Country Playbook
Region: Asia-Pac
Country: Vietnam
August 2015
Any US tax advice contained herein was not intended or written to be used, and cannot be
used, for the purpose of avoiding penalties that may be imposed under the Internal Revenue
Code or applicable state or local tax law provisions.
These slides are for educational purposes only and are not intended, and should not be relied
upon, as accounting advice.
This material has been prepared for general informational purposes only and is not intended to
be relied upon as accounting, tax, or other professional advice. Please refer to your advisors for
specific advice.
Region – Asia-Pac
Country – Vietnam
1. Country Currency/Abbreviation
Dong – VND – R$
 Special Considerations
All wage payments must be made in Vietnamese currency.
2. Tax Year Designation
Calendar – Year Start 1/1; Year End 12/31
3. Minimum Pay Frequency
There is no regulated minimum pay frequency, but the employer is
required to make wage payments according to contract terms. Any
delayed wage payments are subject to at the least the lowest interest rate
during the period of delay.
4. National Minimum Wage
VND 290,000 per month
 Special Considerations – Minimum Wage By Region
1. Not less than VND 626,000 (approximately $39.80 U.S. Dollars) per
month for FIEs located in Hanoi and Ho Chi Minh City
2. Not less than VND 556,000 (approximately $35.40 U.S. Dollars) per
month for FIEs located in the suburbs of Hanoi and Ho Chi Minh
City, or in the urban areas of Hai Phong, Bien Hoa and Vung Tau;
and
3. Not less than VND 487,000 (approximately $31.00 U.S. Dollars) per
month for FIEs located in other areas of Vietnam.
5. Workday/Workweek
Standard workday is 8 hours per day. A standard workweek is a maximum
of 48 hours.
6. Overtime Considerations
Maximum of 4 OT hours allowed per day; Maximum of 200 hours allowed
per year.
Overtime Rates:
1. At least 150% of regular rate if overtime work is carried out on a regular
working day;
2. At least 200% of regular rate if overtime work is carried out on weekends;
3. At least 300% of regular rate if overtime work is carried out on days that
are holidays; and
4. At least 130% of regular rate for non-overtime work carried out at night
(third shift).
7. Employment Contracts *
Employment contracts are legally mandated in Vietnam. Any contract for
an employment term of over 3 months must be in written form. There are
three different types of employment contracts in Vietnam.
1. An indefinite term contract is a contract for employment terms of 3
years or more.
2. A definite term contract is a contract of employment terms of 1 to 3
years.
3. A seasonal contract is either for specific tasks or for an employment
term of 12 months or less.
8. Social Security Program *
Vietnam does have an established social security program.
9. Income Tax Withholding *
N/A
10.
Unemployment Taxes *
Vietnam does not have an unemployment tax, but employers are
required to pay into a work reserve fund.
11.
Termination Notes *
Both the employer and employee should adhere to the terms set
forth in the labor contract in regards to length of employment.
Termination of the employment relationship by either party must
meet specific requirements in order to be legal. This just cause
standard has several components for both employees and
employers, and if the standard is not met, there are financial
consequences.
12.
Other Special Payroll Considerations *
 Unless employee agrees to check or direct deposit payments the
employer is required to pay wages in cash (VND currency).
 Employers must contribute 15% of employee wages to Social
Insurance for all employees.
 Employers must contribute 3% of employee wages to the health
insurance fund for all employees.
13.
Summary Analysis/Recommendation
Country Labor Climate:
In Vietnam, all labor relationships are controlled through the use of
employment contracts. There is not a pervasive culture of
unfavorable employer regulations.
Employment Status Recommendation:
The decision tree should be used as a foundation for determining
employment status, but if there is any ambiguity of status, please
use the length of the engagement to determine status.
By definition any employment relationship of less than 3 years is
considered “definite term” and any employment relationship less
than 1 year is considered “seasonal”. In most circumstances it would
be low risk to consider a labor relationship for an engagement of
these lengths as a independent contractor relationship given that
factors in the initial decision tree analysis are ambiguous.
Conversely, if the relationship between the individual and employer
is deemed to be indefinite (3 or more years) the length of
engagement would favor the status of employee given that the
initial decision tree analysis was ambiguous.
Independent Contractor Payments:
Once the determination is made that the individual is an
independent contractor, BU should understand the main
requirement is ensuring the employment contract is in written form
for engagements of longer than 3 months in duration. Once the
employment contract is established, it is low risk for BU to make
payments to independent contractors through accounts payable.
Recommendation:
1. Making payments to independent contractors through AP is
considered low risk.
2. BU should ensure all labor contracts to independent contractors
explicitly place the responsibility for social insurance payments
on the contractor.
Employee Payments:
When making the determination of risk and cost of establishing an
internal payroll program, numerous factors must be taken into
consideration. Within this document, sections denoted with an
asterisk “*” are some of the basic components of that analysis.
Once an individual is identified as an employee, there are many
requirements inherited by the employer. Those requirements range
from social benefit programs to employer related taxes directly
attributed to headcount. Factors such as risk of being out of
compliance, the capital cost associated with being in compliance,
and additional administrative costs to establish and maintain the
programs associated with the requirements are key components of
determining the best solution for paying employees.
Recommendation:
1. Due to the extensive requirements related to payroll processing
in Vietnam, the recommendation is to seek a 3rd party vendor to
administer this program.
2. If possible, the best solution is to contract with an in country
staffing entity that will hire employees and own employeremployee requirements for a negotiated fee.