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Vietnam, formally the Socialist Republic of Vietnam, is a Southeast Asian nation. It encompasses 311,699 square kilometers and is located on the eastern fringe of continental Southeast Asia (120,348 sq mi). It is the world's fifth most populated nation, with a population of approximately 96 million people. Vietnam has maritime boundaries with Thailand through the Gulf of Thailand and the Philippines, Indonesia, and Malaysia via the South China Sea with China to the north and Laos and Cambodia to the west. Hanoi is the capital, while Ho Chi Minh City is the biggest city.
Vietnam has been inhabited since the Paleolithic period. During the first millennium BC, the earliest known states concentrated on the Red River Delta, which is currently situated in northern Vietnam. From 111 BC until the first dynasty formed in 939, the Han dynasty conquered and ruled Northern and Central Vietnam. Successive monarchical kingdoms absorbed Chinese influences through Confucianism and Buddhism and spread southward to the Mekong Delta. The last imperial dynasty, the Nguyn, was colonized by the French in 1887. Following the August Revolution, the communist revolutionary Ho Chi Minh led the nationalist Viet Minh to declare independence from France in 1945.
Throughout the twentieth century, Vietnam was embroiled in protracted conflict. Following World War II, France attempted to recapture colonial sovereignty in the First Indochina War, which Vietnam won in 1954. Soon after, the Vietnam War broke out, dividing the country into communist North backed by the Soviet Union and China, and anti-communist South supported by the United States. Following the North Vietnamese victory in 1975, Vietnam reunified in 1976 as a unitary socialist state led by the Communist Party of Vietnam. The nation was plagued by an inadequate planned economy, a Western trade boycott, and conflicts with Cambodia and China. The Communist Party launched economic and political reforms in 1986, transitioning the nation into a market-oriented economy.
Vietnamese inclusion into the global economy and politics was aided by the reforms. Vietnam, a developing country with a lower-middle-income economy, is one of the fastest growing economies in the twenty-first century, with its total GDP expected to approach that of many wealthy countries by 2050. It is a member of international and intergovernmental organizations such as the United Nations, ASEAN, APEC, CPTPP, Non-Aligned Movement, OIF, and WTO. It has twice taken a seat on the United Nations Security Council.
After 12 months of service, employees are entitled to 12 days of paid yearly leave, plus one additional day for every five years of work with the same company. Vacation is prorated for employees with fewer than 12 months of service. If annual leave is not taken by the end of the year, employees may be paid in place of it.
Viet Nam recognizes 14 national public holidays.
Employees are entitled to anywhere from 30 to 70 days of paid sick leave, depending on how much they contribute to Vietnam's social security system and the sector. Employees in dangerous work conditions, as well as those who have contributed more, are entitled to additional sick leave. While on leave, employees are paid a proportion of their regular salary.
In the case of the birth of twins or multiples, female employees are entitled to six months of paid maternity leave, plus an extra 30 days for each subsequent kid. Depending on whether the infant was born spontaneously, via C-section, or as a single or multiple birth, male employees are entitled to five to fourteen days of paid leave.
There is no statutory paternity leave.
Apart from the already mentioned terms regarding maternity leave, there are no other provisions in the law of Vietnam regarding parental leave.
Employers and employees both have the right to cancel an employment contract with notice. The notice time varies between three and forty-five days, depending on the nature of the contract and who is providing notice. No notice is necessary in certain cases.
Employers are generally required to pay severance to employees with at least 12 months of service, unless the individual is terminated for breaching business regulations, retires with a pension, or terminates the contract illegally or unilaterally. Severance pay is equivalent to one-half month's salary for each year of service.
According to the Vietnam labor code, an employer may terminate a labor contract by providing 30 working days' advance notice for a fixed-term labor contract and 45 working days for an indefinite labor contract. Employers, on the other hand, must have adequate legal grounds for terminating employees.
In Vietnam, it is customary to provide new employees with a probationary period. A probationary period of no more than 60 days for work requiring specialized or highly technical skills, or 30 days for other types of work, is required.
When a worker has worked for more than one year, he or she is entitled to severance pay equal to half a month's wages plus any other benefits, if any, for each year of service. Severance pay must be paid within seven days of termination.
In Vietnam, the standard work week is eight hours per day and 48 hours per week spread over six days, though this may be reduced in certain industries. Each employee is entitled to at least one day of paid time off per week.
Overtime can be implemented with both the employer and employee's consent. Overtime hours cannot exceed 50% of a day's normal working hours. Overtime is limited to 30 hours per month and 200 hours per year, except in certain instances specified by the government, in which overtime is limited to 300 hours per year.
Overtime is compensated at 150 percent of the regular pay rate on normal weekdays. Weekend overtime is compensated at 200 percent of the regular rate of pay. On public holidays, overtime is compensated at 300 percent of the regular rate of pay. Overtime during a night shift will be paid at least twice the regular pay rate.
The following wages are the minimum salary for untrained employees per region.
In Region I, the minimum wage is VND 4,420,000. In Region II, the minimum wage is VND 3,920,000. In Region III, the minimum wage is VND 3,430,000. In Region IV, the minimum wage is VND 3,070,000.
The minimum salary for trained employees must be higher than at least 7% of the regional minimum base salary.
The national system provides basic insurance.
Employers are required by law to offer health insurance to their workers and to conduct yearly health exams.
Supplementary health and life insurance is often given to workers as a perk in order to provide greater coverage than the mandatory health insurance. Small businesses may offer a stipend in place of obtaining insurance.
Extra vacation time is often requested. Employees often anticipate team excursions and business vacations, which are seen as a perk. Such team activities must be regarded essential in a nation with considerable employee turnover.
All taxes are levied on a national scale. The standard rate of corporate income tax (CIT) is 20%. Companies in the oil and gas sector face CIT rates ranging from 32% to 50%, depending on region and project circumstances. Prospecting, exploration, and exploitation of mineral resources (e.g., silver, gold, gemstones) are subject to CIT rates of 40% or 50%, depending on the project's location.
To assist businesses impacted by Covid-19, the government issued Decree 52/2021 on the extension of deadlines for tax and land rental payments in 2021, which took effect on the signing date of April 19, 2021.
For CIT, there is no notion of tax residence. Business organizations formed under Vietnamese legislation are subject to CIT and are taxed on their global revenue. Foreign income will be subject to a 20% CIT. There are no provisions for tax breaks for such earnings.
Foreign organizations that do business in Vietnam without establishing a legal company in Vietnam and/or earning revenue in Vietnam are deemed foreign contractors, regardless of whether the services are provided within or outside of Vietnam. Payments to overseas contractors are subject to Foreign Contractor Tax (FCT), which includes both VAT and CIT components.
Tax residents must pay Vietnamese (PIT) on their global taxable income, regardless of where it is paid or received. Employment income is taxed at a progressive rate. Non-employment income is taxed at a range of rates.
Non-residents are liable to PIT at a fixed rate on income obtained as a consequence of working in Vietnam/on income linked to Vietnam during the tax year, as well as at various additional rates on non-employment income. However, this must be weighed against the terms of any applicable double taxation agreement (DTA).
The tax rates vary among employment income, non-employment income, business income, and for residents and non-residents. Generally, the tax rates range from 0 to 35 percent.
With some exceptions, VAT applies to products and services used for manufacturing, trade, and consumption in Vietnam (including goods and services bought from non-residents). The VAT rates vary depending on the type of products or services:
Export goods/services are taxed at 0%, including goods/services sold to overseas/non-tariff areas and consumed outside Vietnam/in non-tariff areas, goods processed for export or in-country export (subject to conditions), goods sold to duty free shops, certain exported services, construction and installation carried out for export processing enterprises, aviation, marine, and international trade.
A 5% rate is usually applied to sectors of the economy involved with the supply of vital goods and services. Clean water, teaching aids, books, unprocessed foodstuffs, medicine and medical equipment, husbandry feed, various agricultural products and services, technical/scientific services, rubber latex, sugar and its by-products, social housing, and certain cultural, artistic, and sporting services/products are examples of these.
The 10%' standard' rate applies to activities that are not stated as being subject to VAT, exempt, or subject to the 0% or 5% rate.
Before visiting Vietnam to work, foreign people are usually required to get a work permit. The Vietnamese work permit is a legal document that allows a person to work for and be paid by a business in Vietnam.
In some conditions, a foreigner may work in Vietnam without a work permit but with a work permit exemption certificate. This certificate is equal to a work permit and is valid for up to two years. It may be used to apply for a temporary residency card.
Employer and employee names and addresses
Job Description Working Address
Salary for contract duration
The payment date
Advantages in addition
Process of salary review
Benefits of vacation
Information about social and medical insurance
In Vietnam, employment contracts must be in writing, with two copies signed (one for the employer and one for the employee). Verbal contracts are only permitted for work that is shorter than three months in duration.
When you're ready to establish your subsidiary, think about where you want to incorporate and what business criteria are crucial to you. Because Vietnam has stringent regulations for foreign investments, it is critical to grasp Vietnam subsidiary laws from beginning to end. The government requires licensing and approval procedures in specific areas, as well as an Investment Registration Certificate (IRC) for foreign investments.
The location of your Vietnam headquarters will also have an impact on the Vietnam subsidiary creation procedure. Different areas and localities may have different policies, fees, and availability that affect your business. If you opt to go through the process on your own rather than outsource it, working with consultants, attorneys, and others to ensure compliance will be beneficial.
A corporation, a branch office, or a representative office are the three kinds of commercial organizations that may be formed in Vietnam. While each has its own set of Vietnam subsidiary rules and procedures, the most typical alternative is to form a limited liability company (LLC) inside a corporation. The following steps are involved in the formation of an LLC:
1. Putting together a group of investors
2. Putting in place a management structure
3. Meeting accounting and auditing standards
The subsidiary rules regulating LLCs in Vietnam are quite complicated. There are various conditions to meet, and it may be a complex and expensive procedure. Though there would be no minimum capital requirement, you will need to acquire investors to form an LLC. You may choose a single investor or a group of investors with at least two shareholders and no more than 50 members. The corporation may function as a wholly foreign-owned enterprise or as a joint-venture company with both foreign and local investors.
A members' council comprising a chairman, a director or general director, and a controller should be part of your company's management structure. If your LLC has more than 11 members, you'll also need a board of supervisors, but the members' council, which comprises all capital-contributing members, is in charge of making decisions.
Every business must generate financial statements and submit a balance sheet and profit and loss statement with the Ministry of Finance and local tax authorities. Foreign-invested companies must also submit to an annual audit by an independent auditor based in Vietnam.