Foreign employee payroll compliance vietnam 2026
In the context of Vietnam’s increasingly integrated and developing economy, the employment of foreign workers and experts by businesses has become common. However, in fulfilling their tax and insurance obligations, many businesses still face difficulties regarding whether the salary and mandatory social insurance contributions of foreign workers can be included as deductible expenses when determining corporate income tax, as well as the legal conditions that need to be met. This article foreign employee payroll compliance vietnam 2026 from S4B Vietnam aims to clarify these issues.
1. Payroll outsourcing vietnam compliance 2026 regulation update
The government issued Decree 320/2026/ND-CP on corporate income tax, and the Tax Department provided specific guidance stating that businesses paying salaries exceeding 5 million VND must transfer the money via bank transfer to be eligible for tax deduction. Clause 1, Article 9 of Government Decree 320/2026/ND-CP dated December 15, 2026 (applicable from the 2026 corporate income tax period) detailing some provisions and measures for organizing and guiding the implementation of the Corporate Income Tax Law stipulates:
“Article 9. Deductible expenses when determining taxable income
1. Except for non-deductible expenses as stipulated in Article 10 of this Decree, enterprises are allowed to deduct expenses when determining taxable income if they meet the conditions in points a, b, and c below:…
c) Expenses with non-cash payment documents for the purchase of goods, services, and other payments with a value of VND 5 million or more per transaction. Non-cash payment documents shall comply with the provisions of the laws on value-added tax.”
Based on the above regulations of payroll & tax withholding updates vietnam 2026, if a business pays its employees salaries of 5 million VND or more in installments without non-cash payment documentation as required, these payments cannot be deducted as expenses when determining taxable corporate income.
Therefore, under salary payment rules under new labor regulations vietnam, businesses paying salaries exceeding 5 million VND must make bank transfers to be eligible for tax deductions.
Payroll & tax withholding updates vietnam 2026
2. Social insurance contribution changes 2026 vietnam employers
Failure to comply with social insurance regulations can expose your FDI company to the risk of years of back taxes and administrative fines of up to VND 150,000,000. This is not only a financial cost but also a significant blow to the company’s reputation during inspections and audits. With the Social Insurance Law 2024 coming into effect on July 1, 2026, regulations regarding eligible individuals, contribution rates, and wages used as the basis for social insurance contributions have been tightened and made more transparent than ever before.
- FDI businesses must comply with regulations on corporate social insurance contributions, with a contribution rate of 30% of the payroll for employees with contracts of 12 months or more.
- From July 1, 2026, the 2024 Social Insurance Law and Decree 158/2026/ND-CP will tighten regulations on the subjects, contribution rates, and calculation of wages used as the basis for social insurance contributions.
- Violations can lead to retroactive collection for many years and administrative fines of up to VND 150 million for organizations, seriously affecting the reputation of the business.
- Compliance with the regulations on corporate social insurance contributions not only avoids legal risks but also creates a foundation for sustainable development and enhances competitiveness.
- Businesses need to proactively review labor contracts, build transparent payrolls, and establish a process for regular updates.
Regulations on corporate social insurance contributions are becoming increasingly stringent, especially with the 2024 Social Insurance Law and Decree 158/2026/ND-CP. The regulations will take effect from July 1, 2026. For CEOs and leaders of FDI enterprises, mastering these regulations is no longer an option, but an urgent requirement to ensure stable operations, avoid unnecessary legal risks, and build a foundation for sustainable development in Vietnam.
3. Mandatory payroll reporting for foreign-owned companies vietnam
Reporting on the employment situation is a periodic obligation for employers in Vietnam, submitted twice a year (before June 5th and before December 5th) to provide information on labor changes (new hires, resignations, contract changes) to state agencies. This reporting is usually done online through the National Public Service Portal or directly at the Department of Internal Affairs and Social Insurance. This report helps manage labor, social insurance, and implement labor laws.
Social insurance contribution changes 2026 vietnam employers
>>>Read more: How to set up payroll in Vietnam
3.1. Entities required to submit the report:
All employers employing workers in Vietnam.
3.2. Submission deadlines:
- Six-monthly: Before June 5th.
- Annual: Before December 5th.
3.3. Main content to be reported:
- Labor changes (new hires, resignations, contract changes).
- Number of employees working.
- Information on employees participating in social insurance, health insurance, and unemployment insurance.
4. Submission methods:
- Online: Via the National Public Service Portal (dichvucong.gov.vn) using the company account and digital signature.
- In person: Submit the application (report form) to the Department of Internal Affairs and the Social Insurance agency where the company is located, or the Industrial Park/Economic Zone Management Board if applicable.
Complying fully and accurately with payroll and social insurance obligations will help foreign businesses comply with Vietnamese law, avoid administrative penalties and years of retroactive contributions. At the same time, this helps optimize personnel costs in a reasonable and transparent manner, improve financial management capabilities, and build a reputable and professional image in the eyes of partners and employees.
Understanding employee benefits, including payroll and mandatory social insurance, will help businesses develop effective human resource strategies. Solutions for all your HR problems!
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S4B Vietnam
- Address: Unit 701B – 701C, Tower A, Handi Resco Towers, 521 Kim Ma Street, Giang Vo Ward, Hanoi, Vietnam
- Tel: +84 24 3974 4181
- Email: service@s4b.com.vn
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