Running payroll in Vietnam requires monthly calculation and withholding of Personal Income Tax (PIT, progressive 5-35% for residents), plus mandatory employer and employee social insurance, health insurance (BHYT), and unemployment insurance contributions (roughly 21.5% employer and 10.5% employee of gross salary combined, subject to statutory salary caps). Payroll is almost always processed in VND, monthly, with payslips and statutory reporting filed to both the tax authority and Vietnam Social Security. Many foreign-invested companies outsource payroll to local providers or PEO/EOR services given the compliance complexity, especially in the first 1-2 years of operation.
Employer-side statutory insurance contributions (roughly 21.5% on top of gross salary) are a substantial and easy-to-underestimate cost when budgeting headcount — many foreign founders benchmark against gross salary alone and are caught off guard by total employer cost being 20%+ higher.
Key Facts
Total statutory insurance contributions: roughly 32% of gross salary combined (employer ~21.5%, employee ~10.5%), covering social insurance, health insurance (BHYT), and unemployment insurance, each subject to its own salary cap for contribution purposes.
PIT is withheld monthly by the employer based on progressive resident rates (5%-35%) or a flat 20% for non-resident employees, with annual finalization reconciling actual liability.
Payroll must be run and paid in VND for local employees; foreign employees under a Vietnamese labor contract are also generally paid in VND (though total compensation packages sometimes reference a USD-equivalent figure).
The 13th-month salary/Tet bonus is not a strict legal requirement under the Labor Code but is an extremely strong cultural expectation and near-universal market practice — effectively a mandatory cost to budget for competitive hiring.
Payroll and insurance reporting deadlines are monthly (insurance contributions and PIT withholding remittance) and annual (PIT finalization, labor usage reports to MOLISA in some cases).
Many foreign-invested SMEs use local payroll/HR outsourcing firms or PEO/Employer-of-Record services in their first years to manage the compliance burden before building in-house HR capability.
Steps
Set up payroll registration — Register the company with the local Social Security office and tax department for payroll reporting before the first payroll run.
Calculate gross-to-net for each employee — Apply progressive PIT withholding (or flat 20% for non-residents), deduct employee-side insurance contributions, and calculate the employer-side insurance cost separately as a company expense.
Budget the 13th-month bonus — Include a 13th-month salary/Tet bonus in your total compensation budgeting, since it is expected by virtually all Vietnamese employees even though not strictly mandated by law.
File monthly and annual statutory reports — Remit withheld PIT and insurance contributions monthly, and complete the annual PIT finalization and any required labor usage reports.
Consider outsourcing early on — For a new foreign-invested entity, using a local payroll/PEO provider for the first 1-2 years reduces compliance risk while you build internal HR/finance capability.