Vietnam Payroll Structure for FDI Employers: Gross-to-Net Calculations & SHUI Compliance

Employer payroll costs in Vietnam typically run about 21.5% above gross salary for Vietnamese employees (around 20.5% for foreign staff) due to mandatory Social Insurance, Health Insurance, and Unemployment Insurance contributions under the Social Insurance and Employment regulations, including Decree 143/2018/ND-CP for foreign employees.

The choice between gross and net salary contracts determines your compliance exposure. Gross salary structures support transparent SHUI and PIT calculations, though Labor Code 2019 Article 93 doesn’t explicitly mandate gross formats over net structures. Net salary agreements might seem simpler for employee communication, but they create tax refund disputes when authorities require gross documentation during audits.

Regional unemployment insurance caps vary by location—for Region I (Hanoi and Ho Chi Minh City) the cap is currently around VND 106.2 million per month, with substantially lower caps in Regions II–IV, all derived from the applicable regional minimum wage levels and subsequent adjustment regulations.

What FDI Employers Actually Pay: Gross-to-Net Breakdown

Net salary calculations subtract employee SHUI (10.5%) and Personal Income Tax from gross salary. Gross includes basic salary, allowances (housing, transportation, meals), and overtime calculated at Labor Code 2019 minimum multipliers—at least 150% on normal working days, 200% on weekly rest days, and 300% on public holidays. Overtime on public holidays carries the highest 300% multiplier—confirm the current schedule in Vietnam’s official public holidays and overtime calculation rules.

Here’s the breakdown for a VND 30 million gross wage:

Employee Deductions:

• Social Insurance (8%): VND 2.4 million
• Health Insurance (1.5%): VND 450,000
• Unemployment Insurance (1%): VND 300,000
• Total SHUI deducted: VND 3.15 million (10.5%)

After SHUI deductions, taxable income drops to VND 26.85 million. PIT applies progressive rates per Law 04/2007/QH12 as amended—around VND 3.72 million for this bracket—leaving net take-home of approximately VND 23.13 million.

Your Employer Obligations (Separate from Employee Deductions):

• Social Insurance (17.5%): VND 5.25 million
• Health Insurance (3%): VND 900,000
• Unemployment Insurance (1%): VND 300,000
• Total employer SHUI: VND 6.45 million (21.5%)

True employment cost: VND 36.45 million. Many FDI companies underestimate labor costs by focusing only on gross figures—the 21.5% employer contribution represents a significant budget line that compounds across headcount.

Gross Salary Components That Affect SHUI Calculations

SHUI audits often focus on unclear salary breakdowns, and current Social Insurance regulations expect basic salary and relevant allowances to be distinguished in contracts to define the contribution base, while Decree 73/2024/ND-CP sets the statutory base salary used together with these rules. Basic salary forms the core input for SHUI calculations. Regular allowances typically count toward the contribution base—housing, transportation, meal subsidies paid monthly. One-time bonuses usually don’t.

Allowances need clear itemization in employment contracts. If you can’t show clear documentation separating regular allowances from one-time payments during tax inspections, authorities default to including everything—inflating your contribution obligations retroactively.

The Gross vs Net Salary Contract Risk

Gross salary contracts prevent tax refund disputes, though Labor Code 2019 Article 93 doesn’t explicitly require gross formats. The law requires employment contracts to clearly specify salary, allowances and other payments, but doesn’t state that only gross salary contracts are permitted.

Here’s the risk: when employees file PIT refund claims, tax authorities need gross salary documentation. If you’ve only given them a net salary contract, the refund gets denied. You face an angry employee plus audit exposure.

Net salary structures make your statutory contribution burden ambiguous. If the contract states “net VND 25 million,” you must gross-up to cover all taxes and SHUI—but the calculation base gets disputed during inspections. Decree 73/2024/ND-CP sets the statutory base salary used in SHUI calculations, and Social Insurance rules require base salary components to be clearly identified for SHUI purposes, which becomes difficult with net structures.

The practical impact: net salary contracts complicate tax administration enough that many employees eventually demand gross contracts when they realize refund claims won’t process. You end up rewriting contracts mid-year, recalculating all prior SHUI contributions, and potentially owing back-payments if the recalculation shows underpayment.

Contract structure decisions at hiring stage determine your SHUI base for the entire employment period—review Vietnam labor contract types, probation rules, and salary structuring before finalizing terms.

Foreign vs Vietnamese Employee SHUI Rates

Foreign employees contribute to social and health insurance at the same rates as Vietnamese staff but are generally not covered by unemployment insurance, resulting in total employer contributions of about 20.5% and employee deductions of about 9.5%, in line with Law 58/2014/QH13 and Decree 143/2018/ND-CP.

SHUI Rate Comparison:

For a VND 110 million monthly salary, Vietnamese employee UI contributions total VND 2.124 million (employer VND 1,062,000 + employee VND 1,062,000 capped at Region 1 maximum). Foreign employees contribute zero. Over 12 months, this represents VND 25.488 million in savings per expatriate position.

Work permit classification determines whether an expat falls under the 20.5% or 21.5% employer rate—confirm status against Vietnam work permit requirements and foreign employee compliance before payroll setup.

SHUI Caps That Vary by Salary Level

High earners hit contribution ceilings that limit SHUI obligations. As of early 2025, the SI and HI contribution base is capped at 20 times the statutory pay rate of VND 2.34 million per month (equivalent to VND 46.8 million) under the general Social Insurance regulations and Decree 73/2024/ND-CP.

For a VND 60 million gross salary, SI contributions calculate as VND 46.8 million × 17.5% (employer) and VND 46.8 million × 8% (employee)—not on the full VND 60 million. This cap protects high earners from disproportionate contribution burdens.

For employees earning VND 100 million monthly, their maximum SI payment is VND 3.744 million (8% of VND 46.8M) rather than VND 8 million (8% of VND 100M)—a VND 4.256 million monthly savings.

UI caps vary by region according to minimum wage zones (below), calculated as 20 times the applicable regional minimum wages under the current minimum wage regulations.

You need to apply the correct cap based on each employee’s work location—a Hanoi-based employee in Region 1 earning VND 120 million pays UI on a capped base of VND 106.2 million, while a Region 4 employee at the same salary uses the VND 73.2 million cap.

Operating across multiple regions? Track caps by location monthly or risk overpaying SHUI without efficient refund processes.

For Reference Level ceiling calculations, expat participation rules, and VSS audit exposure, see Vietnam social insurance 2026 rates, caps, and compliance framework.

Regional minimum wages increased from January 1, 2026 and directly affect UI caps—see Vietnam’s 2026 minimum wage rates and employer compliance impact for updated figures by region.

What Each Insurance Type Covers

Social Insurance funds retirement pensions, survivorship benefits, and occupational injury compensation under Law 58/2014/QH13, with monthly pension payments starting at statutory retirement ages that are being increased towards 62 for men and 60 for women, and financed by 17.5% employer and 8% employee contributions.

Health Insurance grants access to Vietnam’s public healthcare network at registered facilities under Law 25/2008/QH12 as amended. Coverage includes inpatient and outpatient services via health insurance cards issued to employees. Employees register with a primary healthcare facility and can transfer to higher-level hospitals with referrals when needed.

Unemployment Insurance offers income support during job transitions—60% of average contributory salary for 3-12 months depending on contribution period under Law 38/2013/QH13 Article 50. This applies to Vietnamese employees only, with foreign employees generally not covered by Vietnam’s UI scheme.

SHUI is one component of the broader employment framework—for contract rules, work permits, and termination obligations, see Vietnam employment law and HR compliance for FDI companies.

Compliance Risks That Trigger Payroll Audits

When employees file PIT refund claims, tax authorities require gross salary documentation. Net contracts make this impossible—often resulting in refund denial and employee disputes. Tax authorities flag these issues during routine audits, triggering deeper payroll inspections.

Common Violations That Show Up During Inspections

Incorrect cap calculations happen when you apply uniform SHUI ceilings regardless of regional variations or fail to update caps annually. Many HR systems default to Region 1 caps nationwide—if you’re paying Hanoi rates for Region 4 employees, you’re overpaying UI contributions. Getting refunds from social insurance authorities takes 6-9 months when it happens at all.

Late SHUI remittance triggers automatic penalties. Statutory SHUI contributions are generally due by around the 20th of the following month, and late payments may incur daily interest of about 0.05% on the unpaid amount under current social insurance enforcement rules, including Decree 143/2018/ND-CP for foreign employees.

Inconsistent gross/net reporting between payroll systems and tax declarations creates immediate audit flags. Authorities cross-reference submitted data against social insurance records. If monthly tax declarations show VND 30 million gross but social insurance filings show VND 28 million, inspectors investigate whether allowances are being improperly excluded from the SHUI base.

Based on recent audit patterns in 2024-2025, companies with frequent payroll adjustments or retroactive salary changes face more scrutiny. These patterns suggest potential underreporting—even when adjustments are legitimate corrections. Retroactive salary changes from improper terminations are a common audit trigger—see employee termination legal grounds and severance calculation procedures for compliant separation processes.

The Mid-2026 PIT Changes You Need to Prepare For

PIT Law amendments scheduled around July 2026 will modify progressive tax brackets and deduction allowances, directly impacting gross-to-net calculations once the new rules are fully in force. You need to update tax tables in automated payroll systems before the effective date to avoid underpayment or overpayment issues. In practice, many companies delay system updates until after implementation, creating a 1-2 month window of incorrect withholding that requires retroactive adjustments.

The risk: employee dissatisfaction when net pay suddenly changes due to corrected PIT calculations—even when adjustments are legally required. Communicate changes to employees before July 2026 to manage expectations. Verify your payroll provider or HR system vendor has confirmed readiness for the amendments. Some international payroll platforms lag behind Vietnamese regulatory changes by 2-3 months, creating compliance gaps during transition periods.

For expatriate staff, PIT changes interact with residency status determination—see personal income tax finalization under the 183-day residency rules for expat-specific withholding guidance.

Payroll Disbursement Timing That Avoids Penalties

Disburse payroll between the 25th and last day of each month to align with statutory contribution deadlines. This schedule ensures you have processed payroll data ready for SHUI remittance by the 20th deadline of the following month.

If you pay salaries on the 15th, you’re remitting SHUI contributions 35+ days after the payroll period ends—creating cash flow advantages but risking late payment if month-end processing delays occur. The safer approach: standardize month-end payroll schedules that build in buffer time before the 20th deadline.

Late payment penalties at 0.05% daily add up fast. For a company with VND 500 million in monthly SHUI obligations that’s 10 days late, that’s VND 250,000 in interest—minor for individual instances but adds up if late payments become systematic.

Regional Cap Application Across Multiple Locations

You need to track UI caps by employee work location, not company headquarters—Social Insurance and Employment regulations tie UI contribution ceilings to the regional minimum wage zones where employees actually work, creating administrative complexity for multi-location operations.

Common mistake: applying Hanoi’s VND 106.2 million cap to all employees regardless of location. If you have manufacturing staff in Region 3 or 4, you’re overpaying UI contributions substantially. The reverse creates bigger problems—using lower regional caps for Hanoi employees triggers underpayment violations during inspections.

Your HR system needs to map each employee to their work location region and apply the corresponding UI cap. Most international payroll platforms don’t handle Vietnamese regional variations automatically—you need manual configuration or custom development to track this correctly.

Tax authorities specifically check UI cap applications during payroll audits, particularly for companies with employees in multiple regions. Discrepancies between submitted SHUI amounts and expected calculations based on registered employee locations flag your company for deeper inspection.

Quick Reference: Key Payroll Questions

SHUI rates for 2026: SI 17.5%/8%, HI 3%/1.5%, UI 1%/1% (Vietnamese only), with SI/HI capped at VND 46.8M and Region 1 UI cap at VND 106.2M based on current statutory rates.

Foreign vs Vietnamese: Foreign employees are generally not covered by UI—saving 2% total (20.5% vs 21.5% employer rate), while SI/HI rates remain identical.

Payment schedule: Disburse 25th-month-end to meet SHUI deadline (20th of following month). Late payments cost 0.05% daily under current social insurance enforcement rules.

Net salary contracts: can create refund problems and audit exposure, though Labor Code 2019 does not expressly require gross salary formats, and Decree 73/2024/ND-CP mainly sets the statutory base salary used in SHUI calculations rather than mandating gross-contract structures.

Key Compliance Points for FDI Companies

Your total employment cost runs 21.5% above gross salary (20.5% for foreign staff exempt from UI). For a VND 30 million gross wage, you pay VND 36.45 million total. Regional UI caps vary—Region 1 maxes at VND 106.2 million while other regions run substantially lower based on local minimum wage levels.

Use gross salary contracts to support transparent SHUI and PIT calculations under Labor Code 2019 and Decree 73/2024/ND-CP. Net salary agreements create tax refund complications and audit exposure that outweigh any perceived communication benefits.

Beyond SHUI, employers must also budget for trade union fee obligations calculated on the social insurance salary base, adding to total employment costs.

Before mid-2026, update payroll systems for expected PIT Law amendments. Verify regional UI cap applications if you operate across multiple locations. Disburse payroll between 25th-month-end to align with SHUI remittance deadlines (20th of following month).

For a 50-person team at VND 30 million average gross, your annual SHUI obligations reach approximately VND 3.87 billion (about VND 322.5 million per month × 12 months)—you should factor this into headcount budgets upfront.

Need Help with Payroll Compliance? We walk FDI companies through compliant payroll structuring and SHUI optimization daily. Contact our HR advisory team at [email protected] to review your current setup and identify potential cost savings or compliance gaps.

Legal Disclaimer: This article provides general information about Vietnam payroll regulations current as of January 2026. Specific circumstances may require professional tax and legal advice tailored to your company structure and employee mix. Regulations are subject to change—verify current requirements with qualified advisors before making payroll decisions or system changes.