Table of contents
Employment taxes in Vietnam
Employment taxes for Vietnamese employees
For Vietnamese employees, the employment taxes are the following:
Personal income tax
3% employer, 1.5% employee
17.5% employer, 8% employee
1% employer, 1% employee
Trade Union Fee
Employment taxes for foreign employees
The employment taxes for foreign employees starting from 1 December 2018 are:
Personal income tax
3% employer, 1.5% employee
17.5% employer, 0% employee
Trade Union Fee
Taxable and non-taxable employee benefits
In Vietnam, some employee benefits are tax-free while others remain taxable.
|Taxable benefits in Vietnam||Non-taxable benefits in Vietnam|
|Utility payments||Petrol, Telephone, Childcare, Transportation, Entertainment, Healthcare|
|Meal allowance (amount exceeding VND 700,000)||Meal allowance up to 700,000 VND (~USD 30)|
|Private sports club membership||Sports membership for a group of employees|
Insurance caps in Vietnam
In 2020, health and social insurance are capped at 29,800,000 VND (~US$ 1,286). Unemployment insurance is capped at 88,400,000 VND (~US$ 3800).
Social insurances for foreign employees in Vietnam
There are three types of compulsory insurances applicable to employees in Vietnam:
- Health insurance
- Social insurance
- Unemployment insurance
Out of these three insurances, foreign employees have only been eligible for health insurance. For this reason, the employment taxes imposed on foreign nationals have been significantly lower than on local employees.
In 2014, however, Vietnam passed the Social Insurance Law which became effective in 2016. The law stated that companies could also begin making social insurance payments for their foreign employees from January 2018.
On 15 October 2018, the government released the long-anticipated Decree (143/2018/ND-CP), making social insurance payments for foreign employees compulsory starting from 1 December 2018.
These percentages will be, accordingly:
- 0% by the employee
- 3.5% by the employer
As can be seen from the decree, foreign employees would be granted the same benefits as the Vietnamese employees.
These benefits include compensation for:
- sickness and maternity leave
- occupational diseases
Foreign employees would also get a one-time payment of pension upon leaving Vietnam. Unemployment insurance, however, will not apply to foreign employees.
Which foreign employees are eligible for social insurance in Vietnam?
Not every foreign employee is eligible for compulsory social insurance in Vietnam. Social insurance only applies if:
- the employment contract is for at least one full year
- the employee has a work permit, a practicing certificate, or a practicing license
However, even if the foreign employee fulfills either of the above-mentioned requirements, they are not eligible for social insurance in Vietnam on the following conditions:
- they have been internally transferred to Vietnam from an office abroad
- they have reached the retirement age which in Vietnam is 60 for men and 55 for women
If the employee has several employers, the social insurance obligation only applies to the first employment contract. However, each of the employers must bear the insurance for labor accidents and occupational diseases which is 0.5%.
Paid and unpaid leaves in Vietnam
Maternity and paternity leaves
Paid maternity leave in Vietnam is six months. However, if the mother has more than one child, she will get one extra month for each additional child.
Pregnant employees are also entitled to have five prenatal check-ups, one full day for each check-up. Furthermore, pregnant employees who live far from health establishments or have complications with their pregnancy can have a two-day leave for each prenatal check-up.
Keep in mind that during maternity leave, the employees must receive their average salary which is fully covered by the insurance fund and capped at 29.8 million VND (~US$ 1,286).
Fathers in Vietnam also have the right to take paternity leave for at least five days.
The general paid sick leave for employees who have been paying the social insurance premiums for under 15 years in Vietnam is 30 days.
However, if the employee has been contributing to the social insurance fund for full 15 years and under 30 years, the paid sick leave can be 40 days, and 60 days when the employee has been paying social insurance premiums for full 30 years or more.
Note that sick leave is covered by the social insurance fund, not by the employer and only Vietnamese employees have been applicable for it so far. However, starting from 1 December 2018, foreign employees also become eligible for sick leave, maternity and paternity leave, as per Decree 143.
After working for one year, the employee is entitled to get at least 12 days off. Furthermore, if the employee works under heavy or dangerous conditions or extremely heavy and hazardous conditions, they can get 14 or 16 paid holidays respectively. Plus one additional day for every five years of consecutive service.
Foreign employees are also entitled to one extra paid day off on their own country’s national day and one traditional new year holiday.
Public holidays in Vietnam
There are ten paid public holiday days in Vietnam. If a public holiday falls on a weekend, employees are entitled to have the following day off as well.
|Public holidays in Vietnam in 2020|
|January 1||New Year’s Day|
|January 23-29||Tết Holidays (Vietnamese New Year)|
|April 2||Hung Kings Commemoration Day|
|April 30||Reunification Day|
|May 1||International Labor Day|
|September 2||Independence Day|
Employees in Vietnam can also get paid days off for various events. For example, under the Labor Law, employees are granted paid leave for a death in the family, marriage, etc.
Other additional unpaid days depend on special arrangements between the employer and the employee.
Minimum wages in Vietnam in 2020
In Vietnam, there are two types of minimum salaries:
- Common minimum wage
- Regional minimum wage
Common minimum wage
Common minimum wage applies to employees who work at state-owned companies and enterprises. In July 2019, Vietnam raised the common minimum wage to 1,490,000 VND/month (~US$ 65) from the previous 1,390,000 VND/month (~US$ 60).
Salaries are calculated by multiplying the common minimum wage by the wage coefficient. For example, the wage coefficient of a person with a bachelor’s degree is 2.34.
Regional minimum wage
For employees of other companies, the regional minimum wage will be paid. Vietnam is divided into four regions, the first one being the urban areas of Ho Chi Minh City and Hanoi, and the fourth one covering the most rural areas of Vietnam.
According to Decree No. 157/2018/ND-CP, the regional minimum wages in Vietnam starting from January 1, 2020, are:
|Region||Monthly minimum salary|
|I||4,420,000 (~US$ 191)|
|II||3,920,000 (~US$ 169)|
|III||3,430,000 (~US$ 148)|
|IV||3,070,000 (~US$ 132)|
On average, the minimum monthly wage in Vietnam increased by 195,000 VND (~US$ 8.4) which makes it a 5% climb compared to last year.
See when is the best time to hire employees in Vietnam.
Getting started with payroll services in Vietnam
Emerhub provides several options for managing your company’s payroll, such as:
- Complete payroll management service, including advisory on employment matters
- Employer of record service where we hire your employees under our payroll. This way you don’t even need a legal entity in Vietnam to hire employees with full benefits.
Get in touch with us by filling in the form below and let’s discuss the best solution for your company.