In order to be able to manage payroll in Vietnam smoothly without any issues, it requires more than just dedicated time investment. It is a must for companies to possess comprehensive knowledge of labour laws and local payroll regulations. In case tax and manpower regulations are not understood well, payroll miscalculating may happen and it will significantly affect both tax and social security reports.
In accordance with Decree 143/2018/ND-CP, all foreign nationals employed in Vietnam are entitled to social insurance, benefits, salaries, among others. With regards to employee insurance, three types of insurance are available in Vietnam: health insurance, social insurance and unemployment insurance.
For foreign employees, they are eligible for health insurance and social insurance, but only when they have a valid work permit and are under a minimum of one-year employment contract in Vietnam. Foreign employees can enjoy the same benefits as local employees from their insurance, including compensation for maternity leave and accidents in workplaces. Once leaving Vietnam, these foreign employees will receive one-off pension payment.
Notably, there are personal income tax deductions ranging from 5 to 35% for both local and foreign employees. Those with monthly taxable income of less than VND 5,000,000 are taxed at 5% rate, whereas those who have monthly taxable income of more than VND 80,000,001 are subject to a tax rate of 35%.