How can an Umbrella Company Help with Contracting in Vietnam?
Most freelance workers aren’t superheroes who successfully tackle these issues all on their own. There are companies who specialise in helping workers make the most out of their contracts.
They’re called Umbrella Companies (or, contractor management companies).
Basically, an Umbrella Company acts as your full-time employer, even though you maintain your independence as a contractor. They collect and filter payments from your clients, filtering out the necessary social security and fees. You send them your timesheets, and they send you payments.
Because they act as your “employer,’ they can sponsor you and provide a single work permit for multiple contracts in Vietnam. Even better, most are experts in Vietnamese and expat tax law, meaning they’ll also help you optimise your earnings in Vietnam.
Although the Umbrella Company is technically your “employer,” you’re essentially freeing yourself to work even more independently. You still dictate your contracts, your hours, your schedule. The Umbrella Company simply filters out the time-consuming admin and immigration issues, allowing you to focus on your new contract.
Can I Organise My Taxes and Work Permit Myself?
Generally, you need to have an employer sponsor in order to secure the appropriate work permit and work visa for Vietnam.
If you’re working independently, it can be difficult to find clients willing to sponsor you. Moreover, even if your client can do this, you’ll need a new sponsor each time you decide to take on a new contract. Of course, every new sponsor will mean more paperwork.
Also, are you familiar with the intricacies of the tax system in Vietnam, as well as your own country’s laws on overseas earnings? If so, good on you!
However, if you’re like the rest of us, figuring out (much less reducing) your tax liability in Vietnam and your home country can seem like full-time work in itself.
A Contractor’s Guide to Taxes in Vietnam
One of the most consistently challenging aspects of contracting in Vietnam is complying with the country’s tax system. As well as paying tax in Vietnam, you might also still be eligible to pay some tax in your home country, and understanding the legislation behind this can be a challenge.
How do I calculate my taxable income in Vietnam
If you’re working in Vietnam under a permanent contract, many employers will handle your tax under the PAYE (pay-as-you-earn) system. This means that they calculate and process your taxes in Vietnam for you and then send you a net wage. Your income tax, public health insurance, social security and other deductions will all be covered by this payment. This is the easiest way to handle your income tax in Vietnam, but contractors may not be offered this service because of their short stay with each employer.
Anybody who can’t pay their tax in Vietnam through PAYE is left with the prospect doing everything themselves.
Do you know much about Vietnamese Tax Law? Does Vietnam have a tax treaty with your home country? You will need to find out or find someone who can help! Income tax in Vietnam can range from 5 to 35 percent, and you need to be sure you are placed in the correct tax brackets.
Tax Filing as a Contractor in Vietnam
| When Do You Need to Lodge Your Tax Return? | Varies depending on the income type and circumstances |
| Tax Filing Deadline | 31 March |
| Can you file it online? | No |
How to File Taxes in Vietnam as a Contractor
Your personal income taxes in Vietnam are generally the responsibility of your employer.
Step 1: Obtain a Tax Identification Number
Provide your employer with the following documents:
- A copy of your valid identification card/citizen identification (for individuals of Vietnamese nationality); or
- A copy of your valid passport (for individuals of a foreign nationality).
Your employer will add your details to a consolidated tax registration form (Form No. 05-DK-TH-TCT(link is external)) which is submitted to the local tax office. Within 3 working days of the tax office receiving your tax registration file, you will be granted a personal tax identification number.
Step 2: Keep a Record of Income Tax Withheld
Employment income taxes are withheld by your employer. You may also opt to declare and settle your own taxes.
Your employer must file a monthly or quarterly tax declaration (if tax withheld in the first month is below VND50 million), and annual tax finalisation return on your taxable employment income. This is to be done no later than the 20th of the following month or the end of the first month of the following quarter, and 90 days after the year ended.
Step 3: Complete a Tax Finalisation Declaration Form
If you have more than one source of income, you are required to complete a tax finalisation declaration form (Form No. 2 / QTT-TNCN) if your tax liability at year end is greater or less than the sum of tax paid during the year.
An individual must file a tax return and make a final tax payment by 30 March in the year following the assessment year.
Tax Figures in Vietnam
| Currency | Vietnamese Dong (VND) | ||||||||||||||||||
| Tax-free Threshold in Vietnam | None | ||||||||||||||||||
| Income Tax Rates |
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| Notes |
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Tax Residency in Vietnam
When do you become a tax resident in Vietnam
You become a tax resident in Vietnam when:
- You are physically present in Vietnam for 183 days or more during a calendar year or 12 consecutive months from the date of arrival in Vietnam; or
- You are a Vietnamese citizen, you have registered a permanent residential place pursuant to the Law on Residence, you live in this place, and earn your living on a regular and stable basis from this place;
- You are a foreigner, and you have registered a permanent residential place (i.e. this place is recorded on your resident or temporary resident card issued by the Ministry of Public Security), or you have leased a house, hotel room, office etc. with a total lease term of 183 days or more in the tax year, and you are not able to provide a certificate of tax residency of a country other than Vietnam.
Does the 183 day rule apply in Vietnam
Yes
Am I taxed on my global income in Vietnam
Residents: Residents are taxed on their worldwide income.
Non-residents: Non-residents are only taxed on their Vietnam-sourced income.
Can you set up your own Limited Company in Vietnam?
| How long does it take to set up | 9 days |
| How much does it cost | VND2,865,000 (without bronze seal) – VND3,235,000 (with bronze seal) |
| Is it easy? | Starting a Business Rank: 123/190 (Source: World Bank) |
Tax Calculator in Vietnam
If you are a contractor and want a calculation on your tax and net retention in Vietnam, we can supply it to you free of charge.
Using an Umbrella Company for Income Tax in Vietnam
Contractors in Vietnam are faced with masses of paperwork and numerous wasted hours filing a tax return unless they find an alternative option. A Vietnamese umbrella company can act as your employer during your stay in the country whilst still allowing you the freedom of a contractor. The only difference is that you submit your timesheets to them; they’ll calculate and pay your taxes as you earn, and then you receive a net wage (as well as documentation for your records).
The companies are experts in Vietnamese taxation, and they’ll ensure that you keep the largest proportion of your earnings whilst complying with local laws. They can deal with any issues with the Vietnamese tax office or tax department directly including processing your tax refund if you are eligible.
How We Can Help You with Tax in Vietnam
We work with numerous umbrella companies in Vietnam, many of whom are experts in tax and immigration laws. If you have any questions about tax in Vietnam, we’ll get the answers from them directly so you can rest assured you’ll be getting accurate information. We have comprehensive knowledge of the different services they provide, and can help you find the right company to handle your income tax. We help oil and gas workers, software developers, IT project managers, testers, business analysts and telecommunications contractors get tax efficient payments and sponsorship for their Vietnamese work permit.
Our advice is 100 percent free, and comes with no obligations. You will be paying taxes in Vietnam but without the overhead of directly dealing with the Vietnamese tax authorities. Get in touch with us today for some reliable advice on tax in Vietnam!
A Contractor’s Guide to Work Permits in Vietnam
Immigration is one of the primary concerns for any contractor hoping to start working in Vietnam. Permanent employees will find it easy to get their Vietnamese work permit because they’ll receive “sponsorship” for their entire stay from their prospective employer.
The Vietnamese work permit, known more commonly as the Vietnamese work permit, is dependent on this sponsorship because it confirms that you’ll be earning money during your stay in the country. Contracting in Vietnam is more difficult because the work permit is tied to one employer, so you have to change it to suit each new contract. Thankfully, umbrella companies provide a convenient and effective solution to this issue.
How Does an Umbrella Company Work?
Most people want to do their work, earn their money and enjoy their spare time without taking on loads of admin in a new country. That is why an umbrella company can help.
When you’re working through an Umbrella Company, you’ll essentially be outsourcing the admin and tax issues to specialists.
While the umbrella company will charge a fee, you’ll likely end up saving more money in the long run: you’ll be able to focus on your work, expertly reduce your tax liability, and comply with all laws and regulations in Vietnam (which means avoiding fees, fines, or even worse penalties).
How Can We Help You?
There’s a huge variety of Umbrella Companies with different specialities and advantages in Vietnam. How do you find the right one for your circumstances?
We work closely with Umbrella Companies all throughout Vietnam and match contractors with the right company for them. If you’ve already secured a contract in Vietnam, we can help you find your best match (for free). Or, we can simply give you feedback on your situation (for free).
