Optimizing Personal Income Tax (PIT) Costs: The Mid-Shift Meal Allowance Cap of VND 730,000 Is Gone

New Regulations on Mid-Shift Meal Allowances

Circular 003/2025/TT-BNV, issued by the Ministry of Home Affairs and effective June 15, 2025, repeals Circular 26/2016/TT-BLĐTBXH. The new rule means there is no longer a specific limit on mid-shift meal expenses. These expenses are not subject to personal income tax (PIT) , provided they are used for the correct purpose, are governed by a clear policy, and are supported by proper documentation.

So, what should businesses do to ensure these expenses remain tax-exempt?

Based on the provisions of Circular 111/2013/TT-BTC and related legal documents, the PIT treatment for mid-shift meal expenses (effective June 15, 2025, onwards) is as follows:

• If the company organizes meals or buys pre-packaged meals: The entire expense is not included in the employee’s taxable income.

• If the company provides a cash allowance to employees: This allowance is not subject to PIT as long as the amount aligns with the company’s employment contracts, collective labor agreements, or internal regulations. Any amount that exceeds the stipulated regulation will be considered taxable income.

Example: If a labor contract stipulates a mid-shift meal allowance of VND 1,000,000 per month, the entire amount is exempt from PIT and is not included in taxable income.

What Businesses Should Do

To effectively leverage the new regulations and avoid tax risks, businesses should be proactive:

• Establish or adjust internal meal allowance policies: Clearly define who is eligible, the allowance level, the payment method, and the internal approval process. This creates a strong legal basis for the expense and ensures cost transparency.

• Stay updated with the latest legal documents: Continuously monitor information from tax authorities to ensure compliance, especially during inspections or tax finalization.

The removal of the VND 730,000 cap not only helps businesses save on tax costs but also provides an opportunity to strengthen welfare policies, boost employee satisfaction, and improve retention in a legal and sustainable way.