Vietnam has quickly emerged as one of the most attractive markets for global expansion. With its growing economy, strategic location, and young, skilled workforce, it’s no surprise that international companies are setting their sights on Vietnam.
However, expanding into Vietnam comes with its own set of legal, payroll, and compliance challenges. Understanding these requirements is key to hiring successfully and maintaining smooth business operations.
This guide explains everything you need to know about payroll, compliance, and hiring options when expanding into Vietnam.
Why Vietnam Is a Prime Destination for Expansion
Vietnam’s strong economic growth, political stability, and pro-business environment make it a leading destination for foreign investment. The country is known for its:
- Competitive labor costs compared to neighboring markets.
- Young, educated, and tech-oriented workforce.
- Strategic trade relationships within ASEAN and with global partners through free trade agreements.
- Rapidly growing digital and manufacturing sectors.
For companies seeking regional growth, Vietnam offers both opportunity and scalability — but entering the market requires careful compliance planning.
Payroll Regulations in Vietnam
Managing payroll in Vietnam involves multiple layers of compliance, including salary structure, tax deductions, and mandatory contributions.
- Salary and Payment Requirements
Employers must pay salaries in Vietnamese dong (VND), typically on a monthly basis. Employment contracts must clearly define salary components such as base pay, allowances, and bonuses.
- Personal Income Tax (PIT)
Employees are subject to Vietnam’s progressive income tax rates ranging from 5% to 35%. Employers are responsible for withholding and remitting PIT to tax authorities monthly.
- Social Insurance Contributions
Both employers and employees must contribute to Vietnam’s social insurance system, which includes:
- Social insurance (for sickness, maternity, retirement, and death benefits)
- Health insurance
- Unemployment insurance
Employers typically contribute 21.5% of an employee’s salary, while employees contribute 10.5%.
- Reporting and Record Keeping
Employers must maintain accurate employee records and submit monthly payroll reports to relevant authorities. Any errors or delays can result in penalties.
Employment Compliance and Labor Laws
Employment Contracts
Vietnam requires written employment contracts for all employees. Contracts must include job descriptions, salary terms, working hours, and social insurance details. Probation periods cannot exceed 60 days for most roles.
Working Hours and Overtime
The standard workweek is 48 hours (typically six days per week). Overtime is limited and must be compensated at higher rates according to labor law.
Termination and Severance
Employers must provide valid reasons for termination and follow due process, including notice periods and severance payments where applicable.
Foreign Employees
Foreign nationals require valid work permits and business visas to work in Vietnam. The process involves multiple approvals and can take several weeks.
Hiring Options in Vietnam
Businesses expanding into Vietnam generally have three options:
- Set Up a Local Entity
Creating a local subsidiary allows full control over operations but involves lengthy registration, capital requirements, and ongoing compliance responsibilities.
- Hire Contractors
Hiring freelancers or independent contractors offers flexibility but carries risks of misclassification and non-compliance with labor laws.
- Partner With an Employer of Record (EOR)
An EOR enables companies to hire employees in Vietnam without establishing a legal entity. The EOR handles payroll, tax filings, contracts, and compliance while your company manages daily work.
This model allows for faster market entry and reduced legal risk — ideal for businesses testing the market or scaling regionally.
Why Choose INLPS for Expansion in Vietnam
At Interloop Solutions & Consultancy (INLPS), we help companies expand into Vietnam quickly and compliantly through our Employer of Record (EOR) and Payroll Management services.
We handle:
- Employment contracts and HR compliance
- Monthly payroll processing and tax filings
- Social security contributions
- Work permit and visa support for foreign employees
Our team ensures your operations stay compliant, efficient, and aligned with Vietnam’s labor laws, so you can focus on growing your business.
The Bottom Line
Expanding into Vietnam offers incredible opportunities for international growth, but navigating payroll, compliance, and hiring regulations can be complex.
By partnering with an experienced EOR provider like INLPS, your company can hire talent, manage payroll, and stay compliant — all without the burden of setting up a local entity.
Contact us today to learn how INLPS can help your business expand successfully into Vietnam.
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