[2022 Update] Payroll Regulations to Keep in Mind While Doing Business in Vietnam

Local and foreign employees are required to comply with payroll regulations in Vietnam. Read the most updated information on the topic.

In 2018, the government of Vietnam issued a new Decree 143/2018/ND-CP in regards to the mandatory social insurance payments and payroll for foreign workers employed in Vietnam.

In 2019, the government released Decree No. 90/2019/ND/CP, announcing that starting on January 1, 2020, the monthly minimum wage in Vietnam would be increased by approximately 5.7%. The most current regulations put the minimum wage at 4,420,000VND. applicable in Vietnam’s biggest urban areas, (2021 update).

There are several important regulatory changes that took place according to this decree and will have lasting impacts on the payroll in companies and organizations.

Find Out About Cekindo’s Payroll Outsourcing Services in Vietnam

In this article, we will list out the major changes in payroll in Vietnam that you should take note of, as well as some of the basic information in regards to payroll in the country.

What are the Changes in Payroll in Vietnam?

1. Foreign Employee’s Social Insurance in Vietnam

Three types of employee insurance available in Vietnam are:

  • Health insurance (HI)
  • Social insurance (SI)
  • Unemployment insurance (UI)

Foreign employees are only eligible for one of the three insurances, which is health insurance. Hence, foreigners’ employment taxes are much lower than domestic employees’.

However, from January 1, 2018, all foreign workers and expatriates will be eligible for social insurance contributions, regulated by the 2014 Social Insurance Law. According to Decree 44/2017/ND-CP and Decision, 595/QD-BHXH issued on April 14, 2017, the social insurance payments are only applicable to foreign employees hired in Vietnam with a work permit.

In addition, the Vietnamese government further strengthened the regulation by making social insurance contributions from employers compulsory effective from December 1, 2018.

As of 2021, Vietnamese employees are required to contribute 8% and employers are required to contribute 17.5% for social insurance. The deduction is based on the employee’s gross salary.

Related article: Top Reasons for Payroll Outsourcing in Vietnam

Compensation Benefits

The change of social insurance law also brings foreign nationals the same benefits as local employees, including compensations for occupational diseases, maternity leave, sick leave, accidents. However, the death and retirement benefit is not applied to foreigners. Starting from 2022, foreigners will have this benefit.

Besides, a one-off pension payment will be granted to foreign workers when they leave Vietnam. However, foreign workers are excluded from the unemployment insurance benefit.

Eligibility

Social insurance contributions from employers only apply to foreign employees that meet the following conditions:

  • an employment contract for a minimum of one year
  • a work permit, or a practising license/certificate

Under the below circumstances, foreign employees will not be granted the social insurance (SI) scheme even when they fulfill the above criteria:

  • transferred to Vietnam from an overseas company and the transfer is done internally
  • In retirement age as set in Vietnam — 55 and 8 months for women; 60 and 6 months for men

Furthermore, the social insurance payment is only made to the first employment contract, if a foreign employee has more than one employer in Vietnam at the same time. However, all employers of that foreign employee are responsible for occupational diseases insurance and labor accidents insurance which is only 0.5%.

2. Employment Tax & Insurance in Vietnam

Local Employees

Payroll taxes in Vietnam for local employees are detailed as follows:

  • Personal Income Tax: 5-35% (employee)
  • Trade Union Fee: 1% (employee)
  • Social Security Contributions
    • Social Insurance: 8% (employee); 17.5% (employer) {NOTE: from January 01 to June 30th, there will be a reduction of 0.5% for employers) – See latest government update
    • Health Insurance: 1.5% (employee); 3% (employer)
    • Unemployment Insurance: 1% (each from both employee and employer)

Foreign Employees

Based on the new law effective from January 1, 2022 payroll taxes for foreign employees in Vietnam are:

  • Personal Income Tax: 5-35% (resident); 20% (non-resident)

Starting from January 1, 2022, certain taxes for foreign employees are adjusted to the following percentages:

  • Social Insurance: 9.5% (employee); 20.5% (employer) {NOTE: from January 01 to June 30th, there will be a reduction of 0.5% for employers) – See latest government update
  • Health Insurance: 3% (employee); 1.5% (employer)
  • Total (until end of June 30, 2022): 29.5%

*Starting from July 1st 2022 the total will increase to 30%

Death and retirement benefits for foreign employees will also come into force at the beginning of January 2022.

Personal Income Tax (PIT)

Personal Income Tax rates in Vietnam range from 5-35% for all resident taxpayers (both domestic and international). The following table further specifies the tax percentage deducted based on the monthly taxable income.

Tax RateMonthly Taxable Income (VND)
5%< 5,000,000
10%5,000,001 – 10,000,000
15%10,000,001 – 18,000,000
20%18,000,001 – 32,000,000
25%32,000,001 – 52,000,000
30%52,000,001 – 80,000,000
35%> 80,000,001

Related article: Your Simple Guide to Payroll in Vietnam: Compensation, Benefits and Bonuses

3. Increase of Minimum Wages

As legislated by the government of Vietnam the General Minimum Wage (GMW) in Vietnam has increased by 5.3% in 2019 to 1,490,000 VND per month for the minimum basic wage.

Types of Minimum Wages in Vietnam in 2019

There are two kinds of minimum wages in Vietnam. They are common minimum wage and regional minimum wage.

Common minimum wage is used for employees working in state-owned organizations and enterprises.

The second type of minimum wage is a regional minimum wage. It applies to all employees of non-state enterprises. The government defines this type of minimum wage based on region.

Vietnam is now split into four regions to reflect the socio-economic conditions of the country. The first region covers the urban areas of Hanoi, and Ho Chi Minh City and the fourth region includes the most rural areas in Vietnam.

July 2022 Update: The current minimum wage is 4,420,000VND which is applicable in Vietnam’s largest urban areas like Ho Chi Minh City, Danang, and Hanoi. An extra 7% will be added on top for those deemed “skilled workers” with diplomas and other certificates. Read the full update here.


Cekindo’s professionals provide comprehensive support to your business concerning payroll, insurance, tax and other market entry strategies. Get in touch with us today and outsource payroll in Vietnam.

Contact Our Consultant

Tomas Svoboda - Cekindo - Vietnam Country Manager

Verified by:​

Ing. Tomas Svoboda

Tomas is the co-founder & Chief Business Development Officer responsible for Vietnam. His role is to define the key potential of the Vietnamese market and to ensure that Incorp's branch in Vietnam provides its clients with smooth and hassle-free market entry solutions.