How to pay international contractors in Vietnam [2025]
In this article
Vietnam, known for its vibrant culture, skilled workforce, and robust business activities, has become an appealing destination for foreign entities looking to outsource work. Whether you're a Singapore-based tech firm or an India-centric retail chain, hiring Vietnamese contractors can offer an innovative solution for business expansion.
However, comprehending the corporate income tax (CIT) laws, VAT regulations, and social security aspects can seem overwhelming if you're unfamiliar with the Vietnamese business landscape. This step-by-step guide will assist you with onboarding your Vietnamese contractors and ensure compliant payment according to Vietnam's legal framework.
Step #1: Classify your workers in Vietnam
As an employer, the correct classification of your Vietnamese contractor is crucial. Misclassification of workers as employees or subcontractors can:
Result in harsh penalties
Jeopardize your business reputation
Trigger legal consequences
Ensuring that you’re classifying contractors in accordance with Vietnam's labor laws can protect your company from such complications. Here are some distinctions to consider:
Contractors | Employees |
|---|---|
High level of worker control.Vietnamese contractors are generally given more autonomy to determine how and when to complete their work. | More direction from the employer. Vietnamese employees are usually subject to more control and direction from their employer, who provides guidance on when and how to perform their work. |
Equipment and tools are owned by the worker. | Equipment and tools are typically provided by the company. |
Less integrated. Vietnamese contractors tend to be independent, they’re more likely to work remotely, and they use their own tools and equipment. | Highly integrated. Vietnamese employees are typically more integrated into the company. For example, they may work at the employer's premises. |
No entitlement to benefits. Vietnamese contractors don’t receive the same benefits and protections as employees. They’re also responsible for paying their own taxes. | Entitled to benefits. Vietnamese employees are entitled to certain employment benefits and protections, such as overtime pay, minimum wage, and paid vacation. They may also be entitled to other benefits like health insurance, paid sick leave, and retirement plans. |
Time-bound engagement. Contractors are typically engaged for a specific project or time. | Indefinite engagement. Employees are generally hired for an indefinite time. |
Risk of loss. Contractors likely assume more risk and liability for their work. | No risk of loss. Employees are typically protected from liability for work-related problems. |
Subcontracting. Contractors can delegate tasks to be completed by another person or business. | No subcontracting. Employees are expected to do their work themselves. They can only delegate responsibilities with approval from their employer. |
Avoid expensive misclassification mistakes with our free online assessment
Step #2: Determine the best way to pay your contractors in Vietnam
Paying contractors in Vietnam involves a hybrid method that accounts for the tax rate, exchange rates, and transfer of securities, if applicable. Here are the common payment methods you can consider:
Direct bank transfers: Paying your contractors directly into their bank accounts in Vietnamese dong (VND) is a straightforward method, but may carry hefty charges. This might involve foreign exchange and transfer fees.
International wire transfers: Sending payments through wire transfer services, while usually reliable, may incur high fees and longer processing times.
Third-party payroll services: Using third-party services like Rippling can simplify the payment process, especially for large teams or frequent payments.
E-wallet or online payment platforms: With the rise of digital transactions, many contractors prefer receiving payments via platforms like PayPal, Payoneer, or local services.
Always align your chosen payment method with your contractor's preferences and ensure it complies with Vietnamese tax regulations.
Step #3: Use global payroll software to process payments for Vietnamese contractors
Utilizing global payroll software like Rippling can alleviate the administrative burden associated with processing payments for your Vietnamese contractors.
It can also help you process payments in Vietnamese dong (VND) and handle compliance with Vietnamese tax regulations, Vietnamese CIT, personal income tax, and social security regulations. With Rippling, you can pay contractors across the world in one system. Here’s a preview of how Rippling’s global payroll system works:
Step #4: Ensure your Vietnamese contractors have the right tax information
In Vietnam, each contractor is required to provide specific tax-related information, including their tax code and the nature of their taxable income, to avoid complications with the tax authorities. This information aids in the accurate calculation and declaration of personal income tax and CIT. They must provide:
Personal income tax (PIT) code: A unique identifier assigned by the tax authorities for income tax purposes.
Permanent establishment information: Non-resident contractors should provide details about their business operations and presence in Vietnam to establish their tax obligations correctly.
Staying up-to-date with these requirements can help ensure compliance with Vietnam's tax laws and avoid unnecessary fines or legal issues.
Effortlessly manage contractors around the world
It's never been easier to grow your global team. With Rippling, you can pay international contractors in Vietnam and around the world in one system.
Frequently asked questions about running payroll for contractors in Vietnam
Hire and pay your contractors in Vietnam with Rippling
Disclaimer
Rippling and its affiliates do not provide tax, accounting, or legal advice. This material has been prepared for informational purposes only, and is not intended to provide or be relied on for tax, accounting, or legal advice. You should consult your own tax, accounting, and legal advisors before engaging in any related activities or transactions.
Author
Vanessa Kahkesh
Content Marketing Manager, HR
Vanessa Kahkesh is a content marketer for HR passionate about shaping conversations at the intersection of people, strategy, and workplace culture. At Rippling, she leads the creation of HR-focused content. Vanessa honed her marketing, storytelling, and growth skills through roles in product marketing, community-building, and startup ventures. She worked on the product marketing team at Replit and was the founder of STUDENTpreneurs, a global community platform for student founders. Her multidisciplinary experience — combining narrative, brand, and operations — gives her a unique lens into HR content: she effectively bridges the technical side of HR with the human stories behind them.
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