What is payroll in Vietnam?

In modern business environment, payroll process has become very complicated and crucial administrative task. You are not only have to pay the employees in time, but also comply to the Vietnam labor code. Thus, one good way is to leave the “hard job” to us.

Legal services:

  • Calculate monthly salary, benefits;
  • Calculate bonuses and commissions for employees;
  • Drafting and submitting salary scale and payroll according to the law.

How to proceed?

We have developed the checklist for each processes. The checklist is the connection between PLF and you. It helps you feel easier and understand more how much they have paid to the employees.

Personal Income Tax (“PIT”) is the tax which applies to the residents earning taxable income within and outside Vietnam’s territory and to non-residents who earn taxable income within Vietnam’s territory.

Exemptions:

Tax regulations provide for many kinds of tax-exempt income, for example:

  • Income from transfer of real estate between relatives in family (depending on each specific relationship);
  • Income from the value of land use rights of individuals to whom land is allocated by the State;
  • Income from receipt of inheritances or gifts that fall under the spectrum of real estate between relatives in family (depending on each specific relationship);
  • Income from foreign exchange remittances.

Reductions: Taxpayers who face difficulties caused by natural disasters, fire, accidents or severe diseases which affect their tax paying ability may be considered for tax reduction corresponding to the extent of damage they suffer from but not exceeding payable tax amounts.

There are several personal income tax rates which depend on the kinds of personal income such as:

  • monthly wages with progressive rates ranging from 5% to 35%;
  • income from capital investment with a fixed rate of 5%;
  • income from real estate transfer with rates of 2% or 25% depending on the case.

A foreign worker must apply for a work permit or work permit exemption certificate to legally work in Vietnam. The permit allows the foreigner to work in a specific position, company and location. Thus, foreigner workers might hold several work permits.

More importantly, the work permit or work permit exemption certificate do not exempt foreigners to obtain a visa or a temporary resident card.

It is mandatory for all companies to have at least one of its legal representatives in Vietnam at all time; however, the legal representative does not need to be a permanent resident in Vietnam.

Yes, in Vietnam, depending on the region, there will be a separate minimum wage (collectively referred to as the regional minimum wage), the company shall base on the minimum wage to calculate the salary for employees and the minimum wage. The amount received shall not be lower than the regional minimum wage.

No. The personal income tax rate of employees will vary depending on the type of labor contract or the employee being resident or non-resident, etc.

Yes. The company is allowed to use foreign currencies to pay salaries and allowances to employees who are non-residents and residents who are foreign individuals.

Actual salaries paid to employees are not required to be registered with the competent authority, as wages are usually not fixed but depend on the employee’s performance in that month. The law requires the company to register the salary as the basis for calculating wages for employees or be understood as registering the payroll scale.

The salary paid to employees and the salary on the labor contract are not required to be the same, because the pay rate is the salary the employee receives based on the performance of that month with bonuses, allowances, and, after the deduction of tax and insurance obligations.

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