Employing in Vietnam

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Expanding into
Vietnam

Expanding to countries such as Vietnam – which is characterised by a highly-skilled and educated workforce, transparent employment and tax laws, a robust infrastructure network linking to the rest of Asia, and leading sectors in agriculture, information technology, manufacturing, tourism, construction, and logistics – can bring both excitement to the possibilities, but also significant stress to ensuring the entity with the country’s rigorous legal structures and laws.

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Global Expansion is a step to make for any business, regardless of your goal. But the opportunities that can come with an expansion can be stimulating as well as intimidating and confusing, especially when you consider all of the registration procedures that need to be done and the documentation required.

Going at it without the proper support can increase the costs, time and risks involved.

The legwork and potential red tape can be worked through more efficiently and cost-effectively with the support of a Professional Employer Organisation (PEO) such as Bradford Jacobs, primarily through our Employer of Record (EOR) framework.

It can be best utilised when businesses are just beginning their expansion process and require more information before incorporating an entity and fully establishing themselves in that market.

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Country EOR Guide - Bradford Jacobs

Download our Guide to Vietnam

Learn all about expanding into Vietnam and see what we can do to make your expansion easier.

DOWNLOAD GUIDE

Download our Guide to Vietnam

Learn all about expanding into Vietnam and see what we can do to make your expansion easier.

Country EOR Guide - Bradford Jacobs
DOWNLOAD GUIDE

Hiring Staff
in Vietnam

The economy of Vietnam is a mixed socialist-oriented market economy, which is the 37th-largest in the world as measured by nominal gross domestic product (GDP) and 23rd-largest in the world as measured by purchasing power parity (PPP) in 2020. Vietnam is a member of the Asia-Pacific Economic Cooperation, the Association of Southeast Asian Nations (ASEAN), and the World Trade Organization.

A developing country with a lower-middle-income economy, Vietnam is nevertheless one of the fastest growing economies of the 21st century, and its total GDP is predicted to rival those of several developed nations by 2050.

Almost all Vietnamese enterprises are small and medium enterprises (SMEs). Vietnam has become a leading agricultural exporter and served as an attractive destination for foreign investment in Southeast Asia. Vietnam’s economy also relies largely on foreign direct investment to attract the capital from overseas to support its continual economic rigor.

It is part of international and intergovernmental institutions including the United Nations, the CPTPP, the Non-Aligned Movement, and the OIF. It has assumed a seat on the United Nations Security Council twice. Contemporary issues in Vietnam include corruption and a poor human rights record.

In Vietnam, SMEs are defined as enterprises with capital investment of less than 100 million VND and total employees of less than 300. SMEs are often planned within industrial clusters.

SMEs continue to play a major role in Vietnam, accounting for 98 percent of all enterprises, 40 percent of GDP, and 50 percent of employment or 1.2 million jobs. As per the Ministry of Finance, Vietnam has more than 600,000 firms, with nearly 500,000 private and 96 percent being small and micro-enterprises.

SMEs also play a relevant role in exports, accounting for 88% of exporting enterprises and for about half of export volume. However, 70% of Viet Nam’s SME export volume comes from foreign-owned SMEs which have relocated to Viet Nam to be closer to multinational enterprises (MNEs) acting as their lead buyers.

Country:
Vietnam (the Socialist Republic of Vietnam)
Local Currency:
Vietnamese dong (VND)
Time Zone:
Indochina Time (GMT+7)
Country Dial Code:
+84
Tax Year:
1 January – 31 December (calendar year)
VAT:
10%
National Minimum Wage (2023):
N/A – but have regional minimum wages
Taxpayer Identification Number (TIN):
Vietnam Tax Code (Mã Sṍ Thuḗ) – Personal & Business
Social Insurance Code
VAT Number
Main trading partners (2021):
United States, China, Japan, South Korea, Hong Kong, Chinese Taipei, and Thailand

Hiring Staff
in Vietnam

The economy of Vietnam is a mixed socialist-oriented market economy, which is the 37th-largest in the world as measured by nominal gross domestic product (GDP) and 23rd-largest in the world as measured by purchasing power parity (PPP) in 2020. Vietnam is a member of the Asia-Pacific Economic Cooperation, the Association of Southeast Asian Nations (ASEAN), and the World Trade Organization.

A developing country with a lower-middle-income economy, Vietnam is nevertheless one of the fastest growing economies of the 21st century, and its total GDP is predicted to rival those of several developed nations by 2050.

Almost all Vietnamese enterprises are small and medium enterprises (SMEs). Vietnam has become a leading agricultural exporter and served as an attractive destination for foreign investment in Southeast Asia. Vietnam’s economy also relies largely on foreign direct investment to attract the capital from overseas to support its continual economic rigor.

It is part of international and intergovernmental institutions including the United Nations, the CPTPP, the Non-Aligned Movement, and the OIF. It has assumed a seat on the United Nations Security Council twice. Contemporary issues in Vietnam include corruption and a poor human rights record.

In Vietnam, SMEs are defined as enterprises with capital investment of less than 100 million VND and total employees of less than 300. SMEs are often planned within industrial clusters.

SMEs continue to play a major role in Vietnam, accounting for 98 percent of all enterprises, 40 percent of GDP, and 50 percent of employment or 1.2 million jobs. As per the Ministry of Finance, Vietnam has more than 600,000 firms, with nearly 500,000 private and 96 percent being small and micro-enterprises.

SMEs also play a relevant role in exports, accounting for 88% of exporting enterprises and for about half of export volume. However, 70% of Viet Nam’s SME export volume comes from foreign-owned SMEs which have relocated to Viet Nam to be closer to multinational enterprises (MNEs) acting as their lead buyers.

Country:
Vietnam (the Socialist Republic of Vietnam)
Local Currency:
Vietnamese dong (VND)
Time Zone:
Indochina Time (GMT+7)
Country Dial Code:
+84
Tax Year:
1 January – 31 December (calendar year)
VAT:
10%
National Minimum Wage (2023):
N/A – but have regional minimum wages
Taxpayer Identification Number (TIN):
Vietnam Tax Code (Mã Sṍ Thuḗ) – Personal & Business
Social Insurance Code
VAT Number
Main trading partners (2021):

United States, China, Japan, South Korea, Hong Kong, Chinese Taipei, and Thailand

Taxpayer Identification Number (TIN):
The TIN is called BSN and is formed of a 9-digit code (Burgerservicenummer).

The Main Sectors of the Vietnamese Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Electronics

Vietnam has invested in the manufacture of electronics which has seen that sector contribute 24% of the country’s GDP. Although the electronics industry is dominated by foreign giants like Samsung and Panasonic, the nation still reaps a lot of benefits since these multinational corporations have set up industries in Vietnam that employ the local people.

Vietnam is a food processing hub that tries to meet the high demand for processed food from both local and international markets. The food industry is dominated by agricultural and sea products that are canned and shipped overseas, the sector accounts for 40% of Vietnam’s export and directly contributes 15% of the GDP.

Any growing economy is always besieged by the need to construct infrastructure that meets the demands of both the people and trade, an increase in foreign investment has led to construction boom that has led to the building of high-rise apartments and office space especially in the urban centers like Ho Chi Minh City.

The construction industry has directly contributed 39% of the GDP, and this is mainly due to the massive support from the government that has formulated laws that are favorable to the sector.

Mining

Mining is a significant contributor to the economy with statistics showing that it directly adds 8.1% to the GDP. Vietnam is home to more than 5000 deposits of minerals that include rare metals that are in high demand around the world. The country has 7% of the world’s bauxite reserves as well as tungsten, titanium, phosphate, coal, and iron ore.

The service industry in Vietnam accounts for 38.2% of the country’s GDP. In the period between 1994 and 2004, the contribution to the GDP by the service sector averaged about 6%. Tourism plays a significant role in the economy of Vietnam and in 2012 the country received approximately 6.8 million visitors from different countries around the world. The number grew to more than 7 million in 2013.

Vietnam has emerged as an attractive destination for tourists from different parts of the world, and according to the trip advisor, the top 25 destinations in Asia included major cities in Vietnam such as Halong, Hoian, and Ho Chi Minh City.

In 2016, Vietnam attained a record of 10 million visitors from around the world, which represents a 26% increase from the previous year.

Vietnam is a major exporter in the key sectors of telecommunications equipment, computer parts, footwear, and garments. Manufacturing makes up around 85% of Vietnam’s merchandise exports. Industry contributed 33.7% of GDP and employed 27% of the total workforce in 2021 (World Bank).

The Main Sectors of the Vietnamese Economy

The country focuses on the following key sectors, which all have a significant impact on the country’s economy:

Electronics

Vietnam has invested in the manufacture of electronics which has seen that sector contribute 24% of the country’s GDP. Although the electronics industry is dominated by foreign giants like Samsung and Panasonic, the nation still reaps a lot of benefits since these multinational corporations have set up industries in Vietnam that employ the local people.

Vietnam is a food processing hub that tries to meet the high demand for processed food from both local and international markets. The food industry is dominated by agricultural and sea products that are canned and shipped overseas, the sector accounts for 40% of Vietnam’s export and directly contributes 15% of the GDP.

Any growing economy is always besieged by the need to construct infrastructure that meets the demands of both the people and trade, an increase in foreign investment has led to construction boom that has led to the building of high-rise apartments and office space especially in the urban centers like Ho Chi Minh City.

The construction industry has directly contributed 39% of the GDP, and this is mainly due to the massive support from the government that has formulated laws that are favorable to the sector.

Mining

Mining is a significant contributor to the economy with statistics showing that it directly adds 8.1% to the GDP. Vietnam is home to more than 5000 deposits of minerals that include rare metals that are in high demand around the world. The country has 7% of the world’s bauxite reserves as well as tungsten, titanium, phosphate, coal, and iron ore.

he service industry in Vietnam accounts for 38.2% of the country’s GDP. In the period between 1994 and 2004, the contribution to the GDP by the service sector averaged about 6%. Tourism plays a significant role in the economy of Vietnam and in 2012 the country received approximately 6.8 million visitors from different countries around the world. The number grew to more than 7 million in 2013.

Vietnam has emerged as an attractive destination for tourists from different parts of the world, and according to the trip advisor, the top 25 destinations in Asia included major cities in Vietnam such as Halong, Hoian, and Ho Chi Minh City.

In 2016, Vietnam attained a record of 10 million visitors from around the world, which represents a 26% increase from the previous year.

Vietnam is a major exporter in the key sectors of telecommunications equipment, computer parts, footwear, and garments. Manufacturing makes up around 85% of Vietnam’s merchandise exports. Industry contributed 33.7% of GDP and employed 27% of the total workforce in 2021 (World Bank).

Commercial Laws in Vietnam

Labour Law in Vietnam

The employer-employee relationship in Vietnam is governed by the Civil Code and Labor Code, which was amended in 2021 to bring in new worker guarantees. Additionally, proposals from the Ministry of Public Security will impose stricter obligations on employers regarding privacy and data protection.

Amendments to the Labor Code stipulated that a contract can either be open-ended (indefinite) or fixed term, with no other options allowed, apart from probationary contracts.

  • General Department of Taxation – The General Department of Taxation forms part of the Ministry of Finance and is entitled to the regime of package funding prescribed by the Prime Minister. The organisational structure of the tax branch is reorganized according to the following principles:
    • determining fully tax administration tasks
    • appreciate responsibilities and obligations of taxpayers in self-calculation and self-declaration toward self-tax payment and take responsibility before law
    • strengthen tax authorities
    • strengthening the function of state management on taxes to well enforce the law
    • adding more powers to tax authorities
    •  strengthening information campaigns to support taxpayers
    • strengthen inspection and examination
    • streamline the apparatus in the direction of administrative reform and modernise tax administration
  • The MOLISA (Ministry of Labour, Invalids and Social Affairs) Inspectorate – the central authority of the labor inspection system in the country. It has six functional divisions: Labour Policy Inspections, OSH Inspections, Child and Social Affairs Policy Inspection, Inspections of “Policy for Meritorious People”, General Services and Administrative Inspections, Citizen Reception and Complaint and Denunciation Handling.

When hiring new staff and drawing up their contracts, specific requirements from the Labor Code apply and must be considered. These include:

  • Contractual terms and conditions come under the Labor Code, supplemented by government decrees, articles and statutes.
  • Employer and employee should each have a signed copy of the contract.
  • The terms should be in Vietnamese for legal verification and to guard against inconsistencies in translation. The employee can request a copy in a language they understand.
  • By law, contracts must cover basic information. This includes the full names and addresses of both parties, specifying the position of the individual signing on behalf of the employer; job location and details of role; salary and payment schedule covering any extra reimbursements; working hours, breaks and vacation allowance; details of provisions for employee’s social, health and unemployment insurance.
  • The new Labor Code accepts the validity of e-contracts related by data messaging.
  • Employees’ roles must be declared to the labor authority within 30 days along with any subsequent changes to their role, within six months of coming into effect.
  • Local employees must be paid in Vietnamese Dong; foreigners, whether resident or non-resident, can be paid in another currency.

Commercial Laws in Vietnam

Labour Law in Vietnam

The employer-employee relationship in Vietnam is governed by the Civil Code and Labor Code, which was amended in 2021 to bring in new worker guarantees. Additionally, proposals from the Ministry of Public Security will impose stricter obligations on employers regarding privacy and data protection.

Amendments to the Labor Code stipulated that a contract can either be open-ended (indefinite) or fixed term, with no other options allowed, apart from probationary contracts.

  • General Department of Taxation – The General Department of Taxation forms part of the Ministry of Finance and is entitled to the regime of package funding prescribed by the Prime Minister. The organizational structure of the tax branch is reorganised according to the following principles:
    • determining fully tax administration tasks
    • appreciate responsibilities and obligations of taxpayers in self-calculation and self-declaration toward self-tax payment and take responsibility before law
    • strengthen tax authorities
    • strengthening the function of state management on taxes to well enforce the law
    • adding more powers to tax authorities
    •  strengthening information campaigns to support taxpayers
    • strengthen inspection and examination
    • streamline the apparatus in the direction of administrative reform and modernise tax administration
  • The MOLISA (Ministry of Labour, Invalids and Social Affairs) Inspectorate – the central authority of the labour inspection system in the country. It has six functional divisions: Labour Policy Inspections, OSH Inspections, Child and Social Affairs Policy Inspection, Inspections of “Policy for Meritorious People”, General Services and Administrative Inspections, Citizen Reception and Complaint and Denunciation Handling.

When hiring new staff and drawing up their contracts, specific requirements from the Labor Code apply and must be considered. These include:

  • Contractual terms and conditions come under the Labor Code, supplemented by government decrees, articles and statutes.
  • Employer and employee should each have a signed copy of the contract.
  • The terms should be in Vietnamese for legal verification and to guard against inconsistencies in translation. The employee can request a copy in a language they understand.
  • By law, contracts must cover basic information. This includes the full names and addresses of both parties, specifying the position of the individual signing on behalf of the employer; job location and details of role; salary and payment schedule covering any extra reimbursements; working hours, breaks and vacation allowance; details of provisions for employee’s social, health and unemployment insurance.
  • The new Labor Code accepts the validity of e-contracts related by data messaging.
  • Employees’ roles must be declared to the labor authority within 30 days along with any subsequent changes to their role, within six months of coming into effect.
  • Local employees must be paid in Vietnamese Dong; foreigners, whether resident or non-resident, can be paid in another currency.

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