Official Letter No. 6661/QNG-QLDN1: Determining personal income tax withholding obligations for income paid after the termination of employment contracts
On 6 August 2026, the Tax Department of Quang Ngai Province (the “Tax Authority“) issued Official Letter No. 6661/QNG-QLDN1 (the “Official Letter“) guiding personal income tax (PIT) withholding on income paid after the termination of employment contracts.
In this Official Letter, based on the legal grounds governing personal income tax withholding under the Law on Personal Income Tax 2025 and Decree No. 253/2026/ND-CP, the Tax Authority provides guidance that where an enterprise or organization makes payments of salaries, wages, remuneration, or other amounts to individuals whose employment contracts have been terminated, and the income paid is VND 5 million or more per payment, the enterprise or organization is required to withhold and remit PIT at the rate of 10% of the income before making the payment to such individuals.
Furthermore, if the former employee earns income solely subject to the withholding rate mentioned above but estimates that their total taxable income after family circumstance deductions falls below the taxable threshold, the employee may submit a commitment letter to the income-paying organization. This commitment serves as a basis for the organization to temporarily refrain from withholding PIT. The employee assumes full responsibility for their commitment letter; any fraud detected by the managing tax authority will be handled in accordance with the law.
Based on the guidance in this Official Letter, ALIAT recommends that enterprises carry out the following necessary actions:
- Review and identify post-termination payments to check whether the enterprise incurs any instances where income must be paid to employees after contract termination.
If applicable, the enterprise must declare and withhold 10% PIT on the income before disbursing it to the employee.
- In cases where former employees estimate their total taxable income after family circumstance deductions will not reach the taxable threshold, the enterprise must request a written commitment letter containing all legally required content; and this document must be retained at the company headquarters for future tax declaration and finalization audits.
