Setting up and managing payroll in Vietnam
Vietnam has a rapidly growing economy built on strong agriculture, tourism, and manufacturing sectors, among others. The country also has one of the most highly regarded education systems in Asia, making it an excellent place to not only expand a business but also to hire locally. In order to start hiring staff in Vietnam, it is advisable to establish a payroll in the country.
This can be a very complicated and difficult process, with various regulations and specific procedures to follow which can cause serious delays in expansion. One way to bypass the process of setting up a payroll in Vietnam is to outsource the work. At Horizons, we will set up and run your Vietnam payroll outsourcing quickly and reliably, ensuring that you are fully compliant and up-and-running without delay.
Our services are suitable for organizations with or without a Vietnam-based entity, so we’re here to help you expand into Vietnam, whatever your current situation.
Why choose the Horizons payroll solution?
If you have an entity
If your organization already has an entity registered in Vietnam, then we can help you by setting up and managing your in-country payroll.
We’ll ensure everything is fully legally compliant and ready to go as quickly as possible, so you don’t have to worry about the complex details and can focus on your expansion.
If you don’t have an entity
If your organization does not have a registered entity in Vietnam, then we can hire your new employees through our Vietnam PEO.
This service helps you to bypass the long and complex process of establishing an entity. Additionally, we can provide our standard payroll and setup service to help you focus on your expansion into Vietnam.
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Vietnam payroll guide
What are payroll tax and withholdings rules in Vietnam?
It’s important that employers are familiar with the rules surrounding payroll withholdings and taxes in Vietnam. Starting with income tax, employees are required to pay between 5% and 35%, following a progressive system based on earnings.
In addition to tax, employers and employees are responsible for contributions to the country’s mandatory social insurance scheme (on contracts of three months or longer). Contributions are split, with the employer paying 23% and the employee paying 10.5% of income.
Entitlements and terminations
The Vietnamese employees entitlement and termination laws are very complex, so a formal contract of employment should be written up for every employee including the specific terms (for more information, check out our Complete Guide to Vietnam Labor Law).
For unilateral terminations, employers will need to give a notice period of between 3 and 45 days, depending on the type of employment.
Regarding severance payments, employers must pay half a month’s salary for every year of employment (where the employer does not have unemployment insurance).
|
Social Insurance
|
17.5%
|
|
Health Insurance
|
3%
|
|
Unemployment Insurance
|
1%
|
|
Trade Union Fund* (Corporate employers only)
|
2%
|
|
Total Employment Cost
|
23.5% |
|
Social Insurance
|
8%
|
|
Health Insurance
|
1.5%
|
|
Unemployment Insurance
|
1%
|
|
Total Employee Cost
|
10.5% |
|
0-60 million VND
|
5%
|
|
60-120 million VND
|
10%
|
|
120-216 million VND
|
15%
|
|
216-384 million VND
|
20%
|
|
384-624 million VND
|
25% |
|
624-960 VND
|
30% |
|
960+ VND
|
35% |
How to establish Vietnam payroll outsourcing
One possibility for setting up a Vietnam payroll is to establish it internally. This option can be a good choice for larger organizations that want to create a long-term presence in the country, but it can also be prohibitively expensive and complicated.
The simplest way to get all the benefits of local employment and none of the difficult administration is to outsource to New Horizon Vietnam PEO & Employer of Record.
With Horizons, your organization can utilize our Vietnam subsidiary as the employer of record to hire employees locally, so our solutions are suitable whether you already have an entity in Vietnam or not.
We will also take care of the payroll setup and management, as well as any HR, legal compliance, contracts, and more. This flexible and tailored service is designed to help you successfully expand into Vietnam without delays.
Manage payroll in Vietnam
Whether it’s EOR service or just payroll management, Horizons’ employment experts can help you get started in 24h.
