Vietnam Clarifies Salary Rules for Foreign Employees Assigned from Overseas

New government guidance outlines when foreign workers can—and cannot—receive salaries in Vietnam, shaping HR, compliance, and tax planning for multinational employers.

Foreign businesses expanding into Vietnam received important clarity this week after the Ministry of Home Affairs issued guidance on how salaries should be handled for foreign employees who are transferred from an overseas entity to work in Vietnam. As Southeast Asia’s fastest-growing investment hub attracts more multinational corporations, clear rules on payroll, labor classification, and tax liabilities have become crucial for global HR teams and foreign professionals relocating to the country.

The Ministry confirmed that foreign workers assigned to Vietnam directly by an overseas parent company are not permitted to sign local labor contracts or be paid salaries in Vietnam under this specific employment category. Instead, their compensation must continue to be handled by the foreign employer, supported by official documentation proving the overseas assignment.

Under Decree 219/2025/NĐ-CP, foreign workers transferred from a company abroad—excluding those moved within the same multinational group—must hold written confirmation from the overseas employer stating they are being assigned to Vietnam and specifying the role they will take on. This assignment letter is the primary legal basis for their status and payroll responsibilities.

If a foreign worker instead signs a Vietnamese labor contract and receives salary locally, they are no longer considered an “overseas transferee” under the decree. In such cases, they fall under Vietnam’s standard employment regulations, triggering different obligations for work permits, taxation, social insurance eligibility, and employer responsibilities.

For global companies navigating cross-border postings into Vietnam, these distinctions carry meaningful financial and compliance implications—from how to structure compensation packages to determining which entity bears payroll taxes and reporting duties. As Vietnam tightens labor oversight while competing aggressively for foreign talent, these rules highlight an evolving regulatory landscape that employers must follow closely.

With Vietnam now a major destination for foreign direct investment and high-skilled expatriates, will future regulatory updates further streamline cross-border hiring—or create more complexity for multinational HR teams?

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Source: Vietnam Insider