Your guide to doing business in Vietnam
Vietnam lies at the eastern tip of the Indochina Peninsula, on the western shores of the South China Sea. Vietnam is the world’s 14th-most populous country, with an estimated population of over 92.7 million. Although isolated from the global economy through most of the 20th century, in the 1980s reforms opened Vietnam up to international business interest and since 2000 it has experienced dramatic growth. Today, Vietnam is a member of the World Trade Organisation and the Asia Pacific Economic Cooperation group, and trades with partners across the world, including China, Japan, Australia, the United States, and Europe. Vietnam’s economy has been historically based on agriculture, but its growth is being driven by the industrial, manufacturing and service sectors. In the 21st century, the high technology manufacturing and information technology industries have become more important to the Vietnamese economy, along with domestic oil production. Various tax incentives are available to businesses wishing to set up in Vietnam, while ongoing government reforms are stimulating investment - a trend reflected by numerous Free Trade Agreements (FTAs) with regional partners and the European Union.
Vietnam’s growing economy holds a variety of interesting investment opportunities:
As a member of the World Trading Organisation ('WTO'), Vietnam has made significant efforts to ensure that foreign investors are not disadvantaged compared to their local counterparts. When other markets were foundering during the economic downturn, Vietnam posted strong growth, and was recently listed as the fastest-growing economy among emerging markets.
Vietnam is boosting international trade, investors and multinationals. Companies from all over the world are looking to do business in Vietnam. The exceptional standing of 140 years history in this dynamic, fast-paced market is most likely what encourages trade in Vietnam.
Requirements for new company establishment in Vietnam:
In Vietnam it is not mandatory to make payments to employees or authorities from an in-country bank account.
The working week in Vietnam is Monday to Friday from 9:00am to 6:00pm. There are no statutory provisions that prescribe maximum working hours. The EO does however provide that in addition to paid statutory (public) holidays, an employee is entitled to no less than one rest day in every period of seven days.
Vietnam lies at the western edge of the South China Sea, and is bordered by China and Laos to the north and northwest, and Cambodia to the west. Long considered an important trade destination, thanks to its maritime links to the rest of the continent, Vietnam grew over several centuries to become a powerful empire, but went through periods of colonization in the 18th, 19th and 20th centuries. Vietnam was unified as a communist state in 1975, a development which saw it isolated on the world stage until the mid-eighties, when political reforms opened the country back up to the world. Thanks to Vietnam’s tropical location, it has become a popular tourist destination, with domestic environments ranging from mountains and highlands, to dense forests and rivers, and including a vast amount of biodiversity.
Full Name: Socialist Republic of Vietnam
Population: 93.40 million (UN, 2015)
Major Language: Vietnamese
Major Religion: Non-Religious, Buddhism
Monetary unit: Vietnamese dong
Main exports: Paddy Rice, Coffee, Rubber, Cotton, Tea, Pepper, Soybeans, Cashews
Internet domain: .vn
International dialling code: +84
Good morning Chào buổi sáng
Good evening tốt buổi tối
Do you speak English? Bạn có nói tiếng Anh không
Good bye tạm biệt
Thank you cảm ơn bạn
See you later gặp anh sau
Vietnam’s tax year runs from 01 January to 31 December, while its tax system operates using a graduated scale. Taxpayers are categorised as ‘residents’ - who pay tax on income from Vietnam and overseas, and ‘nonresidents’ - who pay tax only on income originating from Vietnam.
Vietnam imposes three types of social security: health, social and unemployment insurance. Employees and employers both make social security contributions, up to a maximum threshold of 14.600.000 dong. Employees contracted for less than three months must pay social security contributions to the tax authority themselves.
Vietnam taxes individuals on their worldwide income using a graduated tax scale. Resident foreign citizens must declare all of their income, regardless of whether the income originates from a Vietnamese source or from Overseas.
There are three types of mandatory social security in Vietnam: social insurance, health insurance and unemployment insurance. For employees working under an employment contract that is less than three months in duration, the social insurance contribution amount will be included in their salary, and the employees will be responsible for paying their own social insurance or other insurance.
For Compulsory insurance:
Employee contributes: -
Employer contributes: -
Important Information: -
According to the Vietnamese Labour Code, which came into effect on 1 May 2013, an employment contract is needed for both Foreign and Vietnamese workers. The contract should mention the obligations and responsibilities of both the employers and employees, including the nature of the work involved, working hours, breaks, salary, location and duration of the employment.
Types of Contract:
Employment contracts in Vietnam are normally one of the following types:
The contract of an employee working on a definite term contract will automatically change into an indefinite term contract if the employee continues to work for the employer after the contract’s expiry and it is not renewed within 30 days.
The contract of an employee working on a seasonal or fixed term contract will automatically change into a definite term contract of 24 months if the employee continues to work for the employer after the contract’s expiry and it is not renewed within 30 days.
A definite term contract may only be extended once, after that the employee must be employed on an indefinite contract or stop working.
An employment contract should include:
Deadline for new starters to be registered with the Authorities:
The length of the probationary period is based on the complexity of the job, as follows:
Payment during the trial period is 85% of the salary stated in the employment contract. Employees working on a seasonal contract are not required to undergo a probationary period.
Vietnamese employment law prohibits an employer from discharging an employee who is on any type of leave that complies with applicable law, or who is undergoing medical treatment for his or her illness, including for an occupational injury or illness. The law also provides special employment protection for women, as employers are prohibited from discharging a female employee if:
The Vietnamese labour statutes allow employers to terminate an employee’s contract for the following reasons:
Notice Periods in Vietnam
Employees: Employees working under an indefinite contract may resign by providing their employer with a 45-day notice, or three days if the employee has been treated for six consecutive months due to an illness or accident.
Employers: Excluding the cases of discharge due to a disciplinary matter, employers must provide employees:
Information Required for a Leaver
The termination process in Vietnam involves certain obligations on the part of employers. Depending on the circumstance of their termination, an employee may be entitled to minimum notice period, and a severance package. As part of that process, employees should provide the following documents at the point of employment termination:
Employers in Vietnam have withholding obligations towards their employees’ salaries at each pay date, which include income tax and mandatory social security contributions. Both employers and employees contribute to social insurance, health insurance, and unemployment benefit funds as part of their mandatory social security contributions, but must also pay into their Employee’s Provident Fund (EPF).
Payslips must include details of the relevant pay period, and may be issued to employees electronically. Payroll reports must be kept for at least 7 years.