All You Need to Know About Working as an Independent Contractor in Vietnam
Want to work as an independent contractor in Vietnam? Here’s your A-Z guide
Vietnam is one of the most popular countries among digital nomads and contract workers. It’s because it’s easy on visas (However, it’s not so easy at the moment due to the COVID-19 pandemic). The country has a low cost of living, great food and vibrant places owing to the fact that it’s also popular among tourists and travelers.
But to be able to work as an independent contractor in Vietnam may not be so easy. The country is strict on rules. We’ve put together all the important information you need to know to be able to work as an independent contractor in Vietnam.
Who can work as an independent contractor in Vietnam?
Anyone can engage in freelance work in Vietnam - residents of Vietnam as well as non-residents. However, the conditions for both are different. Non-residents require a work visa if they want to work in Vietnam, legally.
Outsiders cannot work in Vietnam on a tourist visa (for companies in Vietnam). Tourist visas can be utilized for a maximum of three months. However, currently, due to the complicated situation of the COVID-19 pandemic, Vietnam has temporarily suspended the application for new tourist visas to the country. To be able to work as a freelancer in Vietnam (with Vietnamese companies or individuals), one has to apply for a work visa.
However, there’s a way around this. In situations where an independent contractor works online, they can continue doing so without a work visa. For example, a person from Ireland visiting Vietnam for a couple of months working remotely for a company in Ireland can quietly work without worrying about having to pay taxes in Vietnam or the need for a work visa.
How to apply for a work visa in Vietnam?
Tourist visas can be applied in two ways - on arrival in Vietnam or beforehand in your own country. If you want to visit Vietnam and work online for companies based outside Vietnam, you can do so on a tourist visa. But if you want to work legally, you’ll have to apply for a work visa.
Things to know about work visas in Vietnam:
- Vietnam has strict rules for work visas.
- Three categories of individuals can have a work visa in Vietnam: Managers and executives at high positions in companies, specialists and experts and technicians.
- You must apply for a work visa 30 days before the start date of your work.
- You will need a recruitment letter or request letter from a company/business in Vietnam.
- The process involves filling a request form and sharing the required documents with the Department of Labor, Invalids and Social Affairs.
- Companies hiring outsiders also have to provide proof and reasons for recruiting outsiders. Only those vacancies that cannot be filled by Vietnamese nationals can be filled by non-residents.
- Besides, you should prepare the necessary documents before applying for a Work Permit according to the Vietnamese Labor Law. In particular:
* For experts:
- Having a university degree or higher or equivalent and having at least three years of work experience in a specialized field suitable to the job position in which the foreign worker is expected to work in Vietnam; or
- Having at least five years of experience and having a practicing certificate suitable to the position in which the foreign worker is expected to work in Vietnam.
* For technicians:
- Have been trained in a technical field or other fields for at least one year and have worked for at least three years in the trained field; or
- Having at least five years of experience in doing a job suitable to the position that the foreign worker is expected to work in Vietnam.
Taxes to be paid by independent contractors in Vietnam
- In Vietnam, non-resident independent contractors are not considered eligible for any statutory benefits that are provided to employees in permanent jobs. Hence, freelancers are pretty much on their own and have to follow tax rules for personal income tax in the country.
- If you’re a foreigner living in Vietnam your status would be either tax resident or non-resident. Your tax will be determined by your residency status.
Non resident: A person who lives in Vietnam for less than 183 days in a year as a non-resident.
Tax resident: If you stay in Vietnam for more than 183 days in a year and if you have a work visa, are working for a company in Vietnam or working for a company outside of Vietnam but legally involved in work in Vietnam.
- Resident independent contractors (or tax residents) pay taxes on their worldwide income. For example, a Vietnamese national working as an independent contractor in Vietnam for clients in Vietnam, India, USA, Dubai, etc, has to pay taxes on all the income earned from clients in these countries.
- Non-resident independent contractors have to pay taxes on their Vietnamese-sourced income only. They are charged a flat tax rate of 20%. For example, a British national living and working in Vietnam for a Vietnamese company on a freelance or contract basis has to pay tax on the income earned from this Vietnamese source.
- Besides, in case there are charitable contributions, study promotion, humanitarian contributions, voluntary retirement funds and insurance contributions according to Vietnamese Law, this amount will be deducted.
- The determination of taxable income from wages and salaries in Vietnam in cases where non-resident independent contractors work in Vietnam and abroad but cannot separate the income generated in Vietnam, shall be conducted according to the following formula:
- For the case where the individual is not present in Vietnam:
- In the case where the individual is present in Vietnam:
- Other taxable income (pre-tax income) arising in Vietnam mentioned above is other monetary or non-cash benefits that employees enjoy in addition to wages, salaries paid by employers or employees.
- Vietnam has a double tax treaty (DTA) with many countries. This means, non-residents from those countries have to pay tax in their countries and hence aren’t required to pay tax in Vietnam. Independent contractors must note that this is not an automatic process and requires them to apply to the tax authority in Vietnam to get a tax credit for the tax they pay in their country.
- Read more in-depth information about taxation in Vietnam in this article.
- For resident independent contractors, the tax rate varies from 0% to 35% of the income depending on the different income brackets. You can see the tax brackets below.
- Resident independent contractors only pay personal income tax if the income from salary or wages is over 11 million VND/month provided that there are no dependents. For example, if the salary or wage of the resident independent contractor is 15 million VND/month under Labor Contract, the taxable income is only 4 million VND/ month, equivalent to 48 million/ year. Hence, the tax rate shall be 5%.
- Vietnam’s tax year runs from January 1st to December 31st.
- You can read about other taxes to be paid by individuals here.
How to pay taxes in Vietnam?
If you are freelancing in Vietnam as a tax resident, your hiring company or employer will help finalize your PIT (Personal Income Tax) and deduct it directly from your income.
In the case where you are paying taxes in your country, you will have to produce a certificate from your country to prove that you have paid taxes.
If you are a Vietnamese national working as an independent contractor in Vietnam, you will need to file your taxes before the due date or pay monthly taxes. You can pay your tax in two ways:
- Cash payment
- Bank transfer
You have to pay the taxes directly to the state treasury. You will receive a tax voucher, which is proof that you’ve paid the taxes.
Once you get the basics in place, freelancing in Vietnam is easy. The only difficult part is getting a work visa if you have to work legally and if you’re on a tourist visa, renewing your visa every three months. Apart from these formalities, you’re pretty much ready to work as an independent contractor from Vietnam.
Some online resources:
This content was generated by a freelance content writer, Jigna Padhiar, and reviewed by the Law Firm Associates of Successful Lawyers in Vietnam.
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