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From an EOR Service to a Single Global Payroll Provider?

August 29, 2025 by galaxy

August 29, 2025

From an EOR Service to a Single Global Payroll Provider?

As companies expand globally, payroll solutions must also evolve to support sophisticated operations. Employers of Record (EORs) offer a practical solution for rapid market access, eliminating the need to establish local legal structures, simplifying hiring, reducing compliance requirements, and streamlining operations with minimal infrastructure.

However, as teams become more geographically dispersed, the EOR model can become restrictive. Each new hire incurs additional costs, reporting varies by country, and managing multiple suppliers can result in siloed processes and reduced visibility into compliance.

The transition to a global payroll provider provides a centralised and integrated approach. The transition gives more control, standardised reporting, and improved compliance, thereby aligning payroll management with more organisational objectives and long-term growth strategies.

This blog explores the distinctions between EORs and global payroll providers and highlights the advantages of payroll consolidation.

Table Of Content

What’s the Difference Between an EOR and a Global Payroll Provider?

When hiring across borders, companies often choose between two models:

EOR or Global Payroll Provider. Both offer support for managing international teams, but they solve different challenges. An EOR steps in as the legal employer on behalf of a business. It handles everything from employment contracts and payroll to local compliance and statutory benefits. This makes it easier to hire in new markets without setting up a regional entity. It’s a practical option for companies looking to test new regions or hire just a few employees in unfamiliar jurisdictions.

A Global Payroll Provider On the other hand, supports businesses that already have entities in place. They help streamline payroll processing across multiple countries by managing calculations, deductions, local filings, and employee payments, while also offering consolidated reporting. The business remains with the legal employer, but the payroll burden is centralised and simplified.

Here’s a quick comparison:

Aspect	Employer of Record (EOR)	Global Payroll Provider
Legal Employer	The EOR becomes the legal employer and takes on local employment responsibilities.	The company remains the legal employer and oversees employment obligations directly.
Local Entity Requirement	No local entity is needed; the EOR covers this on behalf of the company.	A local entity must be established in each country where employees are hired.
Ideal Use Case	Helpful in entering new markets, short-term projects, or hiring a small number of employees.	Better suited for businesses with a long-term presence and larger teams in multiple regions.
Payroll Management	Fully managed by the EOR, including payslips, tax filings, and employee payments.	Managed by the company with support from the provider for calculations and compliance.
Compliance Handling	The EOR takes care of most legal and regulatory responsibilities.	Compliance is shared, and the company must stay aligned with local regulations.

The choice between an EOR and a global payroll solution typically depends on the stage of international expansion. EORs provide speed and agility for entering new markets, while global payroll systems support scalability, consistency, and operational control over the long term.

When is an EOR the Right Choice for Global Hiring?

An EOR serves as a strategic solution for companies expanding internationally without setting up legal entities in each country. The following situations highlight when partnering with an EOR can be the most effective approach to global hiring:

1. Entering a new international market

For organisations exploring new markets, establishing a legal presence can delay go-to-market timelines. An EOR enables quick hiring of local talent while maintaining full compliance with local employment laws, making it ideal for pilot programs or market testing.

2. Avoiding the Cost and Complexity of Entity Setup

Setting up a legal entity in a new country often involves considerable time, cost, and an in-depth understanding of local rules. For companies seeking to hire internationally without making a long-term investment upfront, an EOR provides a practical alternative. It takes care of employment contracts, payroll, taxes, and benefits on the company’s behalf.

3. Supporting Small Teams in Multiple Countries

When building distributed teams with only one or two employees in each location, entity creation becomes inefficient. An EOR offers a practical, centralised solution for managing employment across several jurisdictions, reducing both administrative and compliance overhead.

4. Hiring for Short-Term or Project-Based Roles

For short-term staffing requirements, like seasonal employees, consultants, or project specialists, EORs offer versatile support. They handle onboarding, hire-to-retire, and offboarding in accordance with local laws, enabling companies to scale teams up or down to meet the project’s changing requirements.

5. Navigating Periods of Organisational Change

During mergers, acquisitions, or internal restructures, maintaining continuity in workforce management can be challenging. EORs can provide stable employment arrangements during transitions, ensuring that teams remain operational while legal structures are still being finalised.

6. Reducing Risk in Employment Compliance

Global hiring requires adherence to country-specific laws regarding wages, benefits, taxes, and social contributions. An EOR takes on the legal responsibility of employing staff, helping organisations remain compliant with local regulations while streamlining HR and finance operations.

An EOR is particularly effective for organisations seeking speed, flexibility, and compliance in global hiring. It acts as a bridge to new markets and ensures legal peace of mind, whether for short-term projects or the early stages of international expansion.

What can a Global Payroll Provider Offer?

Managing payroll becomes increasingly complex as businesses expand into new markets. A global payroll provider can simplify the process by offering local expertise, ensuring compliance, and delivering scalable systems that support international growth.

Understanding Local Rules

1. Stays up-to-date with changing tax laws, labour regulations, and reporting standards in each country.

2. Ensures payslips, deductions, and filings are done correctly in line with local legislation.

3. Helps avoid fines and compliance risks by handling statutory requirements accurately.

A Single, Centralised System

1. Combines payroll processes across countries into one streamlined platform.

2. Offers better visibility and control over payroll operations in different regions.

3. Reduces the need to coordinate with multiple local vendors or systems.

Hassle-Free Payments in Local Currencies

1. Supports on-time salary disbursement in multiple currencies.

2. Manages currency conversions, local banking rules, and payment timelines.

3. Minimises errors in cross-border payments and ensures a reliable employee experience.

Room to Grow

1. Scales easily as the business enters new markets or hires across regions.

2. Reduces the need for internal payroll expansion or new country-specific processes.

3. Allows companies to focus on growth without worrying about backend payroll operations.

Keeping Data Safe

1. Uses secure platforms that follow global data protection laws like GDPR.

2. Safeguards sensitive employee information with encryption and access controls.

3. Reduces the risk of data breaches or non-compliance in global jurisdictions.

Managing More Than Just Payroll

1. Offers additional services such as statutory benefits administration, social insurance management, and leave tracking.

2. Helps standardise HR practices across different countries.

3. Reduces administrative load on internal teams while improving employee satisfaction.

How to Know When It’s Time to Move Beyond an EOR?

Working with an EOR can be an innovative and flexible way to hire internationally, especially when entering new markets or managing short-term projects. But as operations grow, there may come a time when a more permanent setup makes sense.

1. Team Building:

Expansion of local teams may be less feasible for EORs; an integrated legal entity provides complete control over HR activities.

2. Long-Term Strategy:

Creating a legal entity involves commitment and renders long-term regional development feasible.

3. Operational Integration:

Direct hiring facilitates better integration with in-house teams, policies, and workflows.

4. Cost Savings:

Scaling up quickly under an EOR may be costly; a local organisation can be more economical.

5. Regulatory Compliance:

Specific industries or sectors require a legal entity to fulfil licensing, contractual, or regulatory requirements.

Benefits of Using a Global Payroll System Across Countries

Managing payroll across multiple jurisdictions can quickly become complex. Implementing a single global payroll system creates a centralised and consistent approach. It helps businesses stay compliant, streamline operations, and support international growth with confidence.

Brings Consistency to Payroll Operations

1. Ensures uniform payroll schedules, formats, and documentation across regions

2. Minimises the risk of payment delays and calculation discrepancies

3. Supports a consistent employee experience, regardless of location

Offers Better Visibility and Control

1. Provides a centralised view of payroll data across all operating countries

2. Facilitates budget planning, workforce tracking, and risk management

3. Supports leadership with accurate, real-time financial insights

Simplifies Compliance with Local Laws

1. Tracks changes in tax legislation, labour codes, and statutory contributions

2. Reduces exposure to non-compliance penalties and legal complications

3. Makes audit preparation and statutory reporting more efficient

Streamlines Daily Operations

1. Decreases reliance on manual processes and fragmented systems

2. Reduces administrative load for HR, finance, and payroll teams

3. Enhances process efficiency through automation and system integration

Scales with Business Growth

1. Supports onboarding in new markets without needing separate systems

2. Enables faster geographic expansion while maintaining payroll integrity

3. Consolidates provider management through a single global platform

6-Point Checklist Before Switching from an EOR to Global Payroll

Transitioning from an EOR (Employer of Record) to a global payroll provider represents a transition from short-term market entry strategies to repeatable, cross-border operations. Upfront assessment of the key areas guarantees compliance, operational efficiency, and long-term value.

Here’s a 6-point checklist to guide the decision:

Checklist Point	Key Actions
Readiness of the Local Entity	✅ Ensure the business is officially registered in each operating country. ✅ Set up local bank accounts, tax registrations, and employment systems. ✅ Confirm the entity can independently manage payroll, hiring, and compliance.
Understanding of Local Payroll Requirements	✅ Learn local tax brackets, wage laws, and statutory benefits. ✅ Align payroll cycles with local deadlines to avoid penalties. ✅ Verify worker classifications to prevent legal issues.
Suitability of Internal Systems	✅ Evaluate if HR and finance tools support multi-country payroll. ✅ Check adaptability to varied pay structures and compliance rules. ✅ Ensure adherence to data privacy regulations in all locations.
Compliance and Documentation Requirements	✅ Implement internal compliance checks for audits and inspections. ✅ Keep contracts, payslips, and payroll records secure and organised. ✅ Understand local reporting formats and submission timelines.
Selection of a Global Payroll Provider	✅ Choose a provider with expertise in target markets. ✅ Ensure capability for salary processing, tax filings, and compliance. ✅ Opt for providers offering scalable solutions and local knowledge.
Internal Operational Readiness	✅ Define roles and responsibilities across HR, finance, and legal. ✅ Train teams on country-specific payroll practices. ✅ Create a streamlined process for payroll queries and issue resolution.

conclusion

Many businesses find EOR services to be a helpful starting point when entering new markets. But as operations grow and become more complex, there is often a need for greater visibility, consistency and control. In such cases, a more integrated payroll approach becomes essential.

Transitioning to a single global payroll provider isn’t just about simplifying systems. It’s about building a foundation that can scale with the business, support compliance across jurisdictions, and bring payroll, finance, and HR onto the same page. It enables teams to transition from reactive management to proactive planning, all while maintaining focus on local requirements.

Galaxy Group works closely with businesses navigating this shift. With regional expertise and scalable infrastructure, the focus is on helping organisations streamline operations, reduce complexity, and plan confidently for what’s ahead.

As global workforces evolve, so should the way payroll is managed. Choosing the proper setup is a strategic decision rather than a technical one.

Ready to streamline your global payroll?

Talk to our team and find the proper setup for your growing business.

FAQ’S

What’s the difference between an EOR and a global payroll provider?

An EOR becomes the legal employer for your overseas team and handles everything from contracts to compliance. A global payroll provider supports your in-house HR team by managing payroll across multiple countries once you’ve set up your legal entity.

When is the right time to switch from an EOR to a global payroll provider?

If your team is growing, you’ve set up a local entity, or you want more control over compliance and reporting, it’s likely time to move to a global payroll model. It’s a natural step for companies ready to scale sustainably.

Can a global payroll provider handle minimum wage changes in different countries?

Yes. Most global payroll platforms stay updated with local labour laws and adjust payroll calculations automatically, so you remain compliant without tracking every change yourself.

Is switching to a global payroll provider more cost-effective than staying with an EOR?

Often, yes. EORs work well for early-stage expansion, but they can become expensive as your team grows. A global payroll setup typically reduces costs and gives you more control over operations.

Can I use both an EOR and a global payroll provider at the same time?

Yes. Many companies take a hybrid approach by using EORs in countries where they don’t yet have an entity and a global payroll where they do. This allows for flexible and phased expansion.

Guide to Payroll in Vietnam

August 28, 2025 by galaxy

August 28, 2025

Guide to Payroll in Vietnam

Payroll management in Vietnam is a critical function that goes beyond the distribution of monthly salaries. It requires a sound understanding of wage structures, statutory contributions, and local labour regulations to ensure compliance and fairness.

For organisations establishing a presence, expanding teams, or managing a local workforce, effective payroll processes from the outset are essential. Transparent and accurate practices build employee confidence, foster trust, and support organisational efficiency.

This guide outlines the principal aspects of payroll in Vietnam, including minimum wage requirements, salary benchmarks, statutory deductions, reporting obligations, and final settlements. It also considers the advantages of outsourcing payroll, offering businesses a practical means of reducing administrative complexity while maintaining compliance and operational focus.

Table Of Content

How Payroll Works in Vietnam?

Payroll in Vietnam operates within a structured legal framework that requires employers to comply with social insurance obligations, tax regulations, and labour laws. A well-defined payroll system is essential to ensure accuracy and compliance with these requirements.

Most companies process payroll on a monthly basis, with salaries typically paid by the final working day of the month. In addition to gross wages, payroll calculations must include mandatory deductions for personal income tax, social insurance, health insurance, and unemployment insurance, as stipulated by Vietnamese law.

Here’s what the process usually looks like:

1. Start with the Gross Salary

It begins by calculating each employee’s total earnings—this includes their base salary, fixed allowances, overtime, and any bonuses agreed upon in the contract.

2. Apply Employee Deductions

Next, certain mandatory deductions are made from the employee’s salary. These usually cover:

Social Insurance
Health Insurance
Unemployment Insurance
Personal Income Tax

The rates are set by the government and need to be reported and paid monthly.

3. Add Employer Contributions

Additionally, employers are required to contribute to the same insurance schemes on behalf of their employees. These costs are separate from what is deducted from the salary.

4. Issue Payslips

Once deductions are done, employees receive a payslip with a breakdown of gross pay, deductions, and net pay. This step keeps things transparent and helps avoid confusion.

5. Submit Reports

Companies must regularly report payroll data to tax and insurance authorities. There’s also an annual income tax reconciliation, especially for employees with changing or multiple income sources.

6. Stay Updated on Regulations

Payroll regulations in Vietnam are subject to frequent and sometimes unexpected changes. For businesses—especially those newly entering the market—it is essential to remain vigilant and up to date to avoid compliance risks.

What Is the Minimum Wage and Average Salary in Vietnam?

Minimum Wage in Vietnam

Vietnam’s minimum wage structure is divided into two main categories:

1. Common Minimum Wage

This is set at VND 2,340,000 (approximately US$93) and is used to calculate salaries for employees in state-owned organisations and enterprises. It also forms the basis for calculating social insurance contributions for all enterprises (with the maximum social contribution set at 20 times the standard minimum wage).

2. Regional Minimum Wage

Employees of non-state businesses are subject to the regional minimum wage, which is determined by four regions designated by the government. Following a two-year freeze in spite of inflation, these were raised by 6% beginning in July 2024. The updated prices are:

Region	2022 Minimum (VND)	2022 Minimum (US$)	2024 Minimum (VND)	2024 Minimum (US$)
Region I	4,680,000	192	4,960,000	196
Region II	4,160,000	171	4,410,000	175
Region III	3,640,000	150	3,860,000	153
Region IV	3,250,000	134	3,450,000	137

3. Hourly Minimum Wages (by region, July 2024):

Region I: VND 23,800 (US$0.94)
Region II: VND 21,200 (US$0.84)
Region III: VND 18,600 (US$0.74)
Region IV: VND 16,600 (US$0.66)

Even if workers are paid on a daily or weekly basis, employers are still required to make sure that they all receive at least these minimums. The workplace’s location determines the applicable regional minimum; if a business serves several subregions, all employees must be covered by the highest applicable rate.

Average Salary in Vietnam

Depending on the sector, region, and degree of experience, salaries in Vietnam can differ significantly. Although there isn’t a set national average, the following are essential things to remember:

By Region

Location	Monthly Average Salary (VND)	Equivalent in USD	Notable Insights
Hanoi & Ho Chi Minh City	10,500,000 – 18,000,000	$415 – $710	Salaries are significantly higher in these tier-1 cities, especially in sectors like tech, finance, and real estate.
Secondary Cities (e.g. Da Nang, Hai Phong)	8,000,000 – 12,000,000	$316 – $474	Slightly lower cost of living leads to more moderate pay, but strong growth in logistics and tourism.

By Sector

Sector	Monthly Average Salary (VND)	Equivalent in USD	Talent Market Insights
Information Technology	20,000,000 – 35,000,000	$790 – $1,380	There is a high demand for skilled developers and tech engineers.
Manufacturing & Logistics	9,000,000 – 15,000,000	$355 – $590	One of the largest employment sectors is characterised by steady wage growth.
Hospitality & Retail	6,000,000 – 10,000,000	$236 – $395	Entry-level dominated; seasonal wage fluctuations are common.
Accounting & Finance	10,000,000 – 18,000,000	$395 – $710	Competitive salaries, especially in international or regional firms.

Key Takeaways for Employers

The Vietnamese government has established a strictly regulated wage system.
Employers must adhere to region-specific minimum wage requirements, irrespective of the frequency of payment.
While compliance is mandatory, offering wages above the legal minimum is often necessary to attract and retain skilled employees.
Payroll calculations must consider factors such as regional wage levels, job role, and statutory contributions including health and social insurance.

Working Hours, Overtime Pay, and Employer Compliance in Vietnam

Establishing a workforce that is both efficient and compliant requires a clear understanding of Vietnam’s labour regulations. The Labour Code of 2019, together with guidance issued by the Ministry of Labour, Invalids, and Social Affairs (MOLISA), sets out the legal framework governing standard working hours, overtime provisions, and employer obligations. The key requirements are outlined below.

Standard Working Hours

Category	Details
Normal Working Hours	Up to 8 hours per day, 48 hours per week
Shortened Working Week	Common in sectors involving dangerous or hazardous conditions; typically 6–7 hours/day
Flexible Arrangements	Allowed if agreed upon in employment contracts, ensuring total hours don’t exceed weekly or monthly caps

Note: A Monday to Friday workweek is not mandated by law, but it is recommended when practical because it promotes work-life balance and is standard procedure.

Overtime Pay Regulations

Vietnam enforces strict regulations on overtime to protect employee welfare. The framework operates as follows:

Overtime Scenario	Overtime Rate (as % of Base Hourly Wage)
Weekdays (Normal Working Days)	150%
Weekends (Saturday/Sunday)	200%
Public Holidays or Paid Leave Days	300%
Night Shift Overtime (any day)	An additional 20% on top of the applicable rate

1. Daily cap: Overtime must not exceed 12 hours/day

2. Monthly cap: Overtime must not exceed 40 hours/month

3. Annual cap: Overtime must not exceed 300 hours/year for most sectors (expanded from 200 hours under recent law)

Employer Compliance: Key Requirements in Vietnam

1. Clearly define employment terms

All contracts must include working hours, rest periods, and overtime terms in writing.

2. Maintain accurate timekeeping records

Employers must track daily attendance, working hours, and all overtime performed.

3. Obtain written consent for overtime

Overtime requires the employee’s written consent, unless it’s an emergency.

4. Mandatory rest periods

Workers must receive at least one full 24-hour break every 7 consecutive working days.

5. Breaks during long shifts

Employees working 6+ continuous hours must get a minimum 30-minute break.

6. Health & safety precautions

Employers must conduct health and safety checks before assigning overtime in hazardous work conditions.

Penalties for Non-Compliance

Non-compliance with regulations on working hours and overtime may lead to:

1. Administrative fines ranging from VND 2 million to 75 million (approx. USD 80–3,000)

2. Temporary suspension of business operations in severe cases

3. Mandatory back payment of underpaid wages with interest

Strategic Insight for Employers

For organisations managing teams in Vietnam—particularly those with shift-based operations or expanding workforces—several practical measures can enhance payroll accuracy and compliance:

1. Implement automated payroll and attendance systems to minimise manual errors.

2. Ensure employment contracts are updated in line with the latest legal requirements.

3. Provide regular compliance training for HR personnel and line managers.

4. Engage local payroll or HR specialists to navigate regulatory obligations more effectively.

What Are the Employee Deductions and Employer Contributions in Vietnam?

Under the Labour Code and social insurance regulations, both employer and employee salary deductions must be taken into account when managing payroll in Vietnam. These deductions apply universally, irrespective of industry or company size.

Employee Salary Deductions:

Employees in Vietnam typically see deductions for three main types of compulsory insurance:

1. Social Insurance (SI): 8%

2. Health Insurance (HI): 1.5%

3. Unemployment Insurance (UI): 1%

These are deducted directly from the employee’s gross monthly salary.

Employer Contributions:

In addition to employee deductions, employers are legally required to contribute a larger share toward the same insurance categories, along with other funds:

1. Social Insurance: 17.5%

2. Health Insurance: 3%

3. Unemployment Insurance: 1%

4. Occupational Accident and Disease Fund: 0.5%

5. Trade Union Fee (if applicable): 2% (based on company policy or union presence)

Altogether, this brings the total employer contribution to approximately 22% of each employee’s salary.

Important Note on Salary Basis

While the government sets clear caps, contribution amounts are determined by an employee’s monthly salary. Social and health insurance contributions are capped at 20 times the basic salary, whereas unemployment insurance is calculated up to 20 times the regional minimum wage. These limits ensure the system remains fair and manageable for both employers and employees.

Key Insight

Maintaining payroll compliance in Vietnam requires close attention to changes in wage levels, contribution ceilings, and insurance regulations, many of which are subject to annual revision. Accurate calculations and timely submissions are essential to avoid penalties.

For organisations with expanding teams or cross-border operations, engaging professional payroll services in Vietnam can streamline compliance, reporting, and overall workforce management.

How Are Payroll Reports, Tax Filings, and Final Settlements Handled in Vietnam?

Processing monthly salaries is only one element of payroll management in Vietnam. Employers must also comply with government requirements relating to taxation, payroll reporting, and employee terminations. The key obligations are summarised below:

1. Monthly Payroll Reports

Companies prepare detailed monthly reports showing employee earnings, deductions (like tax and insurance), and net salaries.
These records should be accurate and well-maintained, as local authorities may request them during audits.

2. Filing Personal Income Tax (PIT)

Employers are responsible for declaring and paying PIT on behalf of employees.
Filing frequency, whether monthly or quarterly, depends on the size of the business.
At the same time, employers must submit social, health, and unemployment insurance contributions.

3. Year-End Tax Finalisation

At the close of each financial year, a reconciliation process ensures the correct amount of tax has been paid.
Employers submit a final PIT report and issue a form to employees for personal tax records or refunds.

4. Final Settlements When Employees Leave

Businesses must calculate and disburse outstanding amounts such as unpaid salary, bonuses, or leave encashments.
PIT is finalised, and social insurance records are updated or closed.
This process is generally completed within 7 working days from the employee’s last day.

5. Staying Updated

Vietnam’s payroll regulations are revised frequently.
Many businesses choose to work with payroll service providers to ensure ongoing compliance and reduce administrative risk.

What Happens to Payroll During Termination and Final Settlement?

In Vietnam, employers are required by the Labour Code to complete all payroll settlements within 14 working days of an employee’s final day of service. This obligation applies irrespective of the reason for separation—whether resignation, termination, or contract expiry—and ensures fairness and transparency in the termination process.

The final payroll generally includes:

1. Unpaid salary for the days worked up to the departure date

2. Payment for unused annual leave, based on the remaining balance

3. Severance pay, if the employee has completed at least 12 months of service and the termination was not due to misconduct

4. Any pending bonuses or allowances that were contractually agreed upon

5. Statutory deductions, including personal income tax and social insurance contributions

Employers must ensure that all documentation is completed correctly, records are accurate, and the final payment is clearly communicated to the departing employee. Effective management of termination settlements not only upholds legal compliance but also reflects respect for the individual and helps protect the organisation’s reputation.

What are the Best Practices for Compliance and Accuracy for Payroll Services in Vietnam?

Payroll in Vietnam extends beyond salary disbursement; it demands strict adherence to legal and regulatory requirements to maintain smooth business operations. Key practices include:

1. Monitoring updates to wage, tax, and insurance regulations

2. Selecting an appropriate payroll system, whether in-house or outsourced

3. Maintaining organised documentation of contracts, salaries, and tax filings

4. Meeting all tax and insurance deadlines to avoid penalties

5. Centralising employee data for efficient management of leave, bonuses, and deductions

6. Processing final settlements for departing employees within seven working days

7. Engaging local payroll experts to navigate Vietnam’s complex requirements and maintain compliance.

Also Read : Payroll Outsourcing: A Cost-Effective Solution For Employers

conclusion

Managing payroll in Vietnam goes beyond calculations; it requires close attention to contribution ceilings, reporting obligations, and labour law compliance. These responsibilities not only safeguard legal conformity but also shape the employee experience and support smooth business operations.

As organisations expand in Vietnam, sustaining payroll compliance becomes increasingly important. It mitigates legal risks, strengthens employee trust, and underpins long-term stability. However, keeping pace with evolving regulations and local requirements can be complex without specialist support.

Galaxy Group offers practical, on-the-ground expertise to simplify payroll management. From initial setup through to business expansion, our team ensures compliance remains aligned with organisational objectives—enabling companies to concentrate on growth and people, while we manage the complexities behind the scenes.

Stay Compliant with Vietnam’s Payroll Regulations

Get insights on Vietnam’s 2025 payroll laws, wage updates, and compliance essentials to stay on track.

FAQ’S

What is the payroll system in Vietnam?

The payroll system in Vietnam handles social insurance contributions, tax deductions, and salary computation. Employers must follow laws pertaining to minimum wages and reporting deadlines. To effectively manage compliance, many businesses use local payroll services.

How do salaries work in Vietnam?

In Vietnam, salaries are typically paid on a monthly basis and are subject to the government-mandated minimum wage. Additionally, employers manage unemployment insurance, social insurance, health insurance, and personal income tax deductions. The majority of companies adhere to a defined framework to guarantee that workers are paid on time and in compliance.

Is 13th-month pay mandatory in Vietnam?

No, the law in Vietnam does not require 13th-month pay. Nonetheless, it is a typical custom, particularly during Tết, the Lunar New Year. Numerous employers provide it as a bonus in accordance with employee contributions or business performance, or as stipulated in employment contracts or internal policies. It becomes a legally binding obligation if it is expressly mentioned in the contract or company policies.

Do foreign companies need to set up a local entity to run payroll in Vietnam?

Not always. Establishing a complete legal entity can seem like a big step if you’re just getting started or testing the waters. For this reason, many businesses choose to partner with an Employer of Record (EOR) or a local payroll provider. It’s a sensible approach to maintain compliance and appropriately compensate your staff without becoming bogged down in time-consuming paperwork and registrations.

What are the standard working hours in Vietnam?

The standard workweek is 48 hours, typically spread across six days. Overtime is allowed but must follow labour law guidelines.

Comprehensive Checklist on Employment in Taiwan

August 26, 2025 by galaxy

August 26, 2025

Comprehensive Checklist on Employment in Taiwan

Taiwan has rapidly emerged as a key business hub in the Asia-Pacific, offering a skilled workforce, strong infrastructure, and a business-friendly environment. For employers and HR professionals looking to expand into Taiwan, understanding the local employment landscape is a strategic advantage and a legal necessity.

Hiring employees in Taiwan requires compliance with local labour laws, awareness of cultural norms, and the ability to manage contracts, benefits, and payroll accurately.
To simplify this process, this blog presents a comprehensive, step-by-step checklist covering everything from drafting compliant employment contracts to managing tax, overtime, and foreign hires.

Table Of Content

How Can Employers Successfully and Legally Hire Employees in Taiwan?

Here are the 11 essential steps every employer must follow to stay compliant with local labour laws, manage payroll accurately, and onboard talent effectively, whether you’re hiring local staff or foreign professionals. Use this checklist to build a legally sound and efficient hiring process in Taiwan.

1. Understand the Key Labour Laws in Taiwan

Understanding the labour law in Taiwan is the first step toward establishing compliant employment practices. Before hiring, employers must familiarise themselves with the two key statutes governing employment in Taiwan:

Labour Standards Act (LSA)

Regulates working conditions, wage levels, leave policies, and termination procedures.
Sets working hour limits and mandates rest periods.
Requires issuance of payslips and retention of employment records for at least five years (non-compliance can attract fines up to NTD 300,000).

Employment Service Act

Governs the employment of foreign nationals.
Promotes fair hiring practices and prevents discrimination.
Requires employers to provide equal opportunities.

Key Employer Obligations:

Contracts must comply with statutory terms.
Register new hires for labour insurance, health insurance, and pension within 3 days.
Ensure non-discriminatory hiring and workplace practices.

2. Meet the Legal Requirements to Hire Foreign Employees

Hiring international talent in Taiwan can enhance innovation and global reach, but it must be handled in strict accordance with national laws.

To hire foreign employees in Taiwan, employers must:

Obtain a work permit from the Ministry of Labour before the employee begins work.
Assist the employee in applying for an Alien Resident Certificate (ARC) for legal residency and employment.
Ensure the position qualifies under Taiwan’s approved job categories (e.g., tech, education, management roles).

Permits are typically valid for 1–3 years and are renewable. Work without proper authorisation is illegal and may result in fines or deportation.

Employer Responsibilities

Provide a valid employment contract in Taiwan, outlining job duties, compensation, and benefits.
Ensure that foreign hires are registered for labour insurance, health insurance, and pension plans.
Offer bilingual contracts (Mandarin + English) to avoid miscommunication and protect legal interests.
Assist with onboarding and cultural orientation to support smooth integration.

Employers must manage several levels of compliance when onboarding foreign workers. Our foreign hiring guide provides detailed information on the necessary documentation and best practices.

3. Follow a Step-by-Step Hiring Process

Successfully hiring employees in Taiwan requires a structured approach that complies with local labour laws and cultural expectations. Employers must follow a clear path, from posting vacancies to onboarding, while maintaining full regulatory compliance

Job Posting & Recruitment

Publish compliant, non-discriminatory job ads (in Mandarin and/or English).

↓

Candidate Screening & Interviewing

Conduct interviews, ensuring fairness and adherence to anti-discrimination laws.

↓

Offer Letter & Employment Contract

Provide a written employment contract in Taiwan outlining key terms.

↓

Labour & Insurance Registration

↓

Formal Onboarding

Introduce company policies, team structure, and work culture, and set performance expectations.

4. Draft a Legal Employment Contract in Taiwan

A valid employment contract in Taiwan may be written or oral; however, written agreements are strongly recommended. The law mandates that contracts include:

Job title & scope of work
Working hours, rest days, and overtime terms
Salary, payment frequency, and method
Leave entitlements (annual, sick, maternity, etc.)
Termination conditions and severance policies
Contributions to social security schemes

For foreign hires, bilingual contracts (Mandarin and English) are strongly encouraged. Contracts should also include a reference to compliance with labour insurance, health insurance, and pension contributions as part of onboarding obligations. This clarity ensures both legal protection and operational transparency for all parties involved.

Did You Know?

Under Taiwan’s Labour Standards Act, employers are required to issue pay slips and retain employment records for at least five years; failure to comply may result in fines of up to NTD 300,000.

Taiwan’s labour laws require specific clauses within employment agreements. To understand how these local requirements fit into global standards, refer to our international contracting guide.

5. Comply with Taiwan’s Minimum Wage Requirements

Employers must comply with Taiwan’s minimum wage laws for both full-time and part-time employees. 1. As of 2025, the minimum wage rates are:

NTD 28,590 per month (≈ USD 893.44)
NTD 190 per hour (≈ USD 5.94)

2. These wage rates are reviewed annually by the Ministry of Labour to reflect inflation and economic changes. 3. Employers are responsible for paying wages at or above the legal minimum, ensuring that bonuses, overtime pay, and allowances are provided in addition to base salary, and maintaining accurate payroll records to demonstrate compliance with Taiwan’s labour laws. 4. Non-compliance with Taiwan’s minimum wage laws can result in serious consequences, including financial penalties, employee back pay claims, and reputational damage. Ensuring timely and accurate wage practices is essential for maintaining legal and professional credibility.

6. Set Up a Legally Compliant Payroll System

A structured approach to payroll is crucial for employers looking to operate compliantly in Taiwan. Below is a breakdown of key requirements:

1. Pay cycle

Most companies follow a monthly payroll system, typically disbursing salaries at the end of each month.

2. Payslip requirement

Employers must issue detailed payslips that show the gross salary, deductions, and net pay.

3. Payroll components

Base salary, overtime pay, bonuses (e.g., 13th-month salary), meal/transport allowances, and insurance contributions.

4. Labour insurance, health insurance, and pension
Mandatory deductions from both employer and employee; employers must register new hires within three days.

7. Follow Working Hour Regulations and Overtime Pay

1. Taiwan’s standard work schedule, which is intended to safeguard the welfare of its employees, is limited to 8 hours per day and 40 hours per week. 2. Overtime is limited to 46 hours per month and must be done with employee consent. 3. Overtime must be fairly compensated:

1.34× the hourly wage for the first two extra hours
1.67× times the hourly wage for any additional hours

4. At least one rest day per week is mandatory by law, no exceptions. 5. If employees work on public holidays or scheduled rest days, employers must provide additional pay or compensatory leave.

8. Provide Mandatory Employee Leave & Benefits

Offering the right mix of leave and benefits is essential for compliance and employee satisfaction in Taiwan. Under the labour law in Taiwan, employers must provide a set of statutory entitlements:

Annual leave: Starts at 3 days for service exceeding 6 months but less than 1 year and increases to 7 days after one year of service, which continues to increase with tenure.
Sick leave: Up to 30 days per year at half pay.
Paid maternity leave of 8 weeks.
Paternity leave: 5 days, fully paid.
Public holidays: Around 12 national holidays annually.

Many companies enhance their packages with additional benefits such as

A 13th-month salary or performance bonus
Meal and transport allowances
Supplemental insurance and wellness support
Contributions to the Labour Pension Fund

These offerings not only fulfil legal requirements but also help attract and retain skilled professionals in a competitive hiring market.

9. Understand and Fulfil Taxation Obligations

Understanding taxation is essential for payroll compliance. Employers must manage income tax withholding and contribute to the country’s social security schemes in line with regulatory requirements.

Income tax:

Progressive rates range from 5% to 40%, depending on the annual income bracket.

Withholding tax:

Employers must withhold income tax at the source and remit it to the National Taxation Bureau.

Social Security contributions:

Employers contribute to labour insurance, national health insurance, and the Labour Pension Fund, and employees contribute a smaller share through automatic payroll deductions.

10. Comply with Overtime and Termination Rules

In Taiwan, overtime and termination are tightly regulated under the Labour Standards Act. Employees may work overtime only with consent, and it must not exceed 46 hours per month. Compensation is legally mandated.

Dismissals must be lawful and justified. Employers must: Give 3 to 30 days’ notice (or pay in lieu)
Provide a written explanation.
Pay severance, typically half a month’s salary per year of service

Improper termination can result in fines, reinstatement, or compensation.

Quick-Reference Hiring Checklist for Employers to Hire in Taiwan

Stay compliant with Taiwan’s employment laws using this quick-reference checklist:

Item	Status
Understand the labour laws in Taiwan
Meet the Legal Requirements to Hire Foreign Employees
Draft a legal employment contract in Taiwan
Comply with Taiwan’s Minimum Wage Requirements
Ensure the correct payroll setup in Taiwan
Follow the legal working hour limits in Taiwan
Register for health, labour, and pension contributions
Provide leave and benefits in accordance with the law
Fulfil the tax obligations
Manage termination and severance correctly

Conclusion

Navigating employment in Taiwan demands not only an understanding of the local market but also a precise grasp of legal, tax, and procedural requirements. From defining the minimum wage in Taiwan to crafting a compliant employment contract in Taiwan, every step matters, especially when expanding operations or onboarding foreign talent.

At Galaxy Group, we believe in simplifying complexity. This checklist serves as a practical tool to help HR teams, global employers, and decision-makers establish compliant, efficient hiring practices in Taiwan.

Expand Your Team with Global Talent

Ensure compliance with Taiwan’s laws when onboarding international professionals.

FAQ’S

How is payroll managed in Taiwan?

Payroll in Taiwan is typically processed on a monthly basis, with employers responsible for deducting and remitting taxes, labour insurance, health insurance, and pension contributions. Payslips must be provided.

How can I hire employees in Taiwan as a foreign company?

To hire employees in Taiwan, foreign companies must comply with local employment laws, draft legally sound contracts, register with tax and social insurance authorities, and—if hiring foreign talent—secure valid work permits and ARCs.

What are the taxation requirements for employers in Taiwan?

Taxation in Taiwan requires employers to withhold progressive income tax (ranging from 5% to 40%) and make contributions to national health insurance, labour insurance, and the Labour Pension Fund. Errors or delays may result in penalties.

What should be included in a Taiwan employment contract?

A valid employment contract in Taiwan must include job role, salary, working hours, leave, insurance, and termination terms. Bilingual agreements are recommended for foreign hires.

What are the working hour limits in Taiwan?

The working hour limits in Taiwan are 8 hours per day, 40 hours per week, with a cap of 46 overtime hours per month, paid at premium rates.

Understanding Work Visa Requirements in The Philippines

August 25, 2025 by galaxy

August 25, 2025

Understanding Work Visa Requirements in The Philippines

With its growing economic influence in Southeast Asia, the Philippines has become an attractive market for global talent. Yet, onboarding foreign professionals is not without its complexities. Employers must adhere to a dual-system process that involves securing both a work permit from the Department of Labour and Employment (DOLE) and a visa from the Bureau of Immigration.

In this guide, we break down the essential requirements, common pitfalls, and key compliance practices to help you navigate the Philippine employment landscape with confidence.

Table Of Content

Work Permit vs Work Visa in the Philippines

In the Philippines, the terms “visa” and “permit” are not interchangeable. Understanding the distinction is key to navigating the country’s legal employment landscape.

Category	Work Permit (AEP)	Work Visa (9(g))
Issued By	Department of Labour and Employment (DOLE)	Bureau of Immigration (BI)
Purpose	Certifies that an employer can hire a foreign national for a role	Grants legal entry and stay for employment
Who Applies	Employer, on behalf of the foreign worker	Employer or worker, after AEP is secured
When Required	Before hiring a foreign employee	After AEP approval and before starting long-term employment
Validity Period	1 to 3 years, renewable	1 to 3 years, extendable depending on the employment contract
Transferable	No – tied to a specific employer	No – a new visa is needed if the employer changes
Key Requirement	Job postings must be made to ensure that no Filipino can fill the role	Must present an approved AEP and BI clearance
Work Commencement	Cannot begin without it (or with a Provisional Work Permit)	Can begin only after the visa is granted or with a PWP in the interim

What are the Common Types of Philippines Work Visas?

The Philippines provides a range of work-related visa options, but the following are the most relevant for foreign professionals:

1. 9(g) Pre-arranged Employment Visa

For long-term employment with a Philippine-based company. Requires an approved AEP and is typically valid for 1–3 years, renewable.

2. Special Work Permit (SWP)

Designed for short-term roles or urgent assignments under 6 months. Ideal for consultants, seasonal workers, or temporary contractors.

3. Provisional Work Permit (PWP)

PWP is issued while the 9(g) visa is still being processed. Allows a foreign national to begin working legally in the interim.

4. Special Non-Immigrant Visa [47(a)(2)]

Granted to employees of BOI or PEZA-registered companies under special arrangements. It is usually faster to process and is often used for project-based work.

5. Temporary Visitor’s Visa for Business Purposes

Granted to those engaging in short-term business meetings or consultancy without local employment.

6. Special Non-Immigrant Visa under E.O. 226

Issued to investors or executives under specific investment incentives.

7. International Treaty Trader / Investor Visa

Applicable for citizens of treaty nations under-investment or trade agreements.

Why is the AEP Mandatory Before any Work Visa Application?

Before applying for any employment visa , foreign nationals must obtain the Alien Employment Permit (AEP) from the Department of Labour and Employment (DOLE). This permit confirms that the applicant has been hired for a position for which no qualified Filipino candidate is available.

The AEP is employer-specific and is generally valid for 1 to 3 years, in alignment with the employment contract. Without a valid AEP, the application for a Philippines work visa, such as the 9(g), cannot proceed.

Key Requirements:

Duly completed application form
Notarised employment contract and company profile
SEC registration or DTI certificate
Mayor’s business permit
Copy of a valid passport
Proof of publication of job vacancy (local newspaper)
For reissuance: a copy of the existing valid AEP must also be submitted

What are the Requirements to Obtain a Philippine Work Visa?

Below is a comparative breakdown of the documentation required for securing the Alien Employment Permit (AEP) and the 9(g) Work Visa:

Document	AEP (Alien Employment Permit)	9(g) Work Visa
Completed Application Form	Required	Required
Employment Contract and Supporting Corporate Documents	Required	Required
Valid Passport and Visa	Required	Required
Mayor’s Business Permit	Required	Not Required
For Renewals: Previously Issued AEP Copy	Required (for renewals only)	Not Applicable
Notarised Certification of Workforce Composition	Not Required	Required
Approved AEP from DOLE	Not Applicable	Required (must submit an approved AEP for processing)
Published Notice of Job Vacancy	Not Required	Required
Bureau of Immigration (BI) Clearance Certificate	Not Required	Required
Alien Certificate of Registration (ACR) I-Card	Not Required	Required
SEC Documents and Company Profile	Not Required	Required

How long does the Work Visa Application Process take in the Philippines?

Securing legal work status in the Philippines is a multi-stage process that demands careful timing. Two key government bodies are involved, DOLE for the AEP, and the Bureau of Immigration (BI) for the 9(g) Work Visa.

1. AEP Application (DOLE):

Usually processed within 7 to 15 working days, assuming documents are in order and no objections arise.

2. 9(g) Visa Application (BI):

It can take 6 to 12 weeks, depending on the case’s complexity, the completeness of submissions, and BI’s current workload.

During this waiting period, eligible applicants may apply for a Provisional Work Permit (PWP), a temporary authorisation that allows them to begin working legally until their 9(g) visa is approved.

Work Visa Application Flow in the Philippines

Start

↓

Apply for Alien Employment Permit (AEP)

Issued by DOLE (7–15 working days)

↓

Apply for Provisional Work Permit (PWP) [Optional]

Ministry of Human Resources (MOHRSS)

↓

Submit 9(g) Visa Application

Processed by Bureau of Immigration (6–12 weeks)

↓

Receive a 9(g) Visa and Begin Full Employment Legally

What Happens when You Switch Jobs or Extend Your Stay?

Foreign professionals must understand that both the work permit and work visa are non-transferable and tied to the sponsoring employer.

Switching employers? New AEP and 9(g) visa applications are mandatory.
Seeking extension? Update your documentation before expiry.
Ending employment? Visa status becomes void.
Any lapse in timely updates could lead to blacklisting or deportation.

Failure to update immigration status can result in penalties, deportation, or being blacklisted by Philippine authorities.

What are the Key Considerations for Hiring Foreign Nationals in the Philippines?

When hiring foreign nationals in the Philippines, employers must navigate a series of responsibilities to ensure full legal compliance. These include securing the proper work permits, meeting statutory benefit requirements, and maintaining up-to-date immigration records. Here’s a breakdown of what employers need to know:

1. Work Permit and Visa Requirements

Employers must secure valid work permits and visas for foreign employees before onboarding them. This ensures that employees are legally permitted to work in the Philippines. Key permits include the Alien Employment Permit (AEP) and the 9(g) work visa.

2. Statutory Compliance and Employee Registration

Employers are responsible for ensuring that employees meet the necessary statutory requirements, including the provision of benefits. Employees must be registered with the Social Security System (SSS), PhilHealth, Pag-IBIG, and tax authorities. Employers should also submit regular reports to the Department of Labour and Employment (DOLE).

3. Application Fees and Legal Costs

Securing work permits and visas comes with associated costs. Typical fees include:

AEP: US$160
9(g) Visa: US$360 (depending on duration)
SWP and PWP: US$110 to 180
Additional legal or agency fees may apply, depending on whether third-party services are engaged.

4. Visa Duration and Renewal

Work visas in the Philippines come with specific validity periods:

9(g) Visa: Valid for 1 to 3 years, renewable
SWP: Valid for 3 months, extendable up to 6 months
PWP: Valid for 3 months or until the 9(g) visa is issued.

5. Maintaining Legal Status

Once employees are authorised to work, they must comply with ongoing legal requirements:

Report annually to the Bureau of Immigration (BI).
Keep immigration and passport documentation valid at all times.
Renew work permits and visas well in advance of their expiry.

Failure to comply with these responsibilities can result in fines, penalties, or even the cancellation of the employee’s legal work status in the Philippines.

Compliance Risks and Common Mistakes to Avoid while Applying for Work Visa in the Philippines

The Philippine government takes the employment of foreign nationals seriously. Even minor lapses in compliance can result in visa denial, penalties, deportation, or blacklisting. To avoid such setbacks, employers and foreign professionals must pay close attention to every legal requirement.

Here are the Top 5 Mistakes that can jeopardise your work visa status in the Philippines:

1. Starting work without a PWP or 9(g) visa.

→ Working without legal authorisation is a direct violation of immigration law.

2. Failing to renew the AEP before expiry.

→ Expired permits invalidate your visa and employment status instantly.

3. Choosing the wrong visa category.

→ Applying under an incorrect classification can delay or void your application.

4. Not registering with SSS, PhilHealth, and Pag-IBIG.

→ Mandatory for foreign employees; failure may lead to penalties during audits.

5. Inconsistent job titles in contracts and applications.

→ Mismatched details between submitted documents trigger red flags at DOLE or BI.

conclusion

Securing the right to work legally in the Philippines requires more than just submitting forms; it demands a thorough understanding of the country’s employment and immigration landscape, coordinated documentation, and full compliance with the requirements of multiple agencies.

From the Alien Employment Permit (AEP) to the 9(g) Pre-arranged Employment Visa, each step plays a vital role in legitimising foreign employment. Any misstep can lead to costly delays or legal setbacks.

That’s where Galaxy Group becomes your trusted partner, offering comprehensive support from eligibility assessment to end-to-end application and compliance management. Galaxy Group’s expertise in Philippine immigration and employment regulations provides businesses with the confidence to manage these critical tasks efficiently, helping them stay compliant while building a stronger workforce.

For a broader understanding of how international companies can legally employ foreign nationals in the Philippines, including key strategies beyond visa requirements, explore our in-depth guide here.

Ready to Onboard Foreign Talent?

Discover how Galaxy Group helps businesses scale faster with compliant hiring in the Philippines.

FAQ’S

Can I start working while waiting for my 9(g) visa?

Yes, if you obtain a Provisional Work Permit (PWP). It allows legal employment while the 9(G) visa application is in process.

Do I need to apply for a new visa if I change employers?

Yes. Both the AEP and 9(g) visas are employer-specific. A change in employer requires reapplication for both documents.

What are the risks of working without a valid work permit or visa?

Working without authorisation can result in fines, deportation, visa rejection, and blacklisting. It also exposes the employer to legal penalties.

What happens if I overstay my visa in the Philippines?

Overstaying can lead to daily fines, deportation, visa bans, or detention. Galaxy ensures proper tracking and renewal to prevent such issues.

What is the validity of a Provisional Work Permit (PWP)?

A PWP is typically valid until the 9(g) visa is granted, usually for a maximum of 3–6 months. It cannot be used indefinitely.

12 Tax Deductions for Independent Contractors & Businesses

August 25, 2025 by galaxy

August 25, 2025

12 Tax Deductions for Independent Contractors & Businesses

For independent contractors and businesses operating across the Asia-Pacific region, understanding the tax deduction landscape is not merely advantageous; it is essential. Strategic use of business tax deductions, from everyday business expenses to self-employed tax reliefs, can significantly reduce taxable income while ensuring full compliance with local regulations.

This comprehensive guide examines key deduction categories, including bank charges, home office costs, professional fees, and pension contributions, across five major APAC jurisdictions: China, Taiwan, Hong Kong, the Philippines, and Singapore.

If you’re a consultant in Hong Kong or a freelancer based in Manila, knowing what qualifies as a deductible expense can sharpen your financial strategy and strengthen your Business’s fiscal health.

Table Of Content

Why Deductions Matter for Independent Contractors & Businesses?

Business tax deductions, self-employed tax deductions, and standard business deductions enable contractors and small businesses to reduce taxable income, thereby optimising cash flow and enhancing profitability. Identifying legitimate deductions, from bank charges to professional fees, can make a substantial difference in one’s financial bottom line.

Across the APAC (Asia-Pacific) region, tax deduction rules vary but share a common emphasis on documentation and business relevance.

In China, Sole proprietors can deduct business-related expenses, such as telecommunications and materials, provided accurate invoices support them.

In Taiwan allows contractors to benefit from standard deductions or itemise costs, such as travel and equipment, if the thresholds are met.

In Hong Kong, only expenses that are “wholly, exclusively and necessarily” incurred for generating profits are deductible.

The Philippines requires detailed receipts and logs for costs, including bank charges and transport, while Singapore’s IRAS permits deductions for mobile, travel, and professional fees when properly documented.

Understanding Tax Deduction Basics

What Makes an Expense Deductible?

Criteria	Description
Wholly for Business	Must be directly tied to income-generating activities
Documented	Supported by receipts, invoices, contracts, or usage logs
Reasonably Apportioned	For mixed-use items, only the business-related portion is deductible
Permitted by Jurisdiction	Must fall within allowable expense categories under local tax laws
Consistent Application	Must be claimed consistently and not duplicated across categories

Across the APAC region, authorities place a strong emphasis on clarity, reasonableness, and supporting records. From pro-rata claims on shared utilities in Singapore to strict bookkeeping practices in China, accurately separating personal and business use is key to maintaining compliance and maximising allowable deductions.

What are the 12 Essential Tax Deductions for APAC Independent Contractors and Businesses?

1. Home Office and Utilities

Home-based contractors can claim a proportion of costs, such as rent, electricity, and broadband, if the workspace is dedicated to business purposes.

China: The Home office must be allocated; expenses like electricity and internet are deductible if supported by separate invoices.

Taiwan: Utilities and rent may be claimed based on office square meter usage.

Hong Kong: Deductions of home-related costs are allowed under personal assessment with designated workspace allocation.

Philippines: Home-office share of expenses is deductible with a formal schedule of use.

Singapore: The Inland Revenue Authority of Singapore (IRAS) provides home-office deductions when space is used for business more than 50% of the time.

2. Vehicles and Travel Expenses

Claim mileage, parking fees, public transportation, accommodation, and subsistence expenses for business travel, along with complete logs and receipts.

China: Travel allowances are documented via invoices and log entries.

Taiwan: Daily travel logs are required for public transport and mileage.

Hong Kong: Only wholly business travel qualifies; itineraries are needed.

Philippines: Mileage logs and receipts are mandatory for Bureau of Internal Revenue (BIR) compliance.

Singapore: Must document the purpose and amount for the Inland Revenue Authority of Singapore (IRAS) scrutiny.

3. Bank Charges and Financial Fees

Deduct business account fees, foreign exchange charges, loan interest and merchant handling fees when supported by documentation.

China: Bank charges on business accounts are allowable with proper invoices.

Taiwan: Transaction fees and interest must be proportionate to business banking.

Hong Kong: Deduction is solely required for business usage.

Philippines: The Bureau of Internal Revenue (BIR) accepts documentation for processing and remittance fees.

Singapore: IRAS permits businesses to claim interest in banking and foreign exchange transactions.

4. Equipment, Tools and Software

Assets such as laptops, smartphones, and industry-specific software can be deducted either through capital allowances or immediate expensing, subject to jurisdictional thresholds.

China: Equipment may be capitalised and depreciated over time by the State Administration of Taxation (SAT) asset guidelines.

Taiwan: Computers and gadgets can be fully deducted if below the fixed cost ceilings.

Hong Kong: Depreciation allowances are available for qualifying capital items.

Philippines: An annual investment allowance of up to ₱7.5M enables the immediate deduction of qualifying assets.

Singapore: The Section 19A allowance expedites full deduction of IT assets up to S$100,000.

5. Professional Fees and Subscriptions

Accountancy, legal fees, membership subscriptions, and software services are recognised common business deductions when incurred wholly for business purposes.

China: Professional fees for licences or consultancy services are deductible with valid tax invoices.

Taiwan: Payment for professional memberships, training or legal advice qualifies as a business expense.

Hong Kong: Annual fees for relevant professional bodies are tax-deductible.

Philippines: BIR allows deductions for paid subscriptions to professional associations.

Singapore: IRAS permits claims for licensed professional services, legal advice, and software used for business purposes.

6. Marketing and Advertising

Promotional materials, website development, adverts, and branding are deductible when directly supporting revenue growth.

China: Licensed marketing expenses count if invoices are provided.

Taiwan: Website and promotional costs are allowed if business-related.

Hong Kong: Advertising and marketing expenses are fully claimable.

Philippines: Deductible with receipts for ads and campaigns.

Singapore: The Productivity and Innovation Credit (PIC) scheme allows enhanced deductions for websites and software.

7. Training and Development

Deduct fees for courses, seminars, certifications, or workshops enhancing business performance.

China: “Special deductions” require SAT registration and documentation.

Taiwan: Directly related development programs are deductible.

Hong Kong: Business-relevant training costs allowed.

Philippines: The Green Jobs Act enhances deductibility for approved technical training.

Singapore: IRAS recognises professional development expenses with receipts.

8. Insurance Premiums and Risk Management

Insurance costs for professional indemnity, liability, health, or equipment protection are deductible business expenses.

China: Valid invoices are required to claim business insurance.

Taiwan: Premiums for occupational coverage are allowable.

Hong Kong: Liability and indemnity premiums qualify.

Philippines: BIR permits claims for business insurance policies.

Singapore: Life and critical illness insurance relief available.

9. Pensions and Retirement Contributions

Contributions to recognised schemes (e.g., CPF, MPF) serve as deductible items, effectively reducing taxable income.

China: Self-employed social insurance contributions are deductible.

Taiwan: Labour insurance and pension contributions qualify.

Hong Kong: Mandatory Provident Fund (MPF) contributions are deductible under tax rules.

Philippines: Voluntary retirement schemes are eligible for tax incentives.

Singapore: Central Provident Fund (CPF) contributions lower assessable profits for incorporated business owners.

10. R&D and Innovation Incentives

Qualifying R&D activities may be eligible for enhanced deductions or credits, thereby reducing tax liability.

China: R&D claims range from 50–100% extra deduction.

Taiwan: Incentives exist for software and innovation investments.

Hong Kong: Under the Inland Revenue Department (IRD)’s enhanced tax deduction regime, the first HKD 2 million of qualifying Research and Development (R&D) expenditure is eligible for a 300% tax deduction.

Philippines: Deduction incentives apply for certified research.

Singapore: R&D activities are eligible for a deduction of up to 400% under the Enterprise Innovation Scheme (EIS).

11. Sustainability and Green Initiatives

Investments in sustainable and green initiatives yield additional deductions beyond normal business expenses.

China: Emerging green technology rebates apply to qualifying firms.

Taiwan: Environmental improvements may gain extra incentives.

Hong Kong: Energy-efficient measures are eligible for tax allowances.

Philippines: Greener projects qualify for additional deductions under the Green Jobs Act.

Singapore: Tax deductions are available for approved energy-saving equipment and sustainability efforts.

12. Compliance, Documentation and Record-Keeping

Deductibility requires robust documentation, including official invoices (e.g., Chinese fapiaos, Taiwanese tax stamps), logs, receipts, and storage for a period of 5–7 years.

China: Fapiaos issued by service providers form the basis for deductions.

Taiwan: Proper stamps and records are mandatory for audit defence.

Hong Kong: The IRD mandates a 7-year retention period for personal assessment records.

Philippines: BIR requires logs and receipts for verification.

Singapore: The IRAS enforces a 5-year record-retention policy, which includes travel and utility proofs.

Conclusion

In today’s dynamic regulatory environment, understanding and optimising your business tax deductions is essential in building a financially resilient and compliant enterprise. From reclaiming home-office utilities and bank charges to strategically managing self-employed tax deductions and regional allowances, each jurisdiction across APAC presents unique challenges and opportunities.

At Galaxy Group ,we specialise in helping independent contractors and businesses navigate this complexity with precision. Our tailored, jurisdiction-specific support ensures that your deductions are not only maximised but also compliant with local tax laws in China, Taiwan, Hong Kong, the Philippines, and Singapore. With our expertise, you can confidently reduce your tax burden while freeing up capital to reinvest in what matters most: growth, innovation, and your future.

Get Clarity on Business Tax Deductions

From bank charges to software tools, we help independent contractors and SMEs stay compliant while reducing taxable income.

FAQ’S

What are business tax deductions, and why are they important?

Business tax deductions refer to legitimate business expenses that can be subtracted from your gross income to reduce your taxable income. They are essential for improving cash flow, minimising tax liability, and ensuring compliance with local laws.

What are some common business deductions for independent contractors in the APAC region?

Standard business deductions include home office utilities, travel expenses, professional fees, marketing costs, bank charges, and equipment purchases. The exact scope varies by jurisdiction, so it’s crucial to review local tax guidelines or consult a regional expert, such as Galaxy Group.

Are bank charges deductible as business expenses?

Yes, bank charges related to business accounts, such as transaction fees, loan interest, and foreign exchange charges, are generally deductible across APAC countries, provided they are substantiated with official bank statements and used solely for business purposes.

How can I minimise my tax liability as an independent contractor?

Understanding how to reduce taxes as an independent contractor involves maintaining accurate records, claiming all eligible deductions (e.g., equipment, insurance, utilities), and apportioning shared expenses correctly. Seeking localised tax advice ensures you’re maximising every opportunity legally and efficiently.

What qualifies as self-employed tax deductions?

Self-employed tax deductions typically include business-related costs such as professional development, marketing, insurance, pension contributions, and workspace expenses. These deductions help lower your taxable income and vary by country, depending on tax authority definitions.

A View of The Key Challenges in Attracting Top Talent in Singapore

July 19, 2025 by galaxy

July 19, 2025

A View of The Key Challenges in Attracting Top Talent in Singapore

Singapore has held a distinguished position as a strategic gateway to Asia and a global business hub. With its pro-business environment, highly developed infrastructure, and emphasis on innovation, it continues to attract international enterprises across sectors. However, this forward momentum brings with it a set of talent-related challenges.

From the pressures of digital transformation and evolving job expectations to rising operational costs and shifting global workforce dynamics, businesses now face significant obstacles in attracting and retaining top talent.

In this blog, we explore these pressing issues and share strategic recommendations, drawing on our expertise as a leading provider of EOR, payroll, compliance, and workforce support services across the Asia-Pacific region.

Explore how Galaxy EOR solutions in Singapore can simplify your hiring process.

Table Of Content

What are the Key Workforce Challenges Employers Face in 2025?

In today’s fast-changing world, employers are under growing pressure to keep up with a rapidly evolving workforce landscape. Organisations must now contend with widening skills gaps, heightened global competition for talent, inflationary pressures, and an evolving employee mindset. To navigate this terrain successfully, organisations need to be intentional about how they approach pay, flexibility, inclusivity, and how their brand is perceived by current and future employees.

Let’s explore what these changes really mean for employers and how they can rise to meet them.

1. Widening Skills Gap and Digital Transformation

Singapore’s Smart Nation vision has driven substantial investment in emerging technologies like AI, cybersecurity, blockchain, and green innovation. However, the demand for specialised talent continues to outpace supply. Companies often face prolonged hiring cycles due to a limited local talent pool and increasingly rely on foreign hires, adding layers of complexity around visas, payroll, and compliance.

2. Global Competition & Talent Shortage

As work becomes increasingly global, Singaporean employers are competing not just locally but with international firms and remote-first start-ups. This is driving higher turnover in sectors like tech, healthcare, and finance, as talent seeks better pay or flexibility. SMEs, in particular, struggle to retain staff amid stiff competition and limited employer branding.

83% of firms report talent scarcity, with transport (91%) and ICT sectors (88%) hit hardest.
Salary demands are cited as a challenge by 38% of employers, while 36% report fierce competition among candidates.
Flexibility and purpose are becoming more important to mid-career professionals than salary alone.

3. Cost of Living vs Compensation

Singapore’s status as one of the world’s most expensive cities continues to exert pressure on talent attraction and retention, particularly among early-career professionals and international hires. Rising costs in housing, transport, and daily living are prompting candidates to demand higher compensation to sustain a decent quality of life. This places a significant strain on employers, especially SMEs and start-ups, who often operate within tight payroll budgets.

According to recent data, Singapore’s median income rose from SGD 5,197 in 2023 to SGD 5,500 in 2024. Job movers, especially in high-demand fields like AI and data, are securing salary jumps of 12–20%, while those staying in their roles typically see more modest increases of 2–5%, in line with inflation.

As a result, some professionals are opting for remote roles based in lower-cost countries while still seeking the benefits of global career exposure.

Salary Increase in 2024

Job Movers (AI/ Data Roles)

Existing Employees (Same Role)

Unchanged/Below Inflation Adjustments

4. Employer Branding and Diversity Imperative

Today’s Gen Z and millennial workforce is increasingly values-driven, prioritising inclusivity, ethics, and purpose when choosing employers. Yet many organisations still struggle to align their employer brand with these expectations. Cultural misalignment, unclear company values, and unconscious bias in hiring continue to hinder progress.

72% of organisations recognise DEI (Diversity, Equity, and Inclusion) as a growing priority.
Yet only 40% have formal DEI policies in place.
62% of Gen Z candidates would decline offers from companies that don’t clearly commit to DEI.

5. Flexibility and the New Work Paradigm

The COVID-19 pandemic catalysed a major shift toward remote and hybrid work. For many employees, flexibility is now a fundamental expectation rather than a perk. Remote and hybrid models have become standard expectations for recruitment.

65% of companies offer hybrid arrangements
31% of firms will increase contract/freelance hires in 2025, doubling from 2024
54% of employers rate AI literacy as vital, yet only 15% use AI tools in recruitment

Challenges vs Strategic Solutions faced by Employers in Singapore

As workforce dynamics continue to evolve, businesses must go beyond short-term fixes and adopt forward-thinking strategies that attract, engage, and retain top talent. Employers must take a comprehensive approach to remain competitive, given the rise in demands for flexibility and inclusion, skills-based hiring, and global compliance.

The following ten solutions offer a strategic roadmap for building a future-ready workforce in today’s increasingly borderless, values-driven, and tech-enabled world:

Challenge	Strategic Solutions
1. Employer Value Proposition (EVP) unclear	Build a strong EVP and clearly communicate your mission, values, career growth, and well-being promises. For example, highlight innovation-led initiatives, ESG efforts, and work-life harmonisation in employer branding.
2. Cost-of-living pressures	Offer holistic compensation. Beyond salaries, include housing and transport allowances, wellness support, and flexible-work stipends, especially given Singapore’s high living costs.
3. Complex cross-border hiring	Accelerate Onboarding with EOR & Visa Support. Use Employer of Record (EOR) services for fast, compliant hiring. Leverage Singapore’s ONE Pass for high-calibre global talent (S$30k/month or outstanding credentials), Tech.Pass for senior tech leaders (S$20k/month), and the Employment Pass for professionals earning at least S$5,000/month with relevant qualifications.
4. Remote work policy lag	Implement hybrid workforce models and establish clear hybrid frameworks that ensure consistent engagement, productivity, and well-being across locations.
5. Skills shortage	Shift to Skills-Based Hiring. Prioritise capabilities and experience over degrees. A Deloitte survey found 89% of executives believe skills-based hiring enhances diversity and performance.
6. Talent stagnation	Upskill & Reskill Internally. Deliver targeted training and mentorship. With 50% of employees needing reskilling by 2025 (WEF), this is vital for agility and retention.
7. Compliance risks	Ensure Remote Compliance. Use regional experts to manage payroll, tax, and statutory requirements, and keep pace with evolving labour laws, particularly for remote hires.
8. Weak employer brand	Run employer branding campaigns. Encourage employee storytelling, showcase diversity efforts, and highlight ESG or social-impact work. Strong branding lowers cost-per-hire by ~43%.
9. Unconscious bias	Adopt Bias-Aware Hiring. Use structured interviews, blind CVs, and interviewer training. Diverse teams outperform peers by 35%.
10. Diversity, Equity, and Inclusion (DEI) under-action	Align with DEI standards. Introduce formal policies and partner with HR/DEI consultants. Over 60% of Gen Z candidates decline offers lacking clear DEI commitments, making this a retention and attraction imperative.

Conclusion

The competition for talent in Singapore is no longer just about offering the highest salary. It requires a multi-dimensional approach that aligns with the evolving values and expectations of the workforce.

To succeed, organisations must:

Adopt skills-first and flexible hiring practices
Clearly communicate employer brand and purpose
Provide future-focused, holistic compensation
Enable borderless and inclusive workforce strategies

With over a decade of experience, Galaxy Group is uniquely positioned to help businesses address these challenges through its comprehensive solutions, including payroll outsourcing, EOR services, compliance advisory, and workforce strategy consulting, empowering organisations to scale confidently and compliantly across Asia.

Facing workforce challenges in Singapore or across Asia?

Galaxy Group’s proven strategies and tailored support ensure compliant, efficient workforce solutions for your business.

FAQ’S

How can companies legally hire remote workers across Asia?

Engaging an Employer of Record (EOR) expert like Galaxy Group allows companies to hire in different countries without setting up a legal entity, ensuring full compliance.

What is the importance of building a strong Employer Value Proposition (EVP)?

A well-defined EVP helps communicate your company’s purpose, culture, and benefits—crucial for attracting values-driven talent. With 69% of job seekers evaluating a company’s brand before applying, a clear EVP directly influences recruitment success and retention.

How does Galaxy Group support businesses in overcoming these challenges?

Galaxy Group provides end-to-end workforce support solutions across Asia-Pacific, including:

Payroll outsourcing and payroll tax management
Employer of Record (EOR) for compliant employment and onboarding
Cross-border compliance advisory
Talent and HR strategy consulting

These services help companies hire faster, stay compliant, and scale confidently.

What is an Employer of Record (EOR), and how does it work?

An EOR is a third-party provider that legally employs your talent on your behalf. It handles payroll calculation, payroll taxes, benefits, and compliance, enabling you to hire in new markets without setting up a local entity. This is ideal for companies expanding in APAC or hiring remote talent across borders.

Are Singaporean professionals open to flexible work arrangements?

Yes. Surveys have shown that hybrid work is now expected by a majority of the workforce, especially in knowledge-based industries.

Can smaller companies compete with MNCs in hiring talent?

Absolutely, SMEs can compete by emphasizing purpose-driven roles, career development opportunities, and flexible work setups. With the right support from EOR partners like Galaxy Group, smaller firms can hire employees in Singapore and access top-tier global talent.

How can I hire top international talent quickly and compliantly in Singapore?

You can use an Employer of Record (EOR) to streamline cross-border hiring without setting up a local entity. For top-tier professionals, Singapore offers specialized work passes:

ONE Pass: For high-earning or exceptional global talent (≥ S$30,000/month or equivalent achievements).
Tech.Pass: For senior tech leaders, founders, or professionals with strong credentials (≥ S$20,000/month or proven expertise).
Employment Pass: For foreign professionals earning at least S$5,000/month with acceptable qualifications and relevant experience.

Expert Guide

Expert Guide

Expert Guide

Expert Guide

Expert Guide

Expert Guide

Expert Guide

Expert Guide

Expert Guide

Blog

From an EOR Service to a Single Global Payroll Provider?

Table Of Content

What’s the Difference Between an EOR and a Global Payroll Provider?

When is an EOR the Right Choice for Global Hiring?

1. Entering a new international market

2. Avoiding the Cost and Complexity of Entity Setup

3. Supporting Small Teams in Multiple Countries

4. Hiring for Short-Term or Project-Based Roles

5. Navigating Periods of Organisational Change

6. Reducing Risk in Employment Compliance

What can a Global Payroll Provider Offer?

Understanding Local Rules

A Single, Centralised System

Hassle-Free Payments in Local Currencies

Room to Grow

Keeping Data Safe

Managing More Than Just Payroll

How to Know When It’s Time to Move Beyond an EOR?

1. Team Building:

2. Long-Term Strategy:

3. Operational Integration:

4. Cost Savings:

5. Regulatory Compliance:

Benefits of Using a Global Payroll System Across Countries

Brings Consistency to Payroll Operations

Offers Better Visibility and Control

Simplifies Compliance with Local Laws

Streamlines Daily Operations

Scales with Business Growth

6-Point Checklist Before Switching from an EOR to Global Payroll

conclusion

Ready to streamline your global payroll?

FAQ’S

Guide to Payroll in Vietnam

Table Of Content

How Payroll Works in Vietnam?

1. Start with the Gross Salary

2. Apply Employee Deductions

3. Add Employer Contributions

4. Issue Payslips

5. Submit Reports

6. Stay Updated on Regulations

What Is the Minimum Wage and Average Salary in Vietnam?

Minimum Wage in Vietnam

1. Common Minimum Wage

2. Regional Minimum Wage

3. Hourly Minimum Wages (by region, July 2024):

Average Salary in Vietnam

By Region

By Sector

Key Takeaways for Employers

Working Hours, Overtime Pay, and Employer Compliance in Vietnam

Standard Working Hours

Overtime Pay Regulations

Employer Compliance: Key Requirements in Vietnam

1. Clearly define employment terms

2. Maintain accurate timekeeping records

3. Obtain written consent for overtime

4. Mandatory rest periods

5. Breaks during long shifts

6. Health & safety precautions

Penalties for Non-Compliance

Strategic Insight for Employers

What Are the Employee Deductions and Employer Contributions in Vietnam?

Employee Salary Deductions:

Employer Contributions:

Important Note on Salary Basis

Key Insight

How Are Payroll Reports, Tax Filings, and Final Settlements Handled in Vietnam?

1. Monthly Payroll Reports