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Sohaib Ikram
Sohaib Ikram serves as the Director of Emerhub in Malaysia.
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Andi Refandi
Andi serves as a Senior Account Executive on Emerhub’s global team.
If you’re planning to expand your team to Vietnam, payroll compliance is a crucial part of ensuring your business operations run smoothly. From understanding minimum wage to handling insurance and taxes for your hires, this guide covers the essentials of payroll in Vietnam to manage your business with confidence.
Key Considerations for Your Payroll in Vietnam
In order to stay fully compliant with Vietnam’s labor laws, you need to ensure that your payroll structure includes all the mandated requirements, such as:
A. Regional Minimum Wage in Vietnam
The minimum wage in Vietnam is divided into four regions based on the geographic and economic conditions of the area. As an employer, you are required to pay your employees the applicable minimum wage based on their work location as follows:
| Region | Monthly Minimum Wage (VND) |
| Region I | VND 4,960,000 |
| Region II | VND 4,410,000 |
| Region III | VND 3,860,000 |
| Region IV | VND 3,450,000 |
Keep in mind that you should make adjustments to your employees’ wages accordingly, especially if you are hiring for jobs that require vocational skills or are set in hazardous conditions.
B. Vietnamese Statutory Contributions
Part of your responsibilities as an employer in Vietnam is to handle statutory contributions on behalf of your employees. Contributions are calculated based on your employee’s salary and are capped based on their base salary and regional minimum wage.
| Insurance Type | Employer Contribution | Employee Contribution |
| Social Insurance | 17.5% | 8% |
| Health Insurance | 3% | 1.5% |
| Unemployment Insurance | 1% | 1% |
In addition to these insurance contributions, you must contribute 2% of each employee’s gross monthly salary to the Trade Union Fund, up to a salary base cap of VND 46,800,000. This is mandatory even if your company does not have an internal trade union.
Now, what about foreign employees? In Vietnam, foreign workers are required to contribute to social and health insurance if they:
- Have a Vietnamese labor contract that is at least 12 months long
- Hold a valid work permit or practice certificate
However, they are exempt from these contributions if their home country has a bilateral social insurance agreement with Vietnam. As such, it is important to check your employees’ eligibility during the onboarding process and do your due diligence before hiring foreign workers in Vietnam.
C. Personal Income Tax (PIT)
The Personal Income Tax (PIT) in Vietnam follows a progressive tax system for its tax residents. This means that the more your employee earns, the higher the tax rate they’ll fall under. As the employer, you are responsible for calculating, withholding, and filing PIT on behalf of your employees each month.
Here’s a breakdown of the rates:
| Monthly Taxable Income (VND) | Tax Rate |
| Up to 5,000,000 | 5% |
| Over 5,000,000 to 10,000,000 | 10% |
| Over 10,000,000 to 18,000,000 | 15% |
| Over 18,000,000 to 32,000,000 | 20% |
| Over 32,000,000 to 52,000,000 | 25% |
| Over 52,000,000 to 80,000,000 | 30% |
| Over 80,000,000 | 35% |
An employee is classified as a tax resident if they meet either of the following:
- Reside in Vietnam for 183 days or more in a tax year.
- Have a permanent residential address in Vietnam, either through registration or a lease.
Tax residents will be taxed on their worldwide income, while non-residents are taxed at a flat rate of 20% on income sourced in Vietnam. Non-residents are also not eligible for deductions, which makes a significant difference in their take-home pay.
When it comes to calculating taxable income and tax reporting in Vietnam, you need to take into account the following standard deductions as well:
- Family Deductions: VND 11 million per month for the taxpayer, VND 4.4 million for each dependent.
- Mandatory insurance contributions
- Voluntary retirement fund contributions
- Charitable, humanitarian, or educational donations that meet regulatory requirements
D. Overtime Pay and Limits
There are strict limits in place when it comes to working overtime in Vietnam, and fair compensation is legally mandated. The general cap is 40 hours per month and 200 hours per year, but in specific industries like manufacturing or export, the annual limit goes up to 300 hours.
Here’s how overtime is calculated:
- Weekdays: 150% of the regular hourly wage
- Weekends: 200% of the regular hourly wage
- Public Holidays: 300% of the regular hourly wage
Payroll Considerations for Employee Benefits
When creating your payroll structure, it is important to factor in some employee benefits, which will help with employee retention and satisfaction. Here are some of the key payroll-related benefits you should plan for.
Probationary Pay
During the probation period, you are required to pay your employees at least 85% of their official wage for the role. Furthermore, probation durations vary by role, but generally fall within 6 to 60 working days.
13th-Month Pay
While not legally required, the 13th-month salary is a widely expected benefit in Vietnam. It is typically paid at the end of the year or around the Tet holidays as a bonus and morale booster. The standard amount is one month’s base salary, and it can be prorated for employees who joined in mid-year.
Employee Leave Benefits
Paid time off is an important part of structuring and planning your payroll, so be sure to factor in the following:
- Annual Leave: At least 12 days per year for full-time employees.
- Sick Leave: Paid by social insurance, employees must provide a medical certificate from an authorised medical personnel. The number of days allowed depends on their insurance contribution history:
- Less than 15 years: 30 days off (40 days for those in hazardous environments)
- 15 to 30 years: 40 days off (50 days for those in hazardous environments)
- Over 30 years: 60 days off (60 days for those in hazardous environments)
- Maternity Leave: Female employees are entitled to 6 months of paid leave. In certain cases, such as multiple births or medical needs, this can be extended.
- Paternity Leave: Male employees can take 5 to 14 days off, depending on how many children are born and whether it is a single or multiple birth.
5-Step Payroll Calculation in Vietnam with Emerhub
Managing tax and accounting, payroll calculations, and structuring in Vietnam can be challenging, but with Emerhub’s assistance, you can stay compliant without the stress. We will ensure that your employees get paid correctly and on time while staying in line with local labor and tax regulations.
Here’s how we can handle payroll for you:
- You provide us with your employee’s details, including employment contracts, compensation terms, and salary information.
- We will register your employees with the relevant government bodies for their social insurance, health insurance, unemployment insurance, and labor compliance.
- Our accountants will calculate each employee’s monthly salaries, including overtime, benefits, and statutory contributions as required by Vietnamese labor laws.
- We will prepare and file your quarterly personal income tax (PIT) declarations and handle the annual tax finalization on your behalf.
- Our service also includes submitting your company’s biannual Labor Use Reports to ensure compliance with local labor department requirements.
By outsourcing your payroll to Emerhub, you can free up internal resources and be assured that your business is operating within legal requirements.
Get in touch with us today to simplify your payroll structure in Vietnam! Fill in the contact form below for a discussion.
FAQs on Payroll in Vietnam
A Trade Union is a voluntary socio-political organization in Vietnam that protects workers’ rights. Employee membership and contributions are voluntary, but employer contributions are mandatory. The employer must contribute 2% of the total wage fund (payroll) to the Trade Union Fund.
For payroll and Personal Income Tax (PIT) filings, employees use Personal Identification Numbers (PINS) instead of traditional Tax Identification Numbers (TINs).
Part-time employees must pay social insurance only if their labor contract meets the threshold for mandatory insurance participation (e.g., contracts 1 month or longer, certain minimum working hours).
The documents required usually include the employment contract, employee identification, work permit (if foreign), bank account details, and any allowances or bonus agreements based on their employment contract.
Yes, employers can provide non-cash benefits such as housing, travel, or training. Many non-cash benefits are considered taxable income unless specifically exempted under Vietnamese tax law.
