BACK
Hiring in Vietnam gives US companies access to skilled professionals without the expense of building an equivalent team at home. But paying your team involves more than transferring salaries each month.
Vietnam has its own rules for employment, personal income tax, mandatory insurance, and payroll administration. The right setup depends on how you hire, who legally employs your team, and which obligations apply to that arrangement.
Here’s how to approach payroll in Vietnam without adding unnecessary complexity.
Table of contents
How does payroll work differently in Vietnam vs. the US?
The main difference is the local compliance framework. US payroll typically involves federal and applicable state requirements, while employment in Vietnam requires compliance with Vietnamese labor, tax, and social insurance rules.
| Payroll consideration | United States | Vietnam |
|---|---|---|
| Income tax | Federal and applicable state and local withholding | Vietnamese personal income tax (PIT) |
| Employer contributions | Social Security, Medicare, and applicable unemployment taxes | Social insurance, health insurance, and applicable unemployment insurance |
| Employment documentation | Applicable federal and state requirements | Vietnamese labor law and employment requirements |
| Payroll administration | US tax filings, withholding, and payments | Applicable local tax declarations, insurance contributions, and records |
Salary, tax, and insurance calculations
Vietnamese payroll distinguishes gross salary, employee deductions, employer contributions, and net pay. These amounts must be calculated separately.
For the 2026 tax year, Vietnamese tax residents’ employment income is subject to progressive PIT rates of 5%, 10%, 20%, 30%, and 35%. Taxable income is calculated after applicable deductions, including qualifying mandatory insurance contributions and personal deductions. Nonresidents are generally subject to a flat 20% rate on employment income, subject to applicable treaty provisions.
For eligible employees, employer contributions commonly include social insurance at 17.5%, health insurance at 3%, and unemployment insurance at 1% for eligible Vietnamese employees. These percentages do not necessarily apply to the entire gross salary: contribution bases, caps, and eligibility rules differ.
The employing entity must also ensure that payroll records, declarations, and payments are handled according to the obligations applicable to its operating model.
How should US companies set up payroll in Vietnam?
Start by choosing the appropriate employment arrangement. This determines who employs the worker and who is responsible for payroll and statutory compliance.
- Employer of Record (EOR): A local provider employs workers and typically administers employment contracts, payroll, tax withholding, and statutory contributions. This can allow a US company to hire without establishing its own Vietnamese entity, provided the arrangement is legally appropriate.
- Vietnamese entity: Establishing a local company gives the business a direct local employment structure but brings additional corporate, accounting, HR, and compliance responsibilities.
- Independent contractors: This may suit independent, project-based work. The actual working relationship – not simply the contract’s title – determines whether the arrangement may constitute employment.
Once the model is selected, establish the corresponding payroll responsibilities, employment documentation, tax and insurance registrations, payment procedures, and reporting calendar.
A provider can administer payroll, but US companies should not assume that outsourcing employment automatically eliminates every cross-border tax or corporate obligation.
How much does payroll cost in Vietnam?
Budget for gross salary, employer contributions, applicable employment costs, and any payroll or EOR service fees.
Employer contributions
For a typical eligible Vietnamese employee, the commonly applicable employer rates are:
| Contribution | Employer rate |
|---|---|
| Social insurance | 17.5% |
| Health insurance | 3% |
| Unemployment insurance | 1% |
| Combined rate, where all three apply | 21.5% |
These rates apply to their respective statutory contribution bases, not automatically to the full salary. Social and health insurance have a maximum contribution base; unemployment insurance uses a separate cap. Employer trade union funding may also apply, generally at 2% of the salary fund used as the basis for social insurance contributions.
Estimating total employment cost
Use this framework when preparing a monthly budget:
| Cost component | What to include |
|---|---|
| Gross salary | Agreed compensation |
| Employer insurance | Applicable rates multiplied by each statutory contribution base |
| Other statutory costs | Applicable trade union funding and other employment obligations |
| Payroll or EOR fees | Provider’s agreed service fee |
| Additional operating costs | Benefits, equipment, recruitment, and team support, where applicable |
The actual total depends on the employee’s eligibility, contribution bases, and hiring arrangement. Avoid estimating statutory costs from gross salary alone.
Compare the full cost of each hiring model. An EOR adds a service fee but can reduce the need to build internal payroll and employment administration capacity. A local entity may become more suitable as the company’s long-term presence and operational requirements grow.
What payroll and compliance risks should US companies consider?
Focus on the risks most likely to affect your employment arrangement:
- Worker misclassification: A contractor arrangement may be challenged if the actual relationship meets the characteristics of employment.
- Incorrect payroll calculations: Applying the wrong tax treatment, contribution base, cap, or eligibility rule can result in underpayments or compliance issues.
- Cross-border tax exposure: Employees’ activities in Vietnam may raise questions about corporate tax obligations or permanent establishment exposure, depending on the facts and applicable rules.
- Incomplete records or missed obligations: Unclear ownership of payroll declarations, contributions, and employment documentation can lead to errors.
Before hiring, have the proposed arrangement reviewed by qualified Vietnamese payroll or tax professionals and US advisers where appropriate.
How Away Digital Teams makes offshore hiring easier
Payroll is one part of building a successful offshore team. You also need the right people, clear responsibilities, and a team structure that fits your business.
For US companies exploring offshore finance support, our guide to outsourcing your finance and accounting function explains which roles can be outsourced and how a dedicated team can support day-to-day operations.
Away Digital Teams helps US companies recruit skilled professionals in Vietnam and build dedicated teams around their business needs. From identifying the right talent to coordinating recruitment and onboarding, we help you build a team that fits your workflows. We can also help you understand the employment and payroll arrangements to consider when setting up your team, with local expertise where needed.
If you’re looking to build your finance and accounting team in Vietnam, talk to Away Digital Teams about your hiring needs.
FAQs
Can a US company hire employees in Vietnam without opening a local entity?
Yes, potentially. A US company can use an appropriate EOR (Employer of Record) arrangement in which a local provider employs the worker and handles the relevant payroll obligations. The arrangement must be assessed against Vietnamese law and the company’s actual activities; an EOR does not automatically remove every cross-border tax risk.
What payroll costs should US companies expect beyond base salary?
Expect applicable employer insurance contributions, other statutory employment costs, and any payroll or EOR (Employer of Record) service fees. Recruitment, benefits, equipment, and team support may add to the total. The amount depends on the employment model and each worker’s applicable contribution rules.
Should a US company use an EOR (Employer of Record) or build a dedicated offshore team?
They serve different purposes. An EOR is an employment arrangement; a dedicated offshore team is an operating model built around your business needs. A company can build a dedicated team using an EOR or another suitable employment structure. Choose based on your desired level of control, hiring plans, budget, and long-term operating strategy.
