Do I Need a Local Entity to Hire in Vietnam?

In Vietnam, a "local entity" typically refers to a subsidiary, branch office, or a permanent establishment that allows you to be recognized as an employer. This setup is essential for managing local payroll, tax obligations, and employment protections. Without a local entity, you can't effectively handle these responsibilities, which include registering as an employer and complying with Vietnam's labor laws.

For many global employers, establishing a local entity can be a lengthy and costly process. Fortunately, an alternative exists: using an Employer of Record (EOR). An EOR can act as your legal employer in Vietnam, enabling you to hire employees without the need for a local entity.

What is Required to Employ Someone in Vietnam?

• Local employing entity required to directly employ? Yes (a local entity is necessary for direct employment)
• Payroll registration required? Yes (you must register with the General Department of Taxation)
• Withholding/tax remittance required? Yes (employers must withhold personal income tax from salaries)
• Social contributions required? Yes (mandatory contributions to social, health, and unemployment insurance)
• Local employment agreement required? Yes (employment contracts must comply with Vietnamese labor laws)
• Mandatory benefits to budget? Yes (statutory leave, insurance, and other entitlements)
• Works council/collective agreements considerations? Usually (certain sectors may have collective agreements)

Best Options If You're Hiring in Vietnam

Can I Hire Contractors Instead of Setting Up an Entity?

Yes, but you need to be cautious about misclassification risks.

Hiring contractors in Vietnam can be a viable option, but it’s essential to ensure that the contractor truly operates independently. Misclassification can lead to significant legal issues, especially if the contractor is effectively functioning as an employee. Here are key considerations:

• Ensure the contractor has multiple clients and isn’t exclusively working for your company.
• Maintain minimal control over how they perform their work.
• Clearly define the scope of work in the contract to avoid any ambiguity.

How Long Does Entity Setup Take And What Does It Cost?

Typical entity setup timeline: It often takes 2–4 months to set up an entity in Vietnam, depending on the type of entity and required registrations.

Ongoing cost categories (entity route):

• Accounting, bookkeeping, and statutory filings: Estimated 10,000,000–20,000,000 VND per month ($425–$850)
• Payroll provider: Estimated 1,500,000–3,000,000 VND per employee per month ($64–$128)
• Employer registrations and recurring compliance: Varies by complexity
• Corporate tax filings and annual reporting: Estimated 20,000,000–50,000,000 VND per year ($850–$2,130)

EOR cost components (no-entity route):

• A per-employee EOR service fee (from $399 per month with Playroll)
• Pass-through statutory costs (e.g., employer social security contributions)
• Any optional benefits you choose to provide beyond statutory minimums

How an Employer of Record Can Help You Hire in Vietnam

Hiring in Vietnam can be complex, but it doesn’t have to require setting up a local entity or taking on long-term overhead. With an Employer of Record like Playroll, you get a simple, predictable way to hire compliantly while keeping costs transparent and under control. We help you:

• Hire employees in Vietnam quickly without establishing a local entity, eliminating incorporation costs, ongoing administration, and exit complexity.
• Stay fully compliant with local payroll, tax, and employment regulations with Playroll’s payroll services.
• Control your total employment costs, with a clear monthly EOR service fee (from $399 per employee).
• Focus on growing your business, while we manage contracts, payroll, compliance, and labor law obligations end to end.
• Scale up or exit the market easily, without the financial or legal burden of closing a local entity.