income tax from 2 million dong to 5 million dong per occurrence. Accordingly, paying organizations will only withhold 10% tax when payments reach this level or higher for workers who are not under an employment contract or who have contracts shorter than three months. This policy directly affects irregular workers. In practice, many one-off incomes are not high, but because of the lump-sum payment method, they are still subject to withholding tax. Nguyen Quoc Bao, a electrician in Ho Chi Minh City, says he mainly works seasonally in short bursts of 5-10 days with income around 1 million dong per day. However, contractors often pay lump sums through banks. "If I work 10 days with total income of 10 million dong, I am withheld 10%, equivalent to 1 million dong – the same as one day's wage," Bao said. According to him, income is seasonal and unstable, but the lump-sum payment method forces workers to bear the tax. "If paid daily, perhaps there would be no withholding. I'm not sure whether the payer really pays the tax on my behalf," he wonders. [Photo caption: Workers at Ho Chi Minh City's Tax Department] Similarly, Le Kim Xuan, who livestreams sales, says each live session lasts about 3 hours, with income from 300,000-450,000 dong. However, the company typically pays monthly in lump sums. "If total income reaches 5 million dong per month, I would have to pay 500,000 dong in tax, even though each amount is small and irregular," Xuan noted. This is the common situation for freelance workers with irregular income who are taxed at 10% at source, affecting short-term spending. However, Mr Dong Minh Hong, Head of Policy at the Ho Chi Minh City Tax Advisory and Agency Association, says raising the deduction threshold is reasonable. He notes that the Personal Income Tax Law 2025 has increased the dependent deduction to 15.5 million dong per month for taxpayers and 6.2 million dong per month for each dependent, about 40% higher than before. "Raising the threshold for foreign-sourced income from 2 million dong to 5 million dong per occurrence, and possibly higher, will help ease pressure on irregular workers while ensuring consistency with other support policies," Mr Hong said. He also argued that the 10% withholding at source helps freelancers reduce end-of-year tax refund procedures for small incomes, while increasing compliance responsibility of the payer. Organizations with resources and tax expertise have the responsibility to withhold, declare, and remit taxes on behalf of workers. If not performed, the tax authorities will collect from that unit. "Workers should request withholding documents for Personal Income Tax At Source from their employer. The law clearly defines this responsibility. If the payer fails to remit taxes on their behalf, the tax authorities will collect from that organization," Hong advised. According to Thy Tho