Payroll for foreign staff: social insurance and PIT essentials

Paying foreign staff correctly in Vietnam requires care across three areas: tax residency, personal income tax, and compulsory insurance. Each has bright-line rules — and each is easy to get wrong in the first months of an assignment.

Residency determines the rate

An individual present in Vietnam for 183 days or more in a calendar year (or 12 consecutive months from arrival), or with a permanent residence here, is a tax resident: taxed on worldwide employment income at progressive rates of 5–35%. Non-residents pay a flat 20% on Vietnam-source employment income. Establish the expected status early — it changes withholding from the first payslip.

Compulsory insurance

Since Decree 143/2018/NĐ-CP, foreign employees working under a Vietnamese labour contract of 12 months or more participate in compulsory social insurance — currently 8% from the employee and 17.5% from the employer, plus health insurance at 1.5% and 3% respectively. Intra-company transferees and employees who have reached retirement age are outside the scheme, and unemployment insurance does not apply to foreign staff.

The new Social Insurance Law

The Law on Social Insurance 41/2024/QH15, effective 1 July 2025, keeps the framework for foreign workers while making pensions more attainable — eligibility now starts at 15 years of contributions instead of 20. Review assignment structures and cost projections against the new law rather than older summaries.

Keep permits and payroll aligned

Payroll cannot be right if the underlying paperwork is not: the work permit, labour contract and declared salary must tell the same story. Mismatches surface quickly during audits and finalization.

Our payroll service handles residency assessment, withholding, insurance registration and reporting, so foreign hires are paid right from month one.