AusCham Member, Domicile Corporate Services has put together this quick update for employers regarding an organisation’s legal obligations with respect to the hiring of foreigners.

A copy of the update is reproduced below.


Dear Clients and Colleagues

We are seeing many instances of confusion and problems occurring with the hiring and employment of foreign employees in Vietnam. The rules (although somewhat frustrating) are actually quite clear at the moment, and companies that take the time to understand and follow these will enjoy the benefits that foreign employees can provide.

Risks & Problems

The risks and problems that arise when using foreign employment in Vietnam without going through correct procedures are numerous. These range from tax issues (non-deductibility of payments), accounting issues (how are the payments recorded in your financial statements as VAS does not permit their entry), issues of arranging cash/bank transfers without appropriate documentation, through to potential action taken by the Labour Authorities – where financial penalties, deportation of staff and the prohibition of employment of future foreign staff can arise.

Also keep in mind that any company contracts signed by a foreigner on the company’s behalf (ie, under seal), may not be accepted as a legal document – particularly by the tax authorities – unless the foreigner is legally employed or contracted, or is an owner of the company. This could have major issues for many companies.


All foreigners working in Vietnam, even those for a short period, need to have a Work Permit to be paid income for their personal efforts. (There are some exceptions for certain experts here for short periods, but these don’t really apply for the general public). Without a Work Permit, a company cannot enter into a formal Labour Agreement, and cannot pay salaries.

If your staff have a Work Permit, then employers can pay them through the banking system, including payment in Foreign Currency, and the employee can enjoy a Temporary Residence Card for the life of their work permit – removing the need to have a Visa. The salary into the bank account can also be sent by the Employee abroad without issue etc, as it is from a tax paid source.

Gross versus Net

We still see the practice of foreign employees being contracted (or promised) on a Net-of-Tax basis. This puts all risk on the employer, and is at odds with what is regarded as international best practice. We strongly encourage Gross contracts – so that any changes levied by the government on Employee taxes are borne by the employee, and any changes by the government on the employer on-costs are borne by the employer. There are also allowances for dependents permitted by the government, and in theory the employer can actually end up paying more taxes in the Net Tax salary scenario for an event such as a spouse returning to their home country.

Further, the laws are changing in coming years so that foreign employees (who are already subject to compulsory Health Insurance) will also be subject to Unemployment and Social Insurance – and employers do not want to be hit with both the employee and employer portion inadvertently (especially when the employee is the party to benefit solely from these insurances).

To view our 2016 payroll calculation summary to assist with any calculations, see  2016 Payroll Quick Guide 161015.

Work Permits

Work Permits are feared by many, and misunderstood by most.

To put it simply, the Employer is responsible for obtaining a Work Permit before their staff commence work in Vietnam, and the employee is responsible for providing required documents to the employer – before they commence employment – so the Employer can arrange the Work Permit to allow the staff to work for them. If a staff member resigns, they are to return the Work Permit to the employer, and the Employer hands this back to the authorities (and is cancelled).

The process is relatively straight forward – and provided the appropriate documents are arranged (see the attached guide to help), then the process is currently taking around 4-5 weeks. The key is to have the documents arranged in advance. If your employees cannot, or are not willing, to provide the required documentation, then we suggest you seriously reconsider whether they are the right staff for your business.

A more detailed document and instruction pack covering all the issues surrounding foreign employment will be release by Domicile in the near future, so please stay tuned.

If you have any questions, please do not hesitate to contact Matthew Lourey, Partner at or call +84 937 793 942

Best regards

Domicile Corporate Services


Level 5, Somerset Chancellor Court
21-23 Nguyen Thi Minh Khai, District 1
Ho Chi Minh City, Vietnam

P: +84 (0)8 3824 7650



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