A Breakdown of Payroll Taxes & Contributions in Vietnam for Employers

Once you’ve hired your team in Vietnam, the next critical step is setting up a compliant payroll system. As the employer, you are legally responsible for correctly calculating and withholding your employees’ income taxes, managing contributions, and ensuring all mandatory benefits are provided. Each obligation comes with its own rules and its own penalties for non-compliance.

Managing payroll is critical, not only to maintain your working relationship with your employees but also to comply with Vietnamese Labour Laws. Vietnam charges daily interest on late insurance payments, and labor authorities can audit years of payroll records at once. 

For foreign employers who don't have a finance team on the ground, this guide breaks down exactly what you owe, what you withhold, and when everything is due.

What Are Payroll Taxes in Vietnam?

Payroll taxes in Vietnam cover two distinct obligations that sit on top of an employee's gross salary:

1. Employer contributions: These are costs your company pays in addition to wages. They include:
2. Employee withholdings: These are amounts deducted from an employee's gross salary that you, as the employer, must calculate and remit on their behalf. They include:

Both categories are tied to the same underlying wage figures, so a mistake in how you define gross salary or taxable allowances tends to ripple through every calculation you make. Getting your salary structure right at the start saves you from having to unwind errors later.

Mandatory Payroll Contributions in Vietnam

Vietnam's compulsory insurance system is funded jointly by employers and employees. Each scheme has its own contribution rate, its own wage cap, and its own filing rules, all administered by Vietnam Social Security (VSS).

Foreign employees are exempt from Unemployment Insurance, which brings their combined SI and HI contribution to 20.5% for employers and 9.5% for employees. They are also exempt entirely if their home country has a bilateral social security agreement with Vietnam.

Wage Caps for SI, HI, and UI

SI and HI contributions also have wage caps. These contributions are calculated on gross salary, but only up to a ceiling of 20 times the statutory base salary. The base salary rose to VND 2,530,000 (~USD 96) per month from July 1, 2026 under Decree 161/2026/ND-CP. This change pushed the SI and HI contribution ceiling to VND 50,600,000 (~USD 1,927) per month. Anyone earning above that amount still only has SI and HI calculated on the capped figure, not their full salary.

UI is tied to the regional minimum wage instead of the base salary, capped at 20 times the applicable region's rate. In Region I, that puts the UI ceiling at VND 106,200,000 (~USD 4,045) per month.

Trade Union Fund

Every employer contributes 2% of the total SI-contributing salary of all employees to the Trade Union Fund each month, whether or not the company has its own internal union. If a grassroots union exists at the company, 70% of that contribution flows back to the union for employee welfare activities. Employees who choose to join the union separately contribute 1% of their own SI salary, capped at the same wage base.

Registration deadlines

New employees must be registered with VSS within 30 days of signing their first labor contract. Monthly contributions, covering both the employer and employee share, are due by the end of the following month. 

If you miss the deadline, you'll owe 0.03% daily interest on the overdue amount. Repeated non-compliance can escalate to administrative sanctions.

Personal Income Tax (PIT) Withholding

PIT is the tax you withhold from an employee's salary every pay period and remit to the tax authority on their behalf. How much you withhold depends on residency status, the applicable deductions, and which tax bracket the resulting income falls into.

Determining Tax Residency

An individual is a Vietnamese tax resident if they meet any of the following:

• They are present in Vietnam for 183 days or more within a 12-month period
• They hold a permanent or registered temporary residence in Vietnam
• They lease accommodation in Vietnam for 183 days or more in a tax year

Tax residents are taxed progressively on worldwide income. Non-residents are taxed at a flat 20% on Vietnam-sourced income only, with no deductions available. Anyone who signs a labor contract shorter than 3 months, or has no labor contract at all, is instead subject to a flat 10% withholding on total income. This amount is then credited against their final tax liability at year-end.

The 2026 Progressive Tax Brackets

Vietnam's National Assembly passed a new Personal Income Tax Law (No. 109/2025/QH15) on December 10, 2025. While the law formally takes effect July 1, 2026, the provisions covering salary and wage income apply retroactively to the entire 2026 tax year. The old seven-bracket schedule has been cut down to five brackets, and the bands between them are wider, which softens the jump in tax rate as income rises.

The top rate stays at 35%. However,it now only kicks in above VND 100 million a month, up from VND 80 million under the old schedule.

Deductions Before You Apply the Brackets

Before applying these rates, you subtract a set of standard deductions from gross income to arrive at taxable income:

• Employee insurance contributions: The employee's 10.5% (or 9.5% for most foreign employees) share of SI, HI, and UI.
• Personal deduction: A flat VND 15,500,000 (~USD 591) per month for every tax resident, raised from VND 11,000,000 under Resolution 110/2025/UBTVQH15 (effective from the 2026 tax year).
• Dependent deduction: VND 6,200,000 (~USD 236) per month for each registered dependent, raised from VND 4,400,000 under the same resolution. However, this deduction is not automatic. Employees must register each dependent with the tax authority and provide supporting documents such as birth certificates or proof of income below the qualifying threshold.
• Other approved deductions: Contributions to voluntary pension funds, capped at VND 3 million per month, and donations to approved charitable organizations.

Because of the higher deduction thresholds, a resident employee with no dependents doesn't owe any PIT until their monthly income (after insurance deductions) passes VND 15.5 million (~USD 590). Someone with one registered dependent stays untaxed up to roughly VND 21.7 million (~USD 827).

Example PIT Calculation

To put things in perspective, a tax-resident employee earns a gross monthly salary of VND 30,000,000. This employee has one registered dependent and contributes 10.5% of her salary to SI, HI, and UI.

As the employer, this is the cost you need to cover: 

This is the calculation your payroll system needs to run correctly every single month, for every employee, at every salary level. You can use our Vietnam Salary Calculator to get an in-depth, itemized breakdown of your monthly conversions.

Filing and Payment Deadlines

How often you file PIT withholding depends on your company's revenue from the prior year:

• Annual revenue of VND 50 billion or more: File and remit monthly, by the 20th of the following month
• Annual revenue under VND 50 billion: Quarterly filing, by the last day of the month following the quarter

Most foreign companies entering Vietnam for the first time fall under the quarterly threshold until their local operations scale up.

Annual PIT Finalization

Regardless of your filing frequency during the year, you must complete an annual PIT finalization for every employee. This reconciles the total tax withheld against each employee's actual liability for the year. If you withheld too much, the employee gets a refund. If you withheld too little, the shortfall is due.

• Employer-led finalization (single employer, authorized by the employee): due by March 31 of the following year
• Individual self-filing (multiple income sources): due by April 30
• Foreign employees leaving Vietnam permanently: due within 45 days of departure

Simplify Your Payroll Management in Vietnam

Running payroll in Vietnam means tracking, calculating, and keeping up with tax and labour law. For a foreign employer without a finance team on the ground, that's a lot of regulatory surface area to cover. 

RecruitGo's Vietnam Employer of Record service takes that exposure off your plate. We handle:

• Monthly gross-to-net payroll calculations, including PIT withholding
• SI, HI, and UI registration and monthly contribution filings with VSS
• Trade Union Fund contributions and reporting
• Annual PIT finalization for every employee
• Compliant payslips issued in Vietnamese and English
• Payroll record-keeping that meets the ten-year retention requirement

You can onboard your first employee in Vietnam within days, without setting up a local entity, and scale your team up or down as your business needs change. No local company registration, no minimum headcount, and no need to hire an in-house payroll specialist just to stay compliant.

Talk to RecruitGo about Employer of Record in Vietnam and get a compliant payroll running in days, not months.