Quick answer
Employers in Vietnam employing foreign workers are legally required to withhold Personal Income Tax (PIT) monthly or quarterly, register employees for compulsory Social Insurance (SI) and Health Insurance (HI) within 30 days of contract execution, and complete annual PIT finalization for authorized resident employees by March 31 of the following calendar year.
Under Decree 253/2026/NĐ-CP and Law 41/2024/QH15, employers must strictly differentiate between tax resident and non-resident foreign employees to apply correct progressive (5%–35%) or flat (20%) withholding schedules.
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Employer PIT Withholding Framework for Expats
Under Decree 253/2026/NĐ-CP (Articles 50–51), income-paying entities must withhold tax before paying wages to foreign personnel:
1. Resident Foreign Employees (Labor Contract ≥ 3 Months)
* Apply the 5-bracket progressive tax schedule (Law 109/2025/QH15): * Up to 10M VND/mo: 5% * 10M to 30M VND/mo: 10% * 30M to 60M VND/mo: 20% * 60M to 100M VND/mo: 30% * Over 100M VND/mo: 35% * Subtract statutory deductions: VND 15,500,000/month personal allowance and VND 6,200,000/month per registered dependant (Resolution 110/2025), plus compulsory social/health insurance deductions.
2. Non-Resident Foreign Employees
* Deduct a flat 20% on total Vietnam-sourced remuneration without personal or dependant allowances.
3. Short-Term / Contract-Free Workers (< 3 Months)
* Deduct a flat 10% on payments of VND 5,000,000 or more per payment occurrence (Article 50.2).
Compulsory Social Insurance Registration for Foreign Workers
Under Decree 143/2018/NĐ-CP and Law 41/2024/QH15, employers must register foreign employees for compulsory social insurance if they satisfy two conditions:
- Hold a valid Work Permit, Practicing Certificate, or Practicing License issued by Vietnamese authorities.
- Work under an indefinite-term labor contract or a definite-term labor contract of at least 12 months with a Vietnamese entity.
Statutory Exemptions from Compulsory Social Insurance:
* Internal Transferees (ICT): Foreign managers, executives, and specialists transferred within an enterprise under WTO commitments who have worked for the overseas parent for at least 12 consecutive months. * Over-Retirement-Age Employees: Foreigners who have reached statutory retirement age at the time of signing the labor contract. * Bilateral Social Security Treaty Holders: Foreign workers covered by reciprocal bilateral agreements (e.g., Vietnam – South Korea Social Security Agreement) holding valid Certificates of Coverage.
Employer Social & Health Insurance Contribution Rates
| Insurance Fund | Employer Contribution | Foreign Employee Contribution | Total Combined Rate | | :--- | :---: | :---: | :---: | | Retirement & Survivorship Fund (Hưu trí - Tử tuất) | 14.0% | 8.0% | 22.0% | | Sickness & Maternity Fund (Ốm đau - Thai sản) | 3.0% | 0.0% | 3.0% | | Occupational Accidents & Diseases (TNLĐ - BNN) | 0.5% | 0.0% | 0.5% | | Health Insurance (Bảo hiểm Y tế - BHYT) | 3.0% | 1.5% | 4.5% | | Unemployment Insurance (BHTN) | Exempt (0%) | Exempt (0%) | 0.0% | | TOTAL STATUTORY CONTRIBUTION | 20.5% | 9.5% | 30.0% |
Note: The wage base for social and health insurance contributions is capped at 20 times the statutory base salary.
Year-End Employer Finalization & Multi-Employer Handling
Under Decree 252/2026/NĐ-CP (Article 10.5) and Decree 253/2026/NĐ-CP (Article 51):
- Employer Annual Filing Deadline: Income payers must submit Form 05/QTT-TNCN and finalize tax for authorized employees no later than the last day of the third month following the calendar year-end (March 31).
- Authorized vs Non-Authorized Cases:
* Eligible for Authorization: Resident foreigners who worked exclusively for your company during the tax year and remain actively employed at finalization time. * Must Self-Finalize: Foreign employees with multiple employers, contract termination during the year, or non-taxable overseas allowances must file directly via Form 02/QTT-TNCN by April 30.
- Issuing Withholding Certificates (Chứng từ khấu trừ thuế): For non-authorizing foreign employees, employers must promptly issue electronic tax withholding certificates (Chứng từ điện tử) so workers can complete their personal filings.
Compliance Audits & Penalties for Non-Compliance
Failure to comply with PIT withholding and social insurance mandates triggers severe statutory penalties under Decree 125/2020/NĐ-CP and Decree 12/2022/NĐ-CP:
* Under-withholding or Late PIT Remittance: Penalty of 20% of underpaid tax, plus late payment interest of 0.03% per day on overdue amounts. * Late or Missing Social Insurance Registration: Administrative fines up to VND 75,000,000 for corporate employers, plus mandatory retroactive payment of all unpaid contributions with accrued statutory interest. * Work Permit Non-Compliance: Unregistered foreign employment invalidates labor contracts and risks deportation and corporate hiring bans.
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