Payroll taxes in Vietnam that are of key importance to employers include Social Insurance, Health Insurance, Unemployment Insurance, and Trade Union fees. Learn more about the processes for setting up payroll, calculating taxes, submitting payments compliantly, and adhering to due dates in Vietnam.
Capital City
Hanoi
Currency
Vietnames Dong
(
₫
)
Timezone
ICT
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GMT +7
)
Payroll
Monthly
Employment Cost
23.50%
Managing payroll taxes in Vietnam requires careful attention to the country's multi-layered social security system and progressive personal income tax structure. Whether you're a small business owner or part of a larger enterprise operating in Vietnam, understanding the various mandatory contributions is essential for compliance and employee satisfaction.
Employers in Vietnam must navigate several types of taxes and contributions, including Social Insurance, Health Insurance, Unemployment Insurance, and Personal Income Tax (PIT), each with specific calculation methods and contribution rates. Non-compliance can result in significant penalties, including daily interest charges of 0.05% on late payments and potential fines ranging from VND 500,000 to VND 150 million.
This article aims to guide you through the key aspects of Vietnam's payroll tax system, helping you understand the calculations, deadlines, and filing procedures that vary based on employee income levels and business locations across Vietnam's four minimum wage zones.
1 January - 31 December is the 12-month accounting period that businesses in Vietnam use for financial and tax reporting purposes.
The payroll cycle in Vietnam is usually monthly, with employees being paid by the last working day of the month.
As of January 1, 2025, Vietnam's minimum wage varies by region. For example, in Hanoi and Ho Chi Minh City, the minimum wage is set at VND 4,420,000 per month, while in rural areas, it may be lower.
There is no statutory requirement for employers to pay a 13th salary.
Payroll calculation in Vietnam involves several components that affect employee salaries. The process begins with determining the gross salary, which serves as the base for calculating various deductions and contributions. From this gross amount, employers must deduct mandatory employee contributions including Social Insurance (8%), Health Insurance (1.5%), and Unemployment Insurance (1%). These contributions are capped at a maximum monthly salary of VND 36,000,000.
After deducting these mandatory contributions, Personal Income Tax (PIT) is calculated using Vietnam's progressive tax system, which ranges from 5% to 35% depending on income levels. Employees are entitled to personal relief of VND 11,000,000 per month and dependent relief of VND 4,400,000 per month per dependent, which reduces their taxable income. Employers must also factor in their own contributions to these insurance schemes, which total 21.5% of the employee's gross salary (17.5% for Social Insurance, 3% for Health Insurance, and 1% for Unemployment Insurance).
The final net salary is calculated by subtracting all employee contributions and PIT from the gross salary. Additionally, employers must consider regional minimum wage requirements, which vary across Vietnam's four designated zones, with Zone 1 (including Hanoi and Ho Chi Minh City) having the highest minimum wage of VND 4,680,000 per month.
Vietnam's payroll tax system consists of several mandatory contributions that both employers and employees must make. Each type of tax has specific regulations, calculation methods, and compliance requirements. Understanding these different components is crucial for businesses operating in Vietnam to ensure they meet all legal obligations and avoid penalties.
Social Insurance is a mandatory contribution in Vietnam that provides coverage for employees in cases of illness, maternity leave, work accidents, occupational diseases, retirement, and death benefits. The contribution rate is 8% for employees and 17.5% for employers, calculated based on the employee's gross salary up to a maximum monthly cap of VND 36,000,000. This insurance is crucial as it forms the foundation of Vietnam's social security system, providing essential protection for workers.
Employers must register new employees with the Social Insurance agency within 30 days of employment commencement. Payments must be made monthly by the last day of each month. Non-compliance can result in daily interest charges of 0.05% on late payments and potential fines ranging from VND 500,000 to VND 150 million, depending on the severity of the violation. For serious cases, criminal liability may apply.
Health Insurance in Vietnam covers medical examination and treatment costs for employees. The contribution rate is 1.5% for employees and 3% for employers, also calculated based on the employee's gross salary up to a maximum monthly cap of VND 36,000,000. This insurance is mandatory for all employees working under labor contracts of one month or longer.
Health Insurance contributions follow the same payment schedule as Social Insurance, with monthly payments due by the last day of each month. The funds collected are managed by the Vietnam Social Security agency and provide employees with access to healthcare services at registered medical facilities. Employers who fail to make timely Health Insurance contributions face the same penalties as those for Social Insurance violations, including daily interest charges and potential fines.
Unemployment Insurance provides temporary financial support for employees who lose their jobs. The contribution rate is 1% for both employees and employers, calculated based on the employee's salary. Unlike Social Insurance and Health Insurance, there is no specified maximum monthly salary cap for Unemployment Insurance contributions.
It's important to note that foreign employees are exempt from Unemployment Insurance contributions. Payments follow the same schedule as other social security contributions, with monthly payments due by the last day of each month. This insurance provides a safety net for Vietnamese workers, offering financial support during periods of unemployment while they search for new employment opportunities. Non-compliance with Unemployment Insurance regulations results in the same penalties as other social security violations.
Setting up a payroll system in Vietnam begins with registering your business with the relevant government authorities. First, you must register with the Vietnam Social Security (VSS) agency, which oversees Social Insurance, Health Insurance, and Unemployment Insurance. This registration requires submitting company establishment documents, business registration certificates, and a list of employees with their personal details.
Next, you need to register with the local tax authority to obtain a tax code for your business and employees. This involves submitting an application form, business registration certificate, and company charter. After registration, you'll receive a tax code that must be used for all tax-related transactions and filings. Additionally, if you have a trade union, you must register with the Vietnam General Confederation of Labor to manage trade union contributions. Each new employee must be registered with the Social Security agency within 30 days of their employment start date to avoid penalties.
Selecting the right payroll system is crucial for efficient payroll management in Vietnam. Businesses have several options to consider:
In-house payroll processing: Suitable for small businesses with few employees, this approach requires dedicated staff with knowledge of Vietnamese payroll regulations.
Outsourced payroll services: Many businesses choose to outsource their payroll to local accounting firms or specialized payroll service providers who understand Vietnam's complex tax regulations.
Payroll software solutions: Modern payroll software can automate calculations, tax withholdings, and reporting. Some popular options include:
Proper employee onboarding is essential for accurate payroll processing in Vietnam. When hiring new employees, collect all necessary documentation including identification cards (ID cards or passports), tax identification numbers, bank account details for salary transfers, and family information for dependent deductions. For foreign employees, work permits and temporary residence cards are also required.
Create individual employee files containing employment contracts, personal information, and tax declaration forms. Register new employees with the Social Security agency within 30 days of their start date by submitting Form D02-TS. Ensure employees complete and sign a tax registration form (Form 05-ĐK-TH-TCT) to obtain a personal tax code if they don't already have one. Setting up a systematic onboarding process not only ensures compliance with Vietnamese regulations but also creates a solid foundation for accurate and efficient payroll processing.
The first step in processing payroll in Vietnam is gathering accurate attendance data. Most Vietnamese companies use electronic time-tracking systems, biometric scanners, or mobile applications to record employee work hours. Some smaller businesses may still use manual timesheets or attendance registers. Regardless of the method, attendance records should capture regular working hours, overtime, late arrivals, early departures, and absences.
Vietnamese labor law stipulates a standard workweek of 48 hours, with overtime limited to 40 hours per month and 200 hours per year. Overtime rates vary: 150% for weekday overtime, 200% for weekend work, and 300% for work on public holidays. Accurate attendance tracking is crucial not only for calculating regular wages but also for determining overtime pay, which must comply with these legal requirements.
Employers should maintain attendance records for at least 5 years, as they may be requested during labor inspections.
Once attendance data is collected, the next step is calculating gross salaries based on the employment contract terms and actual hours worked. For salaried employees, this typically involves their fixed monthly salary plus any applicable allowances, bonuses, or overtime pay. For hourly workers, multiply their hourly rate by the number of hours worked, including appropriate overtime premiums.
From the gross salary, deduct mandatory employee contributions: 8% for Social Insurance, 1.5% for Health Insurance, and 1% for Unemployment Insurance (except for foreign employees). These deductions are capped at a maximum monthly salary of VND 36,000,000. Next, calculate Personal Income Tax (PIT) using Vietnam's progressive tax rates ranging from 5% to 35%, after applying personal and dependent deductions.
Remember that some benefits may be tax-exempt, such as one-time relocation costs, uniform allowances (up to VND 5,000,000/year), and mid-shift meals (up to VND 730,000/month). The final net salary is determined by subtracting all deductions from the gross salary.
After calculating salaries and deductions, employers must generate payslips for each employee. Vietnamese payslips should include the employee's name, position, employee ID, pay period, gross salary, itemized deductions (Social Insurance, Health Insurance, Unemployment Insurance, PIT), allowances, bonuses, and net salary. While there's no standardized format mandated by law, payslips must clearly show how the final payment was calculated.
Payslips can be distributed either electronically or in physical form. Many companies in Vietnam are transitioning to electronic payslips delivered via email or accessible through employee self-service portals, which is more efficient and environmentally friendly. Physical payslips should be provided in sealed envelopes to maintain confidentiality.
Regardless of the distribution method, employers should obtain acknowledgment of receipt from employees, either through digital confirmation or signature. Payslips should be distributed at the time of salary payment or shortly before, giving employees time to review and raise any questions before their salary is transferred.
Employers in Vietnam must submit various payroll-related reports to government authorities. Monthly Social Insurance, Health Insurance, and Unemployment Insurance contributions must be reported to the Vietnam Social Security agency by the last day of each month using Form C12-TS. Personal Income Tax withholdings must be reported to the tax authority by the 20th of the following month using Form 05/KK-TNCN.
For foreign employees, additional reporting may be required. Annual tax finalization must be completed by March 31st of the following year for Vietnamese employees and within 45 days before departure for expatriates leaving Vietnam. Social Insurance reports must be submitted quarterly and annually, with specific deadlines for each period. All submissions can be done either online through the respective government portals or in person at local offices.
Maintaining accurate records of all submissions is essential, as penalties for late or incorrect filings can be substantial.
In Vietnam, salaries are typically paid once a month, although some companies may opt for bi-weekly payments. According to Vietnamese labor law, salaries must be paid directly to employees in full and on time as specified in their employment contracts. The most common payment method is bank transfer to employees' personal accounts, which provides a clear audit trail for both employers and employees.
Cash payments are still used by some smaller businesses, particularly for part-time or temporary workers, though this practice is becoming less common. If using cash, employers must obtain signed receipts from employees. Payment schedules should be consistent and communicated clearly to employees.
Most companies in Vietnam pay salaries between the 25th of the current month and the 5th of the following month. Delayed salary payments can result in penalties under Vietnamese labor law, including interest payments to affected employees and potential fines from labor authorities.
Understanding the tax obligations for both employers and employees is crucial when operating in Vietnam's business landscape. This section explains how taxes and statutory fees affect payroll and individual earnings in Vietnam.
Employer payroll contributions are generally estimated at an additional 23.5% on top of the employee salary in Vietnam.
In Vietnam , the typical estimation for employee payroll contributions cost is around 10.5%.
Income tax in Vietnam is 'Pay As You Earn'. The individual income tax ranges from 5% to 35%. Income tax is calculated according to progressive rates.
Pensions are part of the social insurance scheme which employers and employees make mandatory contributions. The standard retirement age in Vietnam is current 62 for men and 60 for women. Employees can opt for early retirement if they have contributed to the social insurance fund for at least 20 years and are at least 5 years younger than the standard retirement age. However, early retirement will result in a reduced pension amount.
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Global employers operating in Vietnam often encounter unique payroll challenges that can affect compliance and efficiency, like navigating evolving tax laws and managing employee data. With a need for real-time accuracy, modern organizations must develop strategies to overcome these challenges effectively. Below, we explore some of the most common payroll hurdles and provide actionable solutions to streamline payroll processes in Vietnam.
Maintaining accurate global payroll reports is often challenging due to currency exchange complexities, data integration issues, and the need to keep employee information up-to-date – including tax information, hours worked, leave balances, and any changes in salary or job status. Generating accurate reports is easy with a comprehensive payroll automation tool that consolidates fragmented data sources, and can keep track of employee payments and deductions.
In Vietnam, tax laws and compliance regulations can change frequently, presenting a significant challenge for global employers. Monitoring updates to federal, state, and local tax codes is crucial to avoid non-compliance and costly penalties, but requires significant time and resources. Partnering with local experts or a reputable global HR platform is an effective way to maintain compliance. These services can help employers stay compliant with evolving regulations while freeing up time for more strategic work.
Managing payroll across multiple vendors often leads to fragmented data and inefficiencies, making it difficult to consolidate analytics. These challenges can hinder decision-making, especially when trying to gain a clear view of workforce costs and trends. To address this, organizations can invest in a centralized payroll management system that unifies data from multiple vendors. A consolidated platform simplifies payroll tracking, ensures data accuracy, and provides actionable insights into payroll expenditures.
Global companies are prone to using multiple HR or payroll systems across regions, which can easily lead to fragmented payroll data, increasing the risk of delays and errors in employee compensation. To combat this, seamless integration between payroll and other systems is critical.
Payroll management systems that connect with existing HR and financial platforms can help streamline workflows by reducing manual inputs and ensuring that all departments operate with up-to-date, accurate information. In turn, this helps guarantee on-time, accurate payroll, boosting employee satisfaction.
A global payroll management platform is a software solution designed to streamline and automate the payroll processes for organizations with employees across multiple countries. It helps ensure accurate and timely payment while maintaining compliance with legal and regulatory requirements in Vietnam.
Expanding globally is an exciting milestone for any company, but it comes coupled with complex payroll challenges. It doesn’t have to be complicated. At Playroll, our easy-to-implement global payroll management software combines automation with hands-on support to make global payroll truly simple. Here's how Playroll helps:
Disclaimer
THIS CONTENT IS FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE LEGAL OR TAX ADVICE. You should always consult with and rely on your own legal and/or tax advisor(s). Playroll does not provide legal or tax advice. The information is general and not tailored to a specific company or workforce and does not reflect Playroll’s product delivery in any given jurisdiction. Playroll makes no representations or warranties concerning the accuracy, completeness, or timeliness of this information and shall have no liability arising out of or in connection with it, including any loss caused by use of, or reliance on, the information.
ABOUT THE AUTHOR
Milani Notshe
Milani is a seasoned research and content specialist at Playroll, a leading Employer Of Record (EOR) provider. Backed by a strong background in Politics, Philosophy and Economics, she specializes in identifying emerging compliance and global HR trends to keep employers up to date on the global employment landscape.
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Payroll taxes in Vietnam are calculated based on the employee's gross salary. For Social Insurance, Health Insurance, and Unemployment Insurance, the calculation is straightforward: multiply the employee's gross salary (capped at VND 36,000,000 per month) by the respective contribution rates. For Personal Income Tax (PIT), first subtract the mandatory insurance contributions and personal/dependent deductions from the gross salary to determine the taxable income. Then apply Vietnam's progressive tax rates ranging from 5% to 35% based on income brackets. For non-resident employees, a flat rate of 20% applies to their Vietnam-sourced income without any deductions.
Employers in Vietnam have several payroll options. They can manage payroll in-house using dedicated staff and payroll software, which gives them direct control but requires expertise in Vietnamese regulations. Alternatively, they can outsource to local accounting or payroll service providers who specialize in Vietnamese payroll processing. Many multinational companies use international payroll providers with Vietnam capabilities, such as Playroll, which offers compliance expertise across multiple countries. Some businesses opt for a hybrid approach, handling basic payroll functions in-house while outsourcing more complex tasks like tax calculations and government reporting.
The key elements of payroll in Vietnam include gross salary calculation based on contractual terms and actual work performed, mandatory social security contributions (Social Insurance, Health Insurance, and Unemployment Insurance), Personal Income Tax withholding according to Vietnam's progressive tax system, and various allowances and benefits that may be partially or fully tax-exempt. Other important elements include regional minimum wage compliance (varying across four zones), overtime calculations at premium rates (150-300% depending on when overtime is worked), mandatory 13th month bonus (Tet bonus), and proper documentation and reporting to government authorities. Employers must also maintain accurate records of all payroll transactions for at least 5 years.
In Vietnam, employers contribute a total of 21.5% of an employee's gross salary for mandatory insurance: 17.5% for Social Insurance, 3% for Health Insurance, and 1% for Unemployment Insurance. Additionally, employers must contribute 2% of the salary fund to the Trade Union fee. Employees contribute 10.5% of their gross salary: 8% for Social Insurance, 1.5% for Health Insurance, and 1% for Unemployment Insurance. For Personal Income Tax, Vietnam uses a progressive system with rates ranging from 5% to 35% for residents, while non-residents pay a flat 20% rate on Vietnam-sourced income.
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