ESOPs and bonus shares for employees in Vietnam: tax, legal framework and plan design
The short answer
Under Decree No. 253/2026/ND-CP (effective 1 July 2026, applying to the 2026 tax year), bonus shares and ESOP shares bought at a discount give rise to employment income for employees:
Bonus shares: taxable income equals the number of shares received multiplied by par value. If the transfer price is below par, market value at the time of transfer is used.
ESOP shares: taxable income equals the number of shares received multiplied by par value, less the amount the employee paid. If the result is negative, no employment-income PIT is due.
When tax is payable: when the employee transfers shares of the same class, until all the bonus or ESOP shares have been transferred. Nothing is payable on receipt.
Collection: the securities company provisionally withholds 10% of this employment income, plus 0.1% securities transfer tax on the sale price.
Why will ESOPs be a hot topic in the coming years?
As capital markets develop and competition for talent intensifies, ESOPs are becoming a key retention tool for listed companies and startups alike.
Decree No. 253/2026/ND-CP has clarified how tax is calculated. It also introduces new reporting and withholding requirements through securities companies. Meanwhile, subsidiaries of foreign groups, limited liability companies and startups still face many issues requiring careful design.
Worked example
Ms B is a department head at a listed company with a par value of VND 10,000 per share.
Item | ESOP shares | Bonus shares |
Quantity | 10,000 shares bought at VND 10,000 each | 5,000 shares, free of charge |
Employment income | 10,000 × 10,000 – VND 100 million = VND 0 | 5,000 × 10,000 = VND 50 million |
On selling all shares at VND 45,000 each | Transfer tax: 0.1% × VND 450 million = VND 450,000 | Transfer tax: 0.1% × VND 225 million = VND 225,000. Provisional withholding by the securities company: 10% × VND 50 million = VND 5 million |
The employment income from the bonus shares is included in the annual PIT finalisation at progressive rates. Amounts provisionally withheld are credited against the tax due.
Legal framework for issuing ESOP shares
Public companies: issuing shares under employee share plans must comply with securities law:
the plan must be approved by the general meeting of shareholders;
there are limits on the issuance ratio within a given period;
transfer restrictions apply for the prescribed period;
reporting and disclosure obligations apply.
Non-public joint stock companies: follow the Law on Enterprises and the charter, such as private placements, offers to employees and existing shareholders' pre-emptive rights.
Limited liability companies and startups: cannot issue shares. Plans can instead take the form of:
commitments to transfer capital contributions;
"phantom shares" settled in cash;
conversion to a joint stock company before launching the plan.
Shares and options of an overseas parent (RSUs, stock options): these are employment income linked to work in Vietnam. The timing and measurement of income must be assessed according to the plan structure. Where the parent recharges the cost to the subsidiary, deductibility and related-party issues also arise.
Principles for designing an effective ESOP
Clear objectives: retention, motivation or sharing success? The objective determines eligibility, quantities and conditions.
Time- and performance-based vesting: for example, tranches over 3 to 4 years linked to targets.
Leaver provisions: distinguish good leavers from bad leavers, and set buy-back rights and prices.
Lock-up periods: consistent with the law and the retention objective.
Tax communication: explain to employees how tax is calculated, when it is payable and their finalisation obligations, to avoid "surprises" on sale.
Governance and record-keeping: lists, quantities, purchase prices and dates, for withholding, finalisation and audits.
FAQs
Is tax payable on receiving ESOP shares?
No. Under Decree No. 253/2026/ND-CP, tax becomes payable on transfer of shares of the same class, not on receipt.
Is ESOP income measured at market value or par value?
At par value. Income equals the number of shares times par value, less the amount paid. If negative, no employment-income PIT is due.
What taxes are due on selling ESOP shares?
0.1% securities transfer tax on the sale price, and employment-income PIT (if any income arises under the calculation above), provisionally withheld at 10% by the securities company.
Can a limited liability company run an ESOP?
It cannot issue shares, but it can design similar plans, such as commitments to transfer capital contributions or bonuses linked to company value. These require careful legal and tax design.
Legal basis
PIT Law No. 109/2025/QH15 and Decree No. 253/2026/ND-CP.
Law on Securities 2019 and implementing guidance on issuing shares to employees.
Law on Enterprises 2020 (as amended in 2025).
Decree No. 255/2026/ND-CP (for ESOP costs recharged by an overseas parent).
How W&A can help
A good ESOP combines HR objectives, the legal framework and tax efficiency for both the company and employees. W&A supports businesses with:
Designing ESOP, bonus share and phantom share plans for listed, unlisted and startup companies.
Drafting plan rules, agreements, shareholder resolutions and issuance documentation.
PIT advice for employees, finalisation and application of the new rules in Decree No. 253/2026/ND-CP.
Advice on overseas parent share plans (RSUs, options) for staff in Vietnam.
Business valuation to set issue and buy-back prices.
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