Payroll Vietnam: Quick Guide (Updated 2024)

31/05/2024 07:10 AM

Navigating payroll procedures in Vietnam requires a nuanced understanding of various components such as social insurance, health insurance, unemployment insurance, personal income tax (PIT), and trade union contributions. This Payroll Vietnam guide aims to provide a comprehensive overview of these elements as outlined in the latest regulations effective from January 2024.

The latest updated Payroll Vietnam guide in 2024

Overview of salary cost calculation for employers

Understanding the intricacies of Payroll Vietnam is crucial for employers to ensure compliance with local regulations. Additionally, employers are obligated to contribute to social insurance, health insurance, unemployment insurance, and the trade union fund:

Social insurance at a rate of 17.5%
Health insurance at 3%
Unemployment insurance at 1%
The trade union fund at 2%

(All calculated based on the employee's gross salary)

The total salary cost for employers is the sum of the employee's gross salary and the aforementioned contributions. This reflects the total financial responsibility of the employer towards the employee's salary package, including statutory contributions for social welfare and labor benefits.

Note: Social insurance, health insurance and unemployment insurance contributions are subject to caps on the amounts to be paid.

>>> See more: Top 10 headhunter in Vietnam

Salary cost calculation for employers is an essential aspect of financial planning

Employee costs and calculations

The starting point of Employee costs is the gross salary agreed upon between the employer and the employee. From this figure, various deductions are made to arrive at the final net income received by the employee. Deductions include:

Social Insurance (8%): Employees are required to contribute 8% of their gross salary towards social insurance. This deduction is mandated by law and contributes to various social welfare benefits.
Health Insurance (1.5%): A 1.5% deduction from the gross salary goes towards health insurance, ensuring access to healthcare services and coverage for medical expenses.
Unemployment Insurance (1%): Employees contribute 1% of their gross salary towards unemployment insurance, providing financial assistance during periods of involuntary job loss.

After deducting insurances, the remaining amount constitutes the taxable income. This serves as the basis for calculating personal income tax (PIT). PIT is determined based on a progressive tax rate structure. Personal relief and any dependent reliefs are deducted from the taxable income before calculating the applicable PIT. The exact amount of PIT owed depends on the individual's taxable income and the corresponding tax brackets. The final step in the calculation process yields the total net income received by the employee.

Note: Foreign employees are exempt from contributing to the unemployment insurance fund.

>>> See more: Employment in Vietnam

Employee costs encompass various expenses associated with hiring and maintaining a workforce

Government contributions and payments

In Vietnam, both employers and employees are responsible for contributing to various government authorities. Here's a detailed explanation of these contributions and payment processes.

Breakdown of contributions to Government authorities

Employers and employees collectively contribute to social insurance, health insurance, unemployment insurance, and the trade union fund.

Social insurance comprises 25.5% of the employee's gross salary (17.5% from the employer and 8% from the employee)
Health insurance accounts for 4.5% (3% from the employer and 1.5% from the employee).
Unemployment insurance totals 2% (1% from both parties), and the trade union fund requires a 2% contribution from the employer.

Additionally, personal income tax is deducted from the employee's salary based on the relevant progressive tax rate.

>>> See more: Average salary in Vietnam

Remittance of contributions/withholdings by the employer

Employers are responsible for remitting the total contributions and withholdings to the respective government authorities. This process involves accurately calculating the amounts owed, withholding the employee's portion from their salary, and ensuring timely remittance to the appropriate government agencies.

Foreign employee considerations

Foreign employees may have different requirements or exemptions regarding certain contributions. For example, they may not be subject to unemployment insurance. Employers should be aware of these differences and ensure compliance with relevant regulations for both local and foreign employees.

Note: Certain one-off bonuses or specific allowances may be excluded from insurance and tax calculations.

Government contributions are critical for maintaining economic stability

Quick Guide to Vietnam Salary Calculations (Updated 2024)

With regulations constantly evolving, staying informed is key to compliance and financial planning. Effective management of Payroll Vietnam involves considering factors such as insurance contributions, tax calculations, and trade union establishment. Here’s a detailed breakdown of the latest payroll Vietnam updates 2024.

Personal Income Tax (PIT)

PIT is levied on monthly taxable income, following a progressive tax rate structure ranging from 5% to 35%. Before calculating PIT, deductions such as personal relief (11,000,000 VND/month) and dependent relief (4,400,000 VND/month per dependent) are applied. You can refer to the tax table below:

Tax Rate	Monthly Taxable Income (VND)	Maximum Tax in Bracket (VND)
5%	up to 5,000,000	250,000
10%	5,000,001 - 10,000,000	500,000 (750,000)
15%	10,000,001 - 18,000,000	1,200,000 (1,950,000)
20%	18,000,001 - 32,000,000	2,800,000 (4,750,000)
25%	32,000,001 - 52,000,000	5,000,000 (9,750,000)
30%	52,000,001 - 80,000,000	8,400,000 (18,150,000)
35%	80,000,001 and above	-

Social, Health and Unemployment Insurance

The social insurance, health insurance, and unemployment insurance are calculated based on a fixed percentage of the employee's gross salary. Both employers and employees contribute to these insurances at specified rates. There is a maximum monthly salary cap applied to each insurance type, which is determined by multiplying the Minimum Basic Wage by 20.

Insurance Type	Employer Contribution	Employee Contribution	Maximum Monthly Salary Cap (VND)
Social Insurance	17.5%	8%	36,000,000
Health Insurance	3%	1.5%	36,000,000
Unemployment Insurance	1%	1%	Zone 1: 93,600,000 VND Zone 2: 83,200,000 VND Zone 3: 72,800,000 VND Zone 4: 65,000,000 VND

Trade Union Contributions

Employers in Vietnam allocate 2% of their employees' gross salary to support the trade union fund. Additionally, Vietnamese employees who choose to join the trade union contribute an extra 1% of their gross salary. However, this employee contribution is capped at 180,000 VND.

Note: When a company and its employees agree to establish a trade union, employees will be required to contribute 1% of their gross salary to the trade union fund.

Minimum Wages

The minimum monthly wage in Vietnam varies across different zones, each designated by the government. These zones encompass various urban and industrial areas, reflecting regional economic disparities. Here is a breakdown of the minimum monthly wages in each zone:

Zone	Minimum Monthly Wage
1	4,680,000 (VND)
2	4,160,000 (VND)
3	3,640,000 (VND)
4	3,250,000 (VND)

Zone 1 includes major urban areas such as Hanoi, Ho Chi Minh City, and Hai Phong, along with certain industrial zones like Binh Duong and Dong Nai. Specifically, zones 2, 3, and 4 are assessed based on factors such as economic development, cost of living, infrastructure, and production within the area.

>>> See more: Vietnam Labour Law

Ho Chi Minh city (Zone 1) must comply with a minimum monthly wage as mandated by regulations

In conclusion, mastering Payroll Vietnam is essential for businesses operating within the country's regulatory framework. However, navigating the complexities of Payroll Vietnam can be daunting. If you require further guidance or assistance in managing your human resources and payroll needs, don't hesitate to reach out to Aniday. Similarly, if you are operating in Indonesia, Singapore, or India, understanding payroll Indonesia, Singapore, or India is equally important. Contact us today for payroll consultation.