i. Labour Contract
Under Article 20 of Labour Code 2019 which shall be effective as of 01 January 2021, an employment contract shall be concluded in one of the following types:
– An indefinite-term employment contract is a contract in which the two parties neither fix the term nor the time of termination of the contract;
– A fixed-term employment contract is a contract in which the two parties fix the term of the contract for a duration of up to 36 months from the date of its conclusion.
Therefore, foreign-invested companies should consider signing a suitable contract in accordance with the laws.
ii. Work Permit
Enterprises, organizations, individuals and contractors shall only employ foreigners to hold positions of managers, executive directors, specialists and technical workers the professional requirements for which cannot be met by Vietnamese workers.
Recruitment of foreign employees in Vietnam shall be explained and subject to written approval by competent authorities.
Foreign employees working in Vietnam must have a work permit granted by a competent authority of Vietnam, except in the cases stipulated in Article 154 of the Labor Code 2019. The maximum duration of a work permit is 02 years. A work permit may be extended once for up to 02 more years.
iii. Temporary Residence Card
An employee having a 2-year work permit in Vietnam can apply for a 2-year Temporary Residence Card (TRC). Within the term of the TRC, the cardholder can enter and exit the country multiple times for work, saving time and money. In addition, he/she can sponsor his or relatives to come to Vietnam.
After being granted a work permit and a TRC, a foreigner can open all types of bank accounts, credit cards, savings books and enjoy all the services provided by the banks just like Vietnamese nationals.
iv. Social Insurance and Compulsory Health Insurance
From December 1, 2018 to December 31, 2021, foreign employees do not have to pay compulsory social insurance. In this period, employers are responsible for paying compulsory social insurance premiums on their monthly salary fund of social insurance payment: 3% into the sickness and maternity fund; 0.5% into the fund for labor accidents and occupational diseases.
From 1 January 2022, foreign employees must pay 8% of the monthly salary into the retirement and survivorship fund monthly. For employers, such percentage will be, namely, 3% into the sickness and maternity fund; 0.5% into the fund for labor accidents and occupational diseases; 14% into pension and survivors.
v. Personal Income Tax
Foreign employees working in Vietnam are subject to pay personal income tax (PIT) on their salary. The duration of a foreign employee stay in Vietnam determines his tax status, which means he is considered as a tax resident or tax non-resident in Vietnam.
For tax residents, the tax rate shall be applicable in accordance with the Progressive Tax Table stipulated in Article 22 of the Law on Personal Income Tax and Article 7.2 of the Circular No. 111/2013/TT-BTC, in particular:
|Tax rate (%)|
|1||Up to 60||Up to 5||5|
|2||Over 60 to 120||Over 5 to 10||10|
|3||Over 120 to 216||Over 10 to 18||15|
|4||Over 216 to 384||Over 18 to 32||20|
|5||Over 384 to 624||Over 32 to 52||25|
|6||Over 624 to 960||Over 52 to 80||30|
|7||Over 960||Over 80||35|
For tax non-residents, the rate of personal income tax on incomes from wages earned by a non-resident equals the taxable income from wages multiplied by (x) 20%.