Vietnam Social Insurance for Overseas Employers (2025–2026)
Are you expanding your business into Vietnam? Are you planning to hire skilled Vietnamese digital talents?
If so, understanding Vietnam’s Social Insurance (SI) system is your first critical task. It’s a mandatory program. It protects your employees and keeps your company fully compliant with local law.
Social insurance isn’t just a cost. It is a foundation for stable growth. Companies that manage SI well do two things: they avoid painful fines, and they build a strong reputation among the best local talent.
- Who this guide is for: International companies in Vietnam and overseas employers planning to hire Vietnamese talent who will work in Vietnam.
- What you’ll learn: Mandatory coverage rules, contribution rates and caps, registration and payment steps, penalties, hiring models (entity vs EOR vs contractor), real scenarios, and a practical checklist you can use today.
Quick Summary
If your worker performs work in Vietnam, Vietnam’s social insurance rules usually apply. Employers must register staff with Vietnam Social Security (VSS), withhold employee contributions, and remit both employer and employee shares monthly. For many overseas firms, the fastest low-risk option is to hire via an Employer of Record (EOR) or local payroll partner who handles registration and payments. Failure to comply can cause back payments, interest, and fines.
Official sources to check: Vietnam Social Security (VSS), Ministry of Labour (MOLISA), and the Ministry of Finance (MOF).
1) What is Vietnam’s Social Insurance (SI) system?
Vietnam’s social insurance system is a public safety net. It covers sickness, maternity, work injuries, retirement, and unemployment. The program is run by Vietnam Social Security (VSS), under MOLISA. The legal basis includes the Law on Social Insurance and related decrees and circulars published by the government.
Legal basis: Law on Social Insurance (No. 58/2014/QH13).
| Component | Description | Administered by |
|---|---|---|
| Social Insurance (SI) | Covers sickness, maternity, occupational injury, retirement, and death. | Vietnam Social Security (VSS) |
| Health Insurance (HI) | Covers medical and hospital costs. | VSS Health Division |
| Unemployment Insurance (UI) | Provides short-term income support if a worker loses their job. | Department of Employment – MOLISA |
| Personal Income Tax (PIT) | Tax on individual income; employer may withhold PIT. | General Department Of Taxation |
2) Who must be covered?
Vietnamese Nationals
Any Vietnamese person employed under a labor contract of one month or more must be enrolled in SI, HI, and UI through their employer.
Foreign Nationals (Expats)
Foreign workers are typically covered if they hold a valid work permit and have a local labor contract (often at least one year). Decree 143/2018 and subsequent guidance lay out the rules for foreign workers’ participation.
Important Exceptions and Nuances
- Some categories (e.g., international experts seconded to Vietnam, or those covered by bilateral agreements) may be exempt — check the work permit, labour contract, and DTA if relevant.
- Classification matters: If the person is genuinely an independent contractor, social insurance may not apply — but Vietnam applies substance over form. If the relationship looks like employment (fixed hours, employer control), authorities may treat it as employment.
3) Contribution rates (2025 update) — the numbers you need
Vietnam’s total mandatory contribution rate is 32% of the employee’s salary. This cost is split between the employer and the employee.
| Fund | Employer Contribution | Employee Contribution | Total |
|---|---|---|---|
| Social Insurance (SI) | 17.5% | 8.0% | 25.5% |
| Health Insurance (HI) | 3.0% | 1.5% | 4.5% |
| Unemployment Insurance (UI) | 1.0% | 1.0% | 2.0% |
| Total | 21.5% | 10.5% | 32.0% |
These rates come from official documents like Decision 595/QD-BHXH.
Understanding the Contribution Cap
You do not pay SI on unlimited income. The maximum salary base for contributions is capped at 20 times the current basic salary. Example: If the basic salary is VND 1,800,000, the cap is VND 36,000,000 per month.
Example Calculation
If you pay an employee VND 30,000,000 gross per month:
- Employer pays approx: 21.5% × 30,000,000 = VND 6,450,000
- Employee pays approx: 10.5% × 30,000,000 = VND 3,150,000
- Total cost to employer = VND 36,450,000
Hiring Models & Who Handles SI
| Hiring Model | Who Legally Contributes | Pros | Cons |
|---|---|---|---|
| Local Entity | The company itself | Full control; good for scale | Setup time & cost |
| Employer of Record (EOR) | EOR legally employs | Quick, compliant, no entity | Slightly higher per-head cost |
| Contractor / Freelancer | Individual contractor | Flexible, simple | High misclassification risk |
| Pay-from-Overseas | Often no employer registration | Quick to start | High compliance & audit risk |
Recommendation: For most overseas SMEs, an EOR offers the best balance: fast market entry, full compliance, and predictable cost.
4) What benefits do contributions buy?
When payments are made correctly, the employee gets guaranteed benefits. These details are available on the Vietnam Social Security’s Benefit Portal.
| Category | Coverage | Typical Eligibility |
|---|---|---|
| Sickness | Paid leave for certified illness or injury. | ≥ 30 days contribution. |
| Maternity | Paid leave for childbirth or adoption. | Up to 6 months for females. |
| Work Injury | Compensation and medical care for work accidents. | Requires verified occupational cause. |
| Retirement | Lifetime monthly pension. | Male 62 / Female 60 (retirement age phasing in). |
| Death/Survivor | Lump-sum or monthly allowance for dependents. | Upon verified employee’s death. |
Tax Implications
- For Employers: Employer SI contributions (the 21.5% share) are tax-deductible business expenses. This is allowed as long as you pay the VSS on time and keep proper records.
- For Employees: Employee contributions (the 10.5% share) are deductible from the employee’s taxable income. This lowers their final Personal Income Tax (PIT) obligation.
5) When do you need to register and pay?
Registration
- Employers must register with the local Social Insurance Office once they hire employees.
- Each employee must be registered and issued a social insurance book/number.
- Registration requires copies of business license, tax code, labor contracts, ID documents, and completed forms — the exact list is on the VSS portal.
Payment Schedule
- Social insurance contributions are generally submitted monthly. Employer must remit both employer share and employee-withheld share by the monthly deadline (often by the last working day of the month).
- Employers submit monthly declarations via the VSS e-portal.
6) Penalties for Non-Compliance
Authorities can impose penalties under Decree 12/2022/ND-CP. Always check latest decrees or use a local advisor.
| Violation | Penalty | Notes |
|---|---|---|
| Late payment | 12% to 20% interest on overdue amounts | Compounds monthly |
| False reporting | Fines up to VND 75 million | Audits led by MOLISA |
| Repeated violations | Suspension of operations | Possible criminal liability |
The High-Risk Misclassification Trap
The worst risk is classifying a full-time employee as an “independent contractor.” Vietnam looks at the actual relationship, not the job title. If you control the work, the authorities can demand years of back contributions, interest, and fines.
7) Checklist for Overseas Employers
1. Classify the role: employee or contractor? (Be conservative — if in doubt, treat as employee.)
2. Decide hiring model: set up entity or use EOR.
3. Prepare documentation: signed labor contract (Vietnamese/English), ID/passport copies, address proof.
4. Register employer with VSS: file business license, tax code, contact details.
5. Set up payroll schedule: gross salary, SI/HI/UI deductions, PIT withholding.
6. Declare & remit monthly via VSS portal or payroll provider.
7. Keep records: contracts, payslips, payment receipts, declarations.
8. Get Local Advice: This is crucial if employees perform revenue-generating activities, which can create Permanent Establishment (PE) risk.
8) Further Reading
- Vietnam Social Security (VSS)
- Ministry of Labour (MOLISA)
- Vietnam Government Portal
- Acclime — Social Insurance Vietnam guide
- InCorp — Social Security compliance
- PwC — Vietnam tax and payroll overview
We help overseas companies hire legally in Vietnam
- EOR and payroll setup
- Social insurance registration and remittance
- Work permit and tax code processing
- Payroll automation and audit-ready records
Contact VOS Advisory for a tailored compliance plan.
