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Many FDI companies only discover gaps in social insurance for foreign employees when the social insurance authority inspects them or the auditor asks about expat salary costs. The right question is not "do expats have to contribute?", but "is this specific person covered, and which documents prove it?". Below is how the accounting services team at ACCA Consulting Vietnam reviews each expat file.
1. Social insurance for foreign employees: the general principle
Under current regulations, foreign employees working in Vietnam under an employment contract and holding a work permit (or a practising certificate or practising licence) are subject to compulsory social insurance (BHXH – bảo hiểm xã hội), except in excluded cases. The conditions on contract term and on which insurance schemes apply to foreign employees should be checked against the latest regulations, as the Law on Social Insurance has been amended and the guidance may change.
The difference from Vietnamese employees is that not every insurance scheme applies in the same way. For example, unemployment insurance is subject to its own conditions, so the company should check before declaring rates on the system. Do not simply copy the payroll setup for Vietnamese staff to expats.
2. Checklist to determine whether an expat is compulsorily covered
For each expat, the payroll accountant should answer all of the following questions and keep the evidence in the HR file. If even one answer is unclear, provisionally classify the person as "to be checked" rather than assuming no contributions are due.
- Does the person hold a valid work permit, or are they exempt from a work permit (with a written confirmation)?
- Is the employment contract signed directly with the Vietnamese legal entity, or is there only an assignment letter from the parent company?
- Which basis is stated on the work permit: employment contract or intra-corporate transfer?
- Does the contract term meet the minimum term required under current regulations?
- Has the employee reached the statutory retirement age?
- Is there an international treaty (a social insurance agreement) between Vietnam and the expat's country that provides otherwise?
- Which items make up the salary used as the contribution base, and does it exceed the statutory contribution ceiling?
3. Exclusions that need careful checking
The three most common exclusions in FDI companies are intra-corporate transfers, employees who have reached retirement age and the application of an international treaty. The risk is that the company assumes an exclusion applies but does not keep supporting documents.
| Case | How to recognize it | Evidence to keep | Risk if missing |
|---|---|---|---|
| Intra-corporate transfer | Work permit issued on an intra-corporate transfer basis; still an employee of the parent company | Work permit, assignment letter, parent company's confirmation of employment | Found to be covered; back contributions plus late payment interest |
| Retirement age reached | Date of birth and gender compared with the retirement age under the phased schedule | Passport, age calculation at the contract signing date | Low, but needs updating when the age schedule changes |
| International treaty | The expat's country has a social insurance agreement with Vietnam | Copy of the agreement, certificate of continuing coverage in the other country | Incorrect application if no certificate |
| No contract with the Vietnamese entity | Only an assignment letter; salary paid from abroad | Assignment letter, cost allocation agreement | Easily treated as a de facto employment relationship |
4. Impact on payroll costs: an illustrative example
Suppose the company has one expat with a contribution base salary of VND 40 million/month (≈ USD 1,570, approximate at VND 25,500/USD), below the ceiling. Applying the general rates of 21.5% for the employer and 10.5% for the employee, the monthly cost is as follows. The actual figure for foreign employees may be lower depending on which schemes apply.
Illustrative example using the general rates. Check which schemes apply to foreign employees before calculating.
View as table
| Social insurance (BHXH) 17.5% | 7,000,000 VND |
| Health insurance (BHYT) 3% | 1,200,000 VND |
| Unemployment insurance (BHTN) 1% (if applicable) | 400,000 VND |
| Total 21.5% | 8,600,000 VND |
Over 12 months, the employer's share comes to about VND 103.2 million per person. If the contract specifies a net salary, the company also bears the employee's 10.5% share and the corresponding personal income tax. This is why the insurance treatment should be settled before the offer is signed; see also how to convert a net salary to gross.
5. Registering an expat for social insurance
- 1Classify
Use the checklist in section 2 to place the expat in the covered, excluded or to-be-checked group.
- 2Collect documents
Passport, work permit, employment contract, residence details in Vietnam.
- 3Declare the new employee
Prepare the registration file on the social insurance e-transaction system using the current form.
- 4Configure payroll
Set up separate rates for expats, distinct from the setup for Vietnamese employees.
- 5Reconcile monthly
Compare the amount payable on the social insurance authority's notice with the payroll and accounting records.
6. Common mistakes and how to avoid them
- Assuming expats do not contribute because "the parent company already pays abroad", without an agreement or a certificate.
- Forgetting to deregister when the work permit expires or the expat returns home, so contributions keep falling due.
- Using the wrong contribution base: omitting allowances of a salary nature, or including benefits that are not part of the salary subject to social insurance.
- Not aligning with PIT: the employee's compulsory social insurance contributions are deducted when calculating assessable income, so an insurance error leads to a tax error.
FAQ
Does an expat on a short-term contract have to pay social insurance?
The minimum contract term is set by current regulations and has changed under the amended Law on Social Insurance. The company should compare the actual contract term with the latest regulations before deciding not to contribute.
What documents should an intra-corporate transferee keep?
Keep the work permit stating the intra-corporate transfer basis, the assignment letter and the parent company's confirmation of the employment relationship. These are the main evidence when the social insurance authority inspects.
Are the employer's social insurance contributions for an expat deductible?
Compulsory insurance contributions made in accordance with the regulations and supported by documents are usually deductible for corporate income tax (CIT/TNDN). Contributions for ineligible persons or above the statutory levels need to be considered separately.
Does an accounting service also handle social insurance declarations for expats?
It depends on the scope of the contract. At ACCA Consulting Vietnam, payroll and insurance are agreed within the scope of the accounting service from the outset, so the company knows clearly who does what.
Review expat social insurance before back contributions are assessed
Send your list of expats and their work permits, and ACCA Consulting Vietnam will classify each person and point out what needs to be added.
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