Business Compliance in Vietnam: A Practical Checklist for Employers

Introduction

Vietnam’s labor framework has moved fast over the past two years. A new Social Insurance Law and a revised Trade Union Law have both taken effect. On top of that, a full Personal Income Tax overhaul is now phasing in through 2026. Because of this, the compliance checklist looks different than it did even twelve months ago. It keeps shifting as each reform reaches its effective date.

Business compliance in Vietnam isn’t one filing or one registration. It’s a set of parallel obligations touching contracts, statutory contributions, tax withholding, and immigration all at once. Each of these has its own deadline, its own authority, and its own penalty if missed.

What follows is the checklist an employer actually needs, not a general overview of Vietnamese labor law. It maps what triggers each obligation and what the enforcement risk looks like once it’s skipped.

What Does Business Compliance in Vietnam Involve?

Business compliance in Vietnam means meeting the legal requirements that apply when you employ people in the country. These requirements cover everything from the employment contract you sign to the taxes and statutory contributions you pay each month.

For employers, the main areas to manage are:

• Labour contracts: Every employee needs a written or electronic labour contract that follows Vietnamese employment rules. The contract should clearly set out key terms such as salary, working conditions and the duration of employment.
• Internal Labour Regulations: Companies with 10 or more employees need to prepare and register Internal Labour Regulations. These rules cover important workplace matters such as working hours, discipline and employee conduct.
• Social and health insurance (SHUI): Employers need to register employees and calculate the correct social, health and unemployment insurance contributions. The employer and employee each pay their share, and the company handles the monthly contribution process.
• Personal income tax (PIT): Employers must calculate and withhold the correct amount of personal income tax from employee salaries and report it to the relevant authorities. Changes to Vietnam’s PIT rules also mean payroll teams need to keep their calculations up to date.
• Foreign employee compliance: Employers hiring foreign nationals need to check whether the employee requires a Work Permit or qualifies for an exemption. Starting this process early can help avoid delays to the employee’s start date.

The Department of Labour, Invalids and Social Affairs (DOLISA) handles much of this at the provincial level.

Each area has its own paperwork, deadlines and reporting requirements. That means employers cannot treat business compliance in Vietnam as a single task they complete once. They need to manage several requirements throughout the employee’s lifecycle, from onboarding and monthly payroll to tax reporting and work permit renewals.

Labor Contracts and Internal Labor Regulations

Every employment relationship in Vietnam requires a written or electronic labor contract. Employers can use two main types:

• Fixed-term contracts: These can run for up to 36 months.
• Indefinite-term contracts: These do not have a fixed end date.

Current rules do not allow contracts for specific tasks or seasonal work. Electronic labor contracts have the same legal standing as paper contracts, as long as employers can access them and the records remain unchanged after signing.

A second requirement applies once a company reaches 10 employees. At that point, the employer must prepare Internal Labor Regulations (ILRs) and register them with DOLISA. The 10-employee threshold includes workers on formal contracts, whether they work full-time, part-time, or under fixed-term contracts. Independent contractors do not count toward this threshold.

Internal Labor Regulations aren’t just a formality. Without registered ILRs, an employer has limited grounds for taking formal disciplinary action beyond a verbal warning.

Foreign-invested companies sometimes submit their headquarters’ policies after translating them into Vietnamese. That approach may not meet local requirements.

The disciplinary process must also follow the structure permitted under Vietnamese law. Companies that fail to register their ILRs can face fines:

• Enterprises: VND 10 million to VND 20 million
• Individual employers: VND 5 million to VND 10 million

Social Insurance, Health Insurance and the Trade Union Fee

Social insurance, health insurance and unemployment insurance are commonly grouped together as SHUI. These contributions apply to foreign-invested employers from the start. Employers don’t get a size-based exemption or a grace period for a new hire.

How Much Do Employers Pay for SHUI in Vietnam?

Under the Social Insurance Law 2024, the combined SHUI contribution is 32% of gross salary:

• Employer: 21.5%
• Employee: 10.5%

The contribution caps vary by type of insurance.

Social and health insurance contributions have a cap of 20 times the basic salary, currently VND 46.8 million per month.

Unemployment insurance uses a different cap. It is based on 20 times the regional minimum wage, which varies across Vietnam’s four wage regions.

Foreign employees participate in social and health insurance but currently do not participate in unemployment insurance.

What Is the Vietnam Trade Union Fee?

Employers must also pay a separate 2% trade union fee.

The company has to pay this fee even if its employees have not formed a local trade union. That means a company can still have a monthly trade union contribution even without any active union at the workplace.

For companies hiring in Vietnam for the first time, this can come as an unexpected addition to the payroll cost.

Why Does the Salary Breakdown Matter?

The employment contract should clearly separate gross salary from allowances such as:

• Housing
• Transport
• Meals

This matters because Vietnamese labor law does not provide specific guidance for net-salary arrangements.

If the contract doesn’t clearly show the gross salary and allowances, the employer may have to recalculate the contribution base later. That can result in higher statutory contributions than the company originally expected.

Personal Income Tax Withholding and Reporting

Employers withhold personal income tax monthly on behalf of every employee, resident and non-resident. This obligation, however, is changing for the 2026 tax year. Vietnam’s amended Personal Income Tax Law, No. 109/2025/QH15, takes full effect on 1 July 2026. Its rules on salary and wage income already apply from the 2026 tax period.

Specifically, the changes raise the personal deduction from VND 11 million to VND 15.5 million a month. Similarly, the dependent deduction rises from VND 4.4 million to VND 6.2 million per dependent. On top of that, the progressive tax schedule shrinks from seven brackets to five, per KPMG’s summary of the reform.

For payroll teams, this means two separate updates land in the same year. The new deduction levels apply from January 2026, while the revised bracket structure phases in from July. Getting the sequencing wrong on either date creates an under-withholding position that surfaces at year-end reconciliation. That kind of gap, unfortunately, is hard to fix retroactively once an employee has already filed.

Work Permits for Foreign Employees

Foreign nationals working in Vietnam under a standard labor contract generally need a Work Permit unless they qualify for a specific exemption.

How Long Is a Vietnam Work Permit Valid?

A Work Permit can remain valid for up to two years. In most cases, the employer starts the application process with DOLISA in the province where the employee will work.

Who Can Qualify for a Work Permit Exemption?

Vietnam provides exemptions for certain categories of foreign workers. These include:

• Short-term experts working for fewer than 30 days per visit, subject to a maximum of 90 days per year
• Foreign spouses of Vietnamese citizens
• Certain capital-contributing shareholders who meet the required investment threshold

The exact requirements depend on the exemption category.

Why Should Employers Start the Process Early?

Work permit processing times can vary by province and by DOLISA’s current workload. Employers that wait until the employee’s start date is fixed can run into delays. In some cases, the work permit becomes the bottleneck that prevents the employee from starting on time.

The revised Trade Union Law also introduced an important change. Since 1 July 2025, foreign employees on contracts of 12 months or longer can join a grassroots trade union.

Business compliance in Vietnam has gotten more layered, not less, as the 2024 to 2026 reforms roll out. Treating it as one checklist, rather than five separate problems, keeps a payroll cycle from turning into a labor inspection. None of these obligations disappear once a company has operated in Vietnam for a few years either. Instead, each renews on its own schedule, and each carries its own audit trail. Over time, a checklist reviewed once at setup tends to drift out of date within a single reform cycle. Galaxy Group’s incorporation, secretarial and compliance team handles registration and statutory filings for employers on the ground in Vietnam. Companies still weighing whether to build a local entity or start with an EOR in Vietnam face a related question. That choice, ultimately, shapes how much of this checklist sits with their own team versus a provider’s. If you’re setting up payroll in Vietnam for the first time, talk to our team about what your plan needs.