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Global Payroll Team
Written by Global Payroll Team
Last updated May 7, 2026
Expert Reviewed
Payroll in Vietnam
Tax in Vietnam
Immigration in Vietnam

Vietnam map

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Employer of Record/PEO and Payroll Services in Vietnam

To increase international competitiveness, Vietnam continues to focus on developing infrastructure, supporting manufacturing, and strengthening logistics and trade integration. The regulatory business environment has also undergone significant change to make it easier and more attractive for businesses to operate in Vietnam, although employers should still monitor frequent labor, immigration, and payroll updates.

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Doing Business in Vietnam

Some of the positive changes made to attract more international business include continued investment in infrastructure, manufacturing, and export-oriented sectors. However, despite the many improvements and the positive direction taken, there are restrictions and compliance challenges to be aware of in this developing nation.

Entity Registration and Incorporation Requirements

Setting up a new business or expanding an existing one in Vietnam is straightforward. Choose how your company operates from a range of entity types which suit your individual circumstance.

Banking

Banks are open from Monday to Friday 8 am to 4 pm.

Working Week

The normal working week in Vietnam is generally up to 48 hours, although many employers operate a 40-hour Monday to Friday schedule.

Labor Law

The primary piece of legislation that regulates employment relationships in Vietnam is the Labour Code 2019 which came into force on 1 January 2021. The Labour Code explicitly states that it applies to foreign nationals working in Vietnam, subject to the specific foreign worker and immigration rules.

Main Industries

Food processing, garments, textiles, shoes, electronics, manufacturing and logistics

GDP Growth

7.1%

Dates & Numbers

dd/mm/yyyy

Official State Name

Socialist Republic of Vietnam

Population

100.99 million

Capital

Hanoi

Major Languages

Vietnamese

Currency

Vietnamese dong

Internet Domain

.vn

International Dialing Code

+84

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Vietnam
Hanoi, VN
4:35 pm, May 15, 2026
36°C
broken clouds
48 %
Wind Gust: 8 mph
Clouds: 77%
Sunrise: 5:19 am
Sunset: 6:26 pm

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Payroll

The most significant payroll-related obligations for employers include minimum wages, overtime, income tax withholding and social insurance. Vietnam operates a progressive rate of income tax which is capped at 35%. Multinational companies who operate global payroll should be aware that Vietnam’s regional private sector minimum wage rates play a significant role in payroll compliance.

It is acceptable to provide employees with online payslips

Payslip

Payroll reports must be kept in line with applicable accounting, tax and labor recordkeeping rules

Reports

12 days

Annual Leave

Sick leave entitlement depends on social insurance status, medical certification and the applicable illness category

Sick Leave

6 months of paid maternity leave and 5-14 working days of paid paternity leave

Maternity & Paternity Leave

Up to 45 days prior notice depending on contract type and the grounds for termination

Employee Termination

It is common to pay a 13th month salary at the end of the lunar year, but it is not mandated by law

13th month salary

Set by region, from VND 3,700,000 to VND 5,310,000 per month in 2026

Minimum Wage

Employees must be paid at least 150% on normal overtime days, 200% on weekly days off, and 300% on public holidays, excluding holiday pay where applicable

Overtime

The severance payment is equal to one-half of one month’s wages for each year of employment in qualifying cases.

Severance Pay

PEO Vietnam

Mercans PEO (Professional Employer Organization) services in Vietnam provide a comprehensive HR outsourcing solution for foreign companies to establish a local presence, compliantly hire and manage employees, handle HR, payroll, benefits, tax compliance, and other administrative tasks, while reducing costs and administrative burden.

Through our Vietnam PEO, we provide services that are flexible and cost-effective for companies seeking to outsource their HR and payroll processes. As a Professional Employer Organization, Mercans offers a range of services including employee benefits, payroll administration, and compliance with Vietnam employment laws. By entrusting their HR and payroll needs to Mercans, companies can focus on their core business activities and ensure a smooth and efficient HR operation.

Partnering with our Vietnam PEO presents the fastest and most efficient way to enter the Vietnam market.

Contact us to explore how PEO Vietnam solutions from Mercans can support your seamless expansion!

Benefits of Hiring an Employee through a PEO in Vietnam

Looking to expand your business in Southeast Asia? Partnering with a PEO in Vietnam can simplify the hiring process, ensure compliance with local laws, and help you establish a presence without the complexities of setting up a local entity. Here’s how a Vietnam PEO can benefit your business:

Quick and Easy Market Entry

A PEO Vietnam allows you to hire employees and start operations swiftly, often within days. This eliminates the need for setting up a legal entity in Vietnam, allowing your business to quickly tap into the market and focus on growth.

Compliance with Local Employment Laws

Vietnam’s labor laws are constantly evolving, with specific requirements related to contracts, benefits, and social security. A Vietnam PEO ensures that your hiring and employee management practices fully comply with the country’s labor regulations, reducing the risk of non-compliance.

Cost-Effective Operations

Starting a business in Vietnam involves legal and administrative costs that can be difficult to manage, especially for foreign companies. By partnering with a PEO in Vietnam, you can avoid these costs and streamline your operations by outsourcing payroll, taxes, and benefits management.

Minimized Risk of Legal Issues

Vietnam has strict labor laws that require careful adherence to avoid legal issues. A PEO Vietnam helps mitigate this risk by staying up to date with labor law changes and ensuring that all aspects of employment are managed correctly, protecting your business from costly penalties

Access to Local Talent Pool

Vietnam boasts a young, dynamic, and highly skilled workforce, particularly in fields like manufacturing, IT, and customer service. A PEO in Vietnam can connect you with the best local talent, helping you recruit professionals who understand the local market and culture.

Streamlined HR and Payroll Management

Managing HR and payroll remotely can be a hassle. A Vietnam PEO handles all of these tasks for you, from calculating salaries and managing benefits to ensuring timely tax filings and compliance with local labor standards.

Scalable Workforce Solutions

As your business grows in Vietnam, a PEO Vietnam allows you to scale your workforce up or down with ease. Whether you’re expanding operations or testing the market, the flexibility to adjust staffing levels makes it easier to navigate the changing demands of business.

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Tax and Social Security

Social, health and unemployment insurance contributions are compulsory for Vietnamese employees meeting the legal conditions. Health insurance is also applicable to foreigners who work in Vietnam under labor contracts in qualifying cases. Taxable revenue includes income from sale of goods, provision of services, leasing or sale of assets, joint venture operations and more.

Tax

Residents are taxed on worldwide income while non-residents are taxed on Vietnam-sourced income at a flat rate of 20%. The schedule for resident personal income tax is capped at 35%.

20%

Corporate Income Tax

35%

Personal Income Tax

10%

Sales Tax

10%

VAT

Social Security

There are three types of mandatory social security in Vietnam: social insurance, health insurance and unemployment insurance. Payable amounts differ depending on the employee’s wages and applicable wage ceilings. While social and unemployment insurance are compulsory for Vietnamese workers meeting the conditions, health insurance may also apply to both local and foreign staff employed under labor contracts.

32%

Social Security Rate

21.5%

Social Security Rate for Employers

10.5%

Social Security Rate for Employees

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Employment Law

Vietnam’s labour laws do not always turn only on the label used by the parties. Businesses, global or otherwise, must take note of this when drafting employment contracts with independent contractors or other types of workers who they do not want to regard as employees as they may still be considered employees if the statutory criteria are met.

Employment agreement

All employment agreements must be made in writing except those for temporary work of less than a month which can be agreed upon orally. There are a number of mandatory provisions including the details of both employer and employee, the work to be performed, work hours and holidays, details of insurance for the employee as well as training and skills improvement.

Working condition

There is a restriction on the maximum regular working hours of employees which no party can waive away. Employers are permitted to grant overtime but this is capped by law. There is no specific provision that gives employees the right to request to work flexibly. However, the law encourages employers to create conditions for women employees to have regular employment and to have systems that include flexible work arrangements.

Leaves

By law, employees working under normal conditions are entitled to 12 days of paid annual leave exclusive of public holidays. Employees working under heavy, hazardous or toxic work conditions are entitled to 14 days of paid annual leave and those working under extremely heavy, hazardous or toxic work conditions are entitled to 16 days of paid annual leave.

Employment termination

Termination of employment by an employer, when permitted, must provide advance notice to the employee within the minimum statutory time limit. Employees who resign are also required to provide advance notice within the statutory time limit, subject to statutory exceptions.

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3 to 45 days

Minimum notice period for terminating an employee

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11

Total number of public holidays

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48

Working hours per week

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3 days

Total number of days for Compassionate and Bereavement Leave

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Immigration

In order to work in Vietnam, foreign nationals must have a work permit unless they qualify for an exemption under law. Foreign workers are also required to carry a valid visa, temporary residence card or other lawful immigration status as applicable.

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Residency permits

In order to get a visa to work in Vietnam, a worker must obtain sponsorship or an invitation letter issued by a Vietnam-based sponsor where applicable. Foreign nationals who wish to work in Vietnam on a long-term basis may be eligible to apply for a temporary residence card instead of relying only on a work visa.

Work Permit validity

Up to 2 years

Required Documents

Passport with at least 6 months validity

Passport-size picture

Proof of payment of the Vietnam visa fee, where applicable

If the visa is applied for through the embassy: Vietnam visa application form, the letter of sponsorship or other documents such as the letter of invitation

If the visa is applied for through approved immigration channels: the relevant approval or sponsorship documents required by the Immigration Department

Work permit or work permit exemption documents where required

Compliant, reliable, error-free and touchless payroll in Vietnam

Build the best team and hire top talent compliantly in Vietnam. Get in touch with Vietnam payroll outsourcing & PEO specialists for a free consultation!

This document was prepared for informational purposes only. As local laws & regulations keeps on changing. Please consult your tax & legal advisors as well.
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    FAQs

    What is an Employer of Record (EOR) in Vietnam and how does it work for foreign companies?

    An Employer of Record in Vietnam allows international companies to hire Vietnamese employees without establishing a local entity. Mercans functions as the legal employer in Vietnam, managing employment contracts, payroll, tax and social insurance compliance, while the foreign company retains operational control of the workforce.

    Why should businesses use an EOR instead of establishing a legal entity in Vietnam?

    Using Mercans as your EOR in Vietnam enables faster entry into the market, eliminates the cost and complexity of entity formation and ongoing local administration, and ensures full compliance with Vietnamese labour, tax and social security laws so you can focus on business growth.

    How does payroll outsourcing in Vietnam ensure compliance with labor and tax regulations?

    Mercans’ payroll outsourcing services in Vietnam ensure accurate salary calculations, correct income tax withholdings, mandatory social insurance contributions and timely reporting. All payroll activities are aligned with Vietnamese labour law, tax regulations and regulatory updates to safeguard your compliance and mitigate risk.

    Can an Employer of Record in Vietnam hire employees and manage work permits for international companies?

    Yes. Mercans as EOR in Vietnam can hire both Vietnamese nationals and expatriate staff on behalf of your company, handle employment contract drafting, employee registration, visa or work permit processing and ensure full compliance with immigration, labour and statutory requirements in Vietnam.

    What are the main benefits of using EOR and payroll services in Vietnam for global expansion?

    The main advantages of partnering with Mercans for EOR and payroll in Vietnam include rapid market access without entity setup, cost savings on setup and administration, access to local HR and payroll expertise, scalable workforce management and full legal compliance with Vietnamese employment, tax and social security laws.

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