Our guide to Payroll in Vietnam

Doing Business in Vietnam

Generally, an employee’s typical monthly salary package includes their gross salary and mandatory insurance contributions. Personal income taxes (PIT) will be levied on the balance after deducting mandatory insurance contributions

Besides, the employees’ income may also include overtime payments, allowances, bonuses, as well as additional benefits
Further, employees will receive compensation in Vietnamese Dong, if their salary and other benefits are based in another currency (USD/EUR, etc.), it must be converted into Vietnamese Dong based on the real foreign exchange rate.

The salary used for compulsory social insurance and trade union payment must be converted into Vietnam Dong based on the Vietnamese government's foreign exchange rate

Basic Facts about Vietnam

How to Say

• Hello: Xin chào
• Good Morning: Chào buổi sáng
• Good Evening: Chào buổi tối
• Do you speak English?: Bạn có nói tiếng Anh không?
• Goodbye: Tạm biệt
• Thank you: Cảm ơn
• See you later: Hẹn gặp lại

To employ staff in Vietnam, a business must be registered with:

• Department of Planning and Investment
• General Department of Taxation
• Social Insurance Fund
• Health Insurance Fund
• Trade Union (if applicable)

Foreign-owned enterprises require:

• Investment registration certificate
• Enterprise registration certificate
• Legal representative in-country

A local bank account must be opened to process payroll and pay taxes.

Registration typically takes 1–2 months. Representative offices may be used for market research and liaison but cannot generate revenue.

Standard working hours:

• 8 hours/day
• 48 hours/week (Monday to Saturday)

Overtime:

• Max 4 hours/day
• Max 40 hours/month
• Max 200 hours/year (300 in special industries)

Overtime premium:

• 150% (normal days)
• 200% (weekends)
• 300% (public holidays)
• 30% premium for night work (22:00–06:00)

Rest:

• 1 day off/week
• 30-minute daily break for shifts over 6 hours

Probationary period:

• 6–60 days depending on job level
• Must be written and paid at ≥85% of official wage

Public Holidays

Vietnam observes 11 public holidays annually. When a public holiday falls on a weekend, the day on which it is observed is at the discretion of the prime minister.

Foreign employees in Vietnam are entitled to 01 traditional public holiday and 01 National Day of their country.

Social Insurance

Mandatory social insurance including Social Insurance, Health Insurance, and Unemployment Insurance, is contributed by both – the employer and the employee:

Social Insurance and Health Insurance

It is levied on the Gross Salary and mandatory allowances as prescribed of the Employee.

The maximum monthly salary that is subject to Social Insurance and Health Insurance is capped at 46,800,000 VND (20 times the Minimum Basic Wage, which is currently 2,340,000 VND per month, applied from 1 July 2024).

Unemployment Insurance

It is levied on the Gross Salary and mandatory allowances as prescribed of the Employee.

The maximum monthly salary that is subject to Unemployment Insurance is capped at 20 times the Minimum Monthly Wage of the.
Zone the Employer is in the Zone 1 minimum (The 1 Regional minimum wage) is 5,310,000 VND, which equates to a cap of 106,200,000 VND per month.

Personal Income Tax

According to Vietnam’s Law on Personal Income Tax, there are two kinds of tariffs for employees in Vietnam, with a host of different deductions, tax rates, and exceptions applying to each of them.

Non-resident taxpayers are subject to PIT at a flat rate of twenty percent (20%) on their Vietnam-sourced income.

Resident taxpayers are subject to PIT at progressive rates from 5% to a maximum of 35%.

Personal Income Tax Rates in Vietnam

The employee’s taxable income includes salaries, allowances, benefits, and bonuses in any form except for some other incomes (nontaxable income) prescribed by the Tax Law.

Taxable Income for each employee, prior to calculating PIT, is further reduced by:

• Personal Relief of 15,500,000 VND per month

• Dependent Relief of an additional 6,200,000 VND per month for each registered dependent

The employer has to conduct personal income tax and pay it to the Tax Office on behalf of their employees.

Trade Union

The Employer will contribute 2% based on the Employee salary subject to Social Insurance to the Trade Union.

The maximum salary that is subject to the Trade Union is capped at 46,800,000 VND (20 times the Minimum Basic Wage, which is currently 2,340,000 VND per month)If the company has established its own union, the employee will be subject to Trade Union costs at 1% of their gross salary and the cost is capped at 234,000 VND (10% of the Minimum Basic Wage) only when they participate in the Company’s Union.

Report

Monthly report

Labour Report:

• Labor Report for Local Employees (2 times per year/ every 6 months) – Deadline before 05th of June and Dec of the current year

• Labor Report for Expat Employees (2 times per year/ every 6 months) 

• Labour Monthly Report (New hire and resigned)- Deadline before 3rd of the next month

PIT Report:

• PIT Report (Monthly) – Deadline 20th of the next month

• PIT Report (Quarterly) – Deadline 30th of the next quarter

Social Insurance Report:

• Increase Report - Deadline: within the month of occurrence

• Decrease Report - Deadline: before the end of the month which employees will resign (if the month has an increase and decrease report, make sure the increase report must be completed before the decrease report can be submitted.)

• Claiming Report (Sick leave, maternity leave, paternity leave) (as soon as received the certificate of hospital from employees).

Yearly report:

PIT Finalization Report – Deadline before 30th Mar of the next year

Case 1: For those who work at company full calendar year (from Jan to Dec of the following year) and:

• Have no other taxable income sources (i.e: income from sales or house rental, employment by another company…);

• Have other income sources, but the income account for not over 10 million VND per month in the year & tax has been withheld at the payment time with flat rate of ten percent (10%)

Case 2: For those who work less than 12 months at company/ or do not fall in Case 1. Employees will be requested to settle the PIT finalization with Tax Office.

Labour Report:

• Labour Report Unemployment insurance contribution- Deadline before 15th of Jan of the next year

Salary, Allowances and Bonuses

Salary: is the monthly or yearly salary before deductions mandatory insurance, personal income tax, and trade union.

Allowances: some common types of allowances such as meal allowance, gasoline allowance, phone allowance, etc. (These types of allowances will be considered taxable or non-taxable income depending on the provisions of the Personal Income Tax Law).

Bonus: there are various kinds of bonuses that a company may grant its employees throughout the year such as 13th Salary, Performance Bonus, Incentives, etc.
(All salaries and bonuses are subject to Personal Income Tax).

Overtime

If a company triggers overtime, they will be obligated to compensate employees beyond the salary that is outlined in their contract. The following are the percentages in excess of a standard that are to be applied in the event that certain work-related thresholds are crossed.

There are limitations on the number of overtime hours an employee is allowed to work. As per the labor code, overtime hours cannot exceed 40 hours per month and 200 hours per year.

Vietnam Overtime Compensation

There are limitations on the number of overtime hours an employee is allowed to work. As per the labor code, overtime hours cannot exceed 40 hours per month and 200 hours per year.

Hiring

Employers must sign a written labour contract before the first working day. Required documents:

• ID/passport
• Tax code
• Bank details
• Health check certificate

Contract types:

• Indefinite
• Fixed-term (≤36 months)
• Seasonal/project-based

Termination

Must be in writing and follow legal notice:

• 30 days (fixed-term contract)
• 45 days (indefinite contract)

Termination without cause may require:

• Severance (0.5 month per year worked)
• Job-loss allowance (1 month per year)
• Final payments on last working day

Employment Law

Public Holidays

Public holidays are administered by the Ministry of Labour, Invalids and Social Affairs of Vietnam (MOLISA). When a public holiday falls on a weekend, the day on which it is observed is at the discretion of the prime minister. Includes: 

• New Year Holiday: 1 day (January 01)

• Lunar New Year Holidays: 5 days (includes the 1st, 2nd, 3rd day of the first month of the Lunar Calendar and two more days assigned at the discretion of the government)

• Liberation Day/Reunification Day: 1 day (April 30)

• International Labor Day: 1 day (May 01)

• Independence Day: 2 days (September 02 and the day before or after at the discretion of the Prime Minister).

• Hung Kings Commemoration Day: 1 day (the 10th of the third month of the Lunar calendar).

Foreign employees in Vietnam are entitled to 01 traditional public holiday and 01 National Day of their country.

Annual leave:

• Employees who have worked with an employer for over 12 months at least 12 days of leave per year

• Employees who have not yet worked for 12 months in one year for a single employer are entitled to have paid annual leave in line with the number of their working months

• Employees who work with an employer for more than 5 years, will be entitled to one extra day of annual leave

• Employees who have their annual leave pending after resigning from an organization will be paid by the employer for the unused leave days.

Personal leave

• Employee is entitled to take a fully paid personal leave in the following circumstances, as long as it is notified to the employer in advance:

• Marriage: 03 days

• Marriage of his/her biological child or adopted child: 01 day

• Death of his/her biological or adoptive parent; death of his/her spouse’s biological or adoptive parent; death of spouse, biological or adopted child: 03 days.

Sick leave:

Company’s regulations: total of sickness days will be limited by internal policies company

Social Insurance’s regulations: 

1st Period: Apply for short and long term sickness 

2nd Period: Apply for long term sickness (after claim 1st period)

[Allowance from Social Insurance Authority = Salary for Social Insurance contributed/24* total of Sick leave days *0.75]

Maternity leave:

• Maternity leave: Female employee is entitled to 06 months of prenatal and postnatal leave; the prenatal leave period shall not exceed 02 months. In case of a multiple birth, the leave shall be extended by 1 month for each child, counting from the second child. During maternity leave, the female employee is entitled to maternity benefits as prescribed by social insurance laws.

  • [Allowance from Social Insurance Authority = Average of Salary for Social Insurance contributed within 6 months before maternity leave*6 + (Common Minimum wage *2)]

• Pregnancy test: total of Pregnancy test days is not over 5 days. 

  • [Allowance from Social Insurance Authority = Average of Salary for Social Insurance contributed within 6 months before Pregnancy test/24* total of Pregnancy test days]

• Miscarriage: based on total of days in the certificate of hospital
  • [Allowance from Social Insurance Authority = Average of Salary for Social Insurance contributed within 6 months before miscarriage/30* total of miscarriage days]

Paternity leave:

Male employee is entitled for Paternity leave: 

• 5 days (applied for born baby by usual method)

• 7 days (applied for born baby by surgery method)

[Allowance from Social Insurance Authority = Average of Salary for Social Insurance contributed within 6 months before wife born baby/24* total of paternity leave (5 or 7 days)]

Minimum Basic Wage 2023:

The new Minimum Basic Wage at Vietnam has been officially on 01st Jul 2024 = 2.340.000 VND/month

The 1 Regional minimum wage from Jan 1, 2026 = 5.310.000 VND/month

Employee Benefits

Employee benefits are the amounts recorded in the labor contract. These amounts are specifically regulated in how to calculate, how to pay periodically, and what level the employee receives the benefits are all specifically recorded in the company's salary and bonus regulations. Employee benefits can be monetary or non-monetary, such as membership cards for individual employees to enjoy benefits in education, health, learning, benefits in housing, travel, and meals are paid by the company.

Work permits costs are the responsibility of the Company when hiring foreign workers, therefore this cost is not included in the taxable income of the employee. Visa fee & temporary residence card costs paid by the company are considered a benefit for employees and will be included in the employee's taxable income.

Further Information

For more information, or assistance with Vietnam tax enquiries please contact: gi@activpayroll.com 

About This Payroll and Tax Overview

Please note that this document gives general guidance only and should not be regarded as an authoritative or complete statement of the law, regulations or tax position in any country.  You should always seek specific advice for each specific situation. This document should not be relied upon as professional advice and activpayroll accepts no liability for reliance on its contents.