Vietnam provides foreign businesses with a young, well-educated workforce and a relatively inexpensive workforce. Employers should have a basic understanding of human resource management. Many companies primarily rely on HR outsourcing entities, particularly for advice related to recruitment, training, and payroll. Many multinationals report that they would like to outsource more of their operational HR practices to a regional shared services function.
Cekindo, a leading business process outsourcing company in Southeast Asia, answers some frequently asked questions about the payroll procedures and requirements in Vietnam.
How to be Compliant When Establishing Operations
There are a number of procedures that must be followed in order to be compliant when establishing operations:
- Creating offer letter and job contract templates (if applicable);
- Drafting of an employee handbook (separate proposal);
- Contact the local labor department and social insurance agency to open a corporate social/health/unemployment insurance account for the new business.
All full-time employees in Vietnam are covered by social insurance, health insurance, and unemployment insurance. According to the labor laws, employers must contribute to each of these social insurances. Contracts, working hours, and norms are all governed by the Vietnamese labor code.
Social Security Minimum Contribution Employer and Foreign Employee
|Social Insurance||Health Insurance||Unemployment Insurance||Total Compulsory Contribution|
*From the year 2022 onwards, employer contribution will be 20% and employee contribution will be 9.5% (Decree 143/2018)
Personal Income Tax rates
Residents of Vietnam pay tax on their taxable income, whereas non-residents pay a flat 20% tax on all income earned in Vietnam. The table below shows the various tax rates for Vietnam residents based on their income.
Vietnam’s Personal Income Tax Rates
|Tax bracket||Monthly taxable income (million VND)||Monthly taxable income (US$)||Tax rate|
|1.||Up to 5||Up to 213||5%|
|2.||Over 5 to 10||Over 213 to 426||10%|
|3.||Over 10 to 18||Over 426 to 767||15%|
|4.||Over 18 to 32||Over 767 to 1,363||20%|
|5.||Over 32 to 52||Over 1,363 to 2,220||25%|
|6.||Over 52 to 80||Over 2,220 to 3,416||30%|
|7.||Over 80||Over 3,416||35%|
What is the minimum wage in Vietnam?
In Vietnam, the minimum wage varies based on location. As seen in the table below, the country is divided into four distinct areas. According to Government Decree 90/2019/ND-CP, salaries provided to employees who have received vocational training must be at least 7% more than the minimum wage level.
Vietnam minimum wages 2020
|People who have been trained from the vocational level upward|
|Urban Hanoi, Ho Chi Minh City, and a number of subregions||VND 4,420,000 (US$190)||4,420,000+(4,420,000 x 7%) = VND 4,729,400 (US$202)|
|Rural Hanoi and Ho Chi Minh City along with Can Tho, Da Nang, and Hai Phong||VND 3,920,000 (US$169)||3,920,000+(3,920,000 x 7%) = VND 4,194,400 (US$179)|
|Bac Ninh, Bac Giang, Hai Duong, Phu Tho, Vinh Phuc||VND 3,430,000 (US$148)||3,430,000+(3,430,000 x 7%) = VND 3,670,100 (US$157)|
|Remaining Localities||VND 3,070,000 (US$132)||3,070,000+(3,070,000 x 7%)
= VND 3,284,900 (US$140)
The key date to declare and submit the PIT
Personal Income Tax (PIT) can be submitted once a month or once a quarter. If a firm owes more than 50 million VND (US$2,130) in the PIT for the first month of business (since its initiation), the company must pay PIT on a monthly basis.
The monthly payment deadline for PIT is the 20th of next month. PIT must be paid quarterly by companies that pay less than 50 million VND (US$2,130) in their first month of operation. The deadline for quarterly PIT payments is the 30th of the first month of the following quarter.
The deadline for completing the PIT annual report is March 31st.
For a more comprehensive guide on considering between in-house and outsourced payroll management, refer to our more updated blog here.
How Cekindo Can Help
Cekindo is an one-stop business that offers professional payroll and HR outsourcing that provides its business process outsourcing services to scale companies.
Cekindo makes sure your raw payroll data will be processed in accordance with the new Vietnamese accounting regulations. In addition to that, we also provide tax advice and post payroll audit services that save you the extra trouble and gives you more room to focus on your core business functions.