Global Mobility Service brochure “Assignments to Vietnam”

Global Mobility Service brochure “Assignments to Vietnam”

Personal Income Tax

→ Tax rates: Tax residents are subject to progressive tax rates that varies from 5% to 35%. Non-residents pay a fixed rate of 20%. Individuals’ business income is taxed separately at fixed rates ranging from 0.5% to 5%.

→ Tax calculation:

    » For tax resident individuals: the tax on income from salaries and wages is calculated annually; for a resident’s income that is from outside Vietnam and other types of income, the tax is calculated on each occasion that the income is generated.

    » For non-resident individuals: the income of those doing irregular business with a fixed location of the business is taxed annually; otherwise, the tax must be calculated on each occasion that income arises.

→ Provisional tax: Although the tax on employment income is finalised annually, a provisional tax on monthly income is withheld.

→ Submission:

    » For annually calculated tax, the tax return must be filed no later than the last day of the third month after the end of the tax year, or the last day of the fourth month after the end of the tax year if the tax return is conducted directly by such an individual, along with whatever payment has not yet been made. Non-residents do not have to file an annual tax return.

    » For the tax calculated upon each time income arises, the declaration files must be submitted within 10 days as from the date on which the tax obligation incurs.

Social Security

Social security contributions are compulsory and generally apply to foreign employees working in Vietnam who hold a work permit, practising certificate, practising licence issued in Vietnam, and have an indefinite-term employment contract, or employment contract with at least a one-year term with an employer in Vietnam. Such contributions are calculated based on the employee’s monthly earnings and are made up of 2 types of insurance with different contribution rates as specified below.

Exemptions for foreigners

→ Foreigners are not subject to contributing to unemployment insurance. But for foreigners the payment of the severance allowance is compulsory.

→ Foreigners are exempted from contributing to social insurance in certain cases.

Immigration

The sponsor, a Vietnamese legal entity or the subsidiary of the foreign entity registered in Vietnam, must apply to hire a foreigner under the visa, and the work
permit.

Visa

→ Obtaining a visa is compulsory for foreigners who want to enter and work in Vietnam unless they are subject to a visa exemption.

→ The sponsor must apply for the approval on entry and visa issuance from the Immigration Department in Vietnam. Having obtained this visa approval, the foreigner must obtain the visa at a Vietnamese embassy or consulate. In special cases, the foreigner can obtain the visa on arrival at the airport upon entering Vietnam.

→ Then a working visa or a temporary resident card can be obtained after the issuing of a work permit or confirmation on work permit exemption or another equivalent certificate (e.g., the practising certificate of a foreign lawyer, etc.), which prove the legitimate purpose of staying in Vietnam. The temporary resident card is optional and will be granted for foreigners staying for more than one year.

Work permit

→ No work permit and no confirmation of a work permit exemption is required if:

    » a person is coming to Vietnam to work as a manager, managing director, specialist, or technician for under 30 days (per assignment) and for no more than 3 times in 1 year.

    » a person is coming to Vietnam to offer but not supply services for up to 3 months.

→ The foreigners must fulfil certain requirements to be eligible for a work permit, which varies depending on each type of job assignment and the form of work.

→ The legalisation of documents regarding qualification and working experience should be taken into consideration.

Registration

Upon arriving at the temporary residence, the foreigner must declare his/her relevant information to the local police station via the manager of the temporary residence accommodation.

Employer’s Obligations

Start of employment

→ Apply for the issuing of a visa and work permit if the employer has an own registered presence in Vietnam. Otherwise this must be done via the Vietnamese sponsor.

→ Register the personal tax code, calculating and paying the personal income tax and handling the social insurance issues.

During employment

→ Send a copy of the signed labour contract to the Labor Authority and Social Insurance Authority.

→ Apply for an extension of a work permit when it is due to expire. The work permit can be extended once.

→ Report to the Labor Authority bi-annually on the status of the employment of foreigners.

→ Ensure compliance with the regulations on immigration, taxation, and social insurance.

Termination of employment

→ Return of the work permit to the Labor Authority.

→ Return of the temporary resident card (if any) or inform the Immigration Department about the termination of the labour contract.

→ Ensure the tax finalisation (if the foreigner is a tax resident).

→ Fulfil the procedure for terminating the contribution of social insurance.

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