Vietnam Payroll & Tax Overview A GUIDE TO DOING BUSINESS IN VIETNAM 2017
Contents 1.0 Key Country Facts and Public Holidays 3 2.0 Business and Culture in Vietnam 4 3.0 Visas and Work Permits 5 4.0 Tax and Social Security 6 5.0 Compliance 8 6.0 Statutory Absence/Payments 9 7.0 In-country Payroll Providers 11 8.0 About This Payroll and Tax Overview 12 2017 The Global Payroll Association, Inc.; All Right Reserved -2-
1.0 Key Country Facts and Public Holidays 1.1 Official Language Vietnamese 1.2 Currency Vietnamese dong 1.3 Country Dial code The country dial code is +84 1.4 Country abbreviation The country abbreviation is VN 1.5 Statutory Filing Payment Methods Yes 1.6 National Minimum wage The current common minimum wage is VND 1,150,000/month and planned to VND 1,210,000/month from May 01 st 2016. 1.7 Filing Deadlines Monthly filing deadline: PIT (personal income tax) should be paid by the employer to the appointed tax office before 20 th every month. If there are public holidays the declaration and payment deadline shall be the day after the day off. Annual filing Deadline: Annual tax filing must be submitted by the company to the appointed tax office within 90 days from the end of the fiscal year and this annual filing is summary of all taxable income paid to employee from Jan 1 st to Dec 31 st. Therefore, Company will process the PIT finalization for their company if the employee has to have enough condition and provided the authorization letter to Company according to the current PIT law. If not, the employee takes responsible for their PIT finalization if having other sources of incomes. 1.8 Fiscal year 1 January 31 December. 1.9 Time Zone Indochina Time Zone (UTC+07:00) 2016 Holiday name 2017 Holiday name Jan 1 International New Year's Day Jan 1 International New Year's Day Feb 7 Vietnamese New Year's Eve Jan 2 International New Year's Day observed Feb 8 Vietnamese New Year Jan 27 Vietnamese New Year's Eve Feb 9 Tet holiday Jan 28 Vietnamese New Year Feb 10 Tet holiday Jan 29 Tet holiday Feb 11 Tet holiday Jan 30 Tet holiday Feb 12 Tet holiday Jan 31 Tet holiday Feb 13 Tet holiday Feb 1 Tet holiday Apr 16 Vietnamese Kings' Commemoration Day Apr 6 Vietnamese Kings' Commemoration Day Apr 30 Liberation Day/Reunification Day Apr 30 Liberation Day/Reunification Day May 1 International Labor Day May 1 Liberation Day/Reunification Day observed May 2 Liberation Day/Reunification Day observed May 1 International Labor Day May 2 International Labor Day observed Sep 2 Independence Day Sep 2 Independence Day Sep 4 Independence Day observed 2017 The Global Payroll Association, Inc.; All Right Reserved -3-
2.0 Business and Culture in Vietnam 2.1 Establishing as an Employer In order to do business in Vietnam, you have to register your company to the authorities to get permission and license to operate. This registration process usually takes place at the Business Registration Department of the Provincial or City Office of Planning and Investment (see Ministry of Planning and Investment). The registering application consists of a request paper for registration of the enterprise and an ID of the company owner - either a notarized copy of your passport or citizen card will do. In some special cases, you also need to produce the certificate of legal capital or the certificate of profession if they are required. The Business Registration Department will assess your application to examine whether it is valid or not, and prepare the business license to the valid application. After 5 days from the submitting day, you visit the Business Registration to collect your result. If you application is approved, you can receive your business license immediately, but if not, you can take back your application for modifying and fixing, and then resubmit it in the same place. There is often a fee to pay at time of registration 2.2 Employment Employment contracts in Vietnam are normally one of the following types; An indefinite term contract, A definite term contract of 12 to 36 months or A seasonal or fixed term contract of less than 12 months. A definite term contract may only be extended once, after that the employee must be employed on an indefinite contract or stop working. The length of the probationary period is based on the complexity of the job, as follows; No more than 60 days for jobs requiring professional or technical qualifications at college level or higher, No more than 30 days for jobs requiring technical expertise and No more than 6 working days for other jobs. Payment during the trial period is 85 percent of the salary stated in the employment contract. Employees working on a seasonal contract are not required to undergo a probationary period. 2017 The Global Payroll Association, Inc.; All Right Reserved -4-
3.0 Visas and Work Permits 3.1 Visas Persons wishing to work in Vietnam must have a work permit in order to work for longer than three months and must fulfil the following conditions: Possess civil acts as prescribed by law Ensure their health status is suitable to meet the job requirements Possess a university degree and have a high degree of specialised knowledge or professional skills which are lacking in the domestic labour market, and have at least five years experience of working in the sector Have no criminal record, and no criminal prosecution in Vietnam or their home country. The government organisation responsible for stipulating guidelines and policies on the recruitment and management of both local workers and foreigners working in Vietnam is the Ministry of Labour - Invalids and Social Affairs. Exemptions Persons do not require a work permit if they are: Working in Vietnam for less than three months A member or owner of a limited liability company or a member of the management board of a shareholding company A lawyer, working under a professional licence issued by the Ministry of Justice A Chief Representative Officer, Chief Project Officer, or representative of an international company operating in Vietnam An internal transferee of a company that engages in one of the 11 service sectors as stated in Vietnam s (World Trade Organisation) WTO service commitments. Providing a professional and technical consultancy service for Official Development Aid programmes or projects Conducing media activities in Vietnam, as permitted by the Ministry of Foreign Affairs 2017 The Global Payroll Association, Inc.; All Right Reserved -5-
4.0 Tax and Social Security 4.1 Tax Vietnam Personal Income Tax Vietnam personal income tax rates are progressive to 35%. Non-residents are taxed at a flat tax rate of 20%. Non-employment income is taxed at rates from 0.1% to 25%. Individuals are responsible for self-declaration and payment of tax. Taxable Income per year (VND) Tax rate VND 0-60,000,000 5% VND 60,000,000-120,000,000 10% VND 120,000,000-216,000,000 15% VND 216,000,000-384,000,000 20% VND 384,000,000-624,000,000 25% VND 624,000,000-960,000,000 30% Above VND 960,000,000 35% Residents - Other tax rates on resident individuals Income from capital investment, copyright and franchise activities 5% Non-residents - Other tax rates on non-resident individuals Income from business and production of goods 1% Income from business and production of services 5% Manufacturing, construction, transport and other activities 2% Salary and wages 20% Income from capital investment 5% Transfer of capital 0.1% Transfer of real estate 2% Copyright and franchise activities 5% Lottery wins, inheritance and gifts which are securities, 10% capital or assets All residents and non-residents are subject to Personal Income Tax in Vietnam. A resident is liable to pay tax on income sourced in Vietnam as well as on the portion of income from foreign sources (except for non-taxable income, including income from real estate transferred between a husband, wife and blood-relations, scholarships, and overseas remittances). Residence An individual is resident if he/she: (1) spends 183 days or more in the aggregate in a 12-month period in Vietnam starting from the date the individual arrives in Vietnam; (2) maintains a residence in Vietnam; or (3) has leased a residence for 90 days or more in a tax year. Deductions: Available for family considerations for residents, comprising children under 18, unemployed spouses and elderly and unemployed parents. 2017 The Global Payroll Association, Inc.; All Right Reserved -6-
4.2 Social Security Compulsory insurance in Vietnam are including the Social insurance (SI); Health insurance (HI) and Unemployment insurance (UI) The current rate of contribution is Payer SI HI UI Employee 8% 1.5% 1% Employer 18% 3% 1% The Cap salary for Social and Health insurance are 20 times of common minimum wage; the cap salary for Unemployment insurance is 20 times of region minimum wage. Compulsory Social insurance: Compulsory social insurance is paid by all Vietnamese employees and their employers. It is used to fund sickness pay, maternity benefits, occupational disease and accident payments, retirement and survivor pensions. Additional voluntary social insurance is also available, and payment into one of these schemes increases the amount of retirement or survivor pension payable. Mandatory social insurance coverage: Public servants and government employees Employees having labor contract of three months onward in the enterprises which employ one worker or more; Commissioned and non-commissioned officers in the military and police forces; Employees in the Party organization or the mass organization. Mandatory health insurance: All members of compulsory social insurance schemes and foreigner employees shall be covered by the mandatory health insurance scheme. Mandatory unemployment insurance: - Employees who can participate in UI include employee under seasonal contracts or specific contracts with a contract length from 03 months to less than 12 months. - In cases where an employee has signed labor contracts with many organisations, then the employee and the first employer to establish a labor contract with the employee shall be responsible for UI participate. - Employers participating in UI include government, public, individual, foreign, international business operating on Vietnam land; enterprise, co-ops who employ individuals under working contracts or labor contracts. The Monthly Unemployment Benefit: - Shall be 60% of the average of the most recent 06 months salary that the employee contributed to UI and - Cannot exceed 05 times the basic wages of employees who are under government salary guidelines and - Cannot exceed 05 times the regional minimum wages at the time of working contract or labour contract termination, for employees who contribute to UI at a salary level determined by employers. 2017 The Global Payroll Association, Inc.; All Right Reserved -7-
5.0 Compliance 5.1 Employer Registration All companies and organizations legally operating in Vietnam are permitted to directly recruit and employ local Vietnamese people. Company must submit the registration for Company SI Code before Social Health and Unemployment insurance (SHUI) reports and payment to Government according to the current Vietnam Laws and Regulations Company must done the submit the registration for Tax code before submitting the PIT declaration and payment Company must submit the 1 st labor report to Labor department according to the current Vietnam labor law and regulations. 5.2 Starters/Registration Companies are required to open social insurance accounts for the new employees assuming the new staff has not previously registered; if an employee has already registered and has an account then the company needs to make an application for transfer. The employer will: Sign a formal labor contract with the new employee; Verify and sign the Social Insurance Registration Form; Prepare the Declaration for SI Registration for the new employee, which includes the Social Insurance Registration form (form No.: TK1-TS), the List of labor register social insurance, health insurance, unemployment insurance (Form D02-TS) Submit Social Insurance Registration forms to the Social Insurance Office; Send the medical insurance card/booklet for the new employee for distribution; And employee should do the tax code registration if the new hire did not have the tax code before 5.3 Leavers/De-registration Termination notice period in Vietnam varies accordingly from the contract type. For employees with indefinite-term contracts is required 45 days advance notice, 30 days for employees with definite-term contract from 12 to 36 months and 3 days for employees with contract fewer than 12 months under certain circumstances involving layoffs and plant closing and both should show the reasonable condition for the termination of contract according to the Labor Law and regulations of Vietnam Sign and send to International Payroll Services the List of labor de-registration for social insurance, health insurance, unemployment insurance (Form D02-TS) before the 16 th of each month ; and Collect and return the HI Card employee to SI Dept. on schedule (before the last working date of the last month of HI contribution) Issue the termination decision or labor contract liquidation; Submit deregistration forms and the receipt of returned HI Card to the Social Insurance office before the 20 th of each month; 2017 The Global Payroll Association, Inc.; All Right Reserved -8-
6.0 Statutory Absence/Payments 6.1 Annual leave There are 10 statutory holidays (public holidays) per calendar year in Vietnam. Employees who have been employed in an enterprise or by an employer for twelve (12) months shall be entitled to fully paid annual leave as follows: Twelve (12) working days shall apply to employees working in normal working conditions; Fourteen (14) working days shall apply to persons working in heavy, dangerous, or toxic jobs, or in places with harsh living conditions, and to persons under the age of eighteen (18) years; Sixteen (16) working days shall apply to persons working in extremely heavy, dangerous, or toxic jobs, or in heavy, dangerous, or toxic jobs in places with harsh living conditions. The number of days of annual leave shall be increased according to the period of employment with an employer by one additional day for every five years of employment. The employee is also entitled to a fully paid leaves for personal affairs in the following circumstances: Three (3) days for Marriage One (1) day for Marriage of his son or daughter. Three (3) days for 3-Death of parents (including parents of husband or wife) death of wife or husband, death of son or daughter. 6.2 Maternity leave Since May 2013, female workers in Vietnam are entitled to six months of maternity leave. If a woman has more than one child, she is entitled to a further 30 days off for each additional child. Articles 34 and 35 of the Law on Social Insurance state that female workers must receive 100 percent of their average salary during their six-months maternity leave. A lump sum payment of the equivalent of two months national minimum salary per child is payable upon birth. A woman can return to work after four months of maternity leave if she has a permission document issued by a competent medical centre stating that she is able to work. A working woman who has a child who is less than 12 months old is entitled to 60 minutes per working day to take care of her baby. 6.3 Sickness Employees will receive a payment of 75% out of the salary base for calculating social insurance when they are on sick leave. The payment is financed by the social insurance office through social welfare payments. If an employee suffers illness or injury and remains unable to work, he or she is able to take time off for treatment for a maximum period of 12 consecutive months with respect to a definite-term labour contract with a term of 12 to 36 months, or more than half the duration of the contract with respect to a contract that is fewer than 12 months. Vietnamese employees who have paid into the Social Insurance Fund for less than 15 years are entitled to take a maximum of 30 days sick leave per year, increasing to 60 days after 30 years of payment. (these policies covers the sickness of both the employee and time taken off work to care for a sick child under the age of seven). The maximum period of consecutive leave for employees working on an indefinite-term contract is 12 months. For those employed under a definite-term contract of between 12 and 36 months, the maximum is six months and for those with a contract of less than 12 months the maximum time allowed is half of the contracted time. An employer may terminate the employment contract if the period of sick leave exceeds these limits. The employer is not obliged to pay the employee during the duration of the sick leave, although they may be eligible for an allowance from the Social Insurance Fund. The rate of this allowance would depend on the amount of time taken off work and the length of time that contributions have been made. 6.4 Paternal leave Male employees whose partner gives birth is entitled to five days leave or seven days leave (in case surgical birth). In case their partner give birth to twins are entitled 10 days leave; he is entitled to a further 03 days off for each additional from the second child and 14 working days, in case their wives give birth to twins or more infants and take childbirth operation. 2017 The Global Payroll Association, Inc.; All Right Reserved -9-
7.0 In-country Payroll Providers Founded by an American Expatriate with 40+ years in enterprise HR and payroll, Tiger-Consulting is committed to making expansion and management of operations easier for international businesses. +(858) 480 6909 neil@tiger-consulting.net http://www.tiger-consulting.et/ Since 2002, Expaticore has specialised in Local National and Expatriate payroll, Assignment Management Services and International HR Consulting Services. +001 212 239 2625 amorris@expaticore.com www.expaticore.com NVM Group is a leading HR management solution provider in Vietnam and Indochina Region, delivering HR excellence to optimize HR capital and investments of companies, both local and international since 2003. +848 3847 9364 quan.huynh@nvmgroup.com www.nvmgroup.com 2017 The Global Payroll Association, Inc.; All Right Reserved -10-
8.0 About This Payroll and Tax Overview 8.1 Copyright All rights reserved. No part of this publication may be reproduced, distributed, or transmitted in any form or by any means, including photocopying, recording, or other electronic or mechanical methods, without the prior written permission of the publisher. 8.2 Disclaimer Every effort has been made to ensure that all information in this booklet is correct at the time of publication. This information should be used as reference only and not as a sole source of decision making. 8.3 The Global Payroll Association Global Payroll Association is the first international payroll association of its kind. We are a central hub for all-things payroll. A one-stop-shop supplying comprehensive directories, interactive training and in-depth country resources. We are here to help you with your global payroll needs, no matter how complex, connecting you with the world s leading experts and offering a forum to network with other like-minded global professionals. Global Payroll Association welcomes international payroll, HR and financial professionals of all levels. 2017 The Global Payroll Association, Inc.; All Right Reserved -11-
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