How to set up as an independent contractor in Vietnam

If you’re ready to turn your back on the 9-to-5 grind, then Vietnam is an ideal locale to go it alone as an independent contractor.

Whether you’re looking to work from the bustling markets of Hanoi, the dreamlike emerald waters of Hạ Long Bay, or the city beaches of Da Nang, this storied Southeast Asian country offers the perfect balance between work and lifestyle. And as one of the fastest-growing economies in the world — with a burgeoning IT sector — there are plenty of opportunities for potential clients, too.

Before you can get started, though, you’ll need to know how to:

• Register your business in Vietnam

• Avoid misclassification as an employee

• Create compliant contracts that protect you

• Invoice and collect payments from around the world

In this article, we’ll cover all these things, and help you navigate your tax responsibilities as a self-employed worker. We’ll also discuss some of the other risks and liabilities you should be aware of.

First, it’s important to clarify how Vietnam defines independent contractors.

What is an independent contractor according to Vietnamese law?

Independent contractors are workers who provide paid services (or products) to another party. However, they are classified differently to employees, and are usually not entitled to the same benefits, such as paid leave, sick days, and minimum wage. On the flip side, contractors have more freedom and flexibility in the way they work.

See also: Why businesses hire contractors vs. international employees

In Vietnam, there is no specific law or code that covers independent contractors. However, the Labor Code of Vietnam outlines the legal definitions of employer-employee relationships and contractual agreements. Based on these guidelines, you can generally be considered a contractor if you:

• Determine your own work schedule and working hours

• Perform work for other companies

• Set your own rates and scope of work

• Provide your own tools or equipment

• Are not integrated into one specific company and its operations (i.e. you don’t have an internal email address)

• Are able to delegate or subcontract work

• Work without direction or supervision

When you work with clients, it’s important to be correctly classified to avoid penalties and fines, and to ensure that you are paying the right taxes.

Business registration in Vietnam

Before you can begin working as an independent contractor in Vietnam, you’ll first need to choose a formal structure for your business.

The most popular model for sole owners is the sole proprietorship structure, as it’s relatively easy to set up and maintain. In this structure, you have full control of the enterprise, although there is no legal separation between you (the owner) and the business; you are personally responsible for all its debts and liabilities.

If you want more legal protection, you’re working with other partners, or you anticipate generating a large amount of revenue, you can also incorporate a formal company or enter into a partnership. If you’re unsure which structure is most suitable for your business, it’s a good idea to speak with a registered solicitor or accountant.

If you do opt for the sole proprietor model, you will need to register your business with the Department of Planning and Investment (DPI). You can do this in person at your local business registration office, or online through the DPI’s Business Registration Portal. This process should take around three to 10 working days.

You must also acquire a tax code from your local district tax office, if you don’t already have one.

If your business activity is regulated (i.e. you practice a protected profession such as medicine or law, or you’re handling food), you may also need to acquire the relevant business permits or licenses from your local issuing authority.

How do I get paid as an independent contractor in Vietnam?

As an independent contractor, it’s down to you to handle your invoices and payment collection. Unfortunately, this means billing each client individually and collecting payment through their preferred payment method — which can be inefficient and time-consuming.

Some of the most common ways to collect payments include:

• Bank transfers

• Direct deposits

• Paper checks

• Money orders

• Virtual wallets

• Digital transfer services like PayPal and Wise

These methods all have their own pros and cons. For instance, bank and digital transfers can be pretty quick, but often come with hefty service fees. And if you have clients in other countries besides Vietnam, the payment collection process can be even more complicated. 

Alternatively, you can use a trusted solution like Remote. Our platform is a simple, secure, and reliable way to get paid quickly in Vietnamese đồng — and with no hidden fees. Learn more about how our platform can help.

Independent contractor taxes in Vietnam

As an independent contractor, you’re responsible for filing and paying your own taxes and social security contributions.

In Vietnam, you pay tax on your business income of between 0.5% and 5%, depending on your business activity. You only need to pay personal income tax if your annual business income exceeds ₫100 million (around $4,250). Personal income tax rates are progressive, ranging from 5% to 35%, depending on your level of income.

As a sole proprietor, you do not have to pay corporate taxes.

You must also make monthly contributions to the social, health, and unemployment insurance systems. The amount you pay depends on your level of income. Note that it’s possible to claim tax deductions on these payments.

You must file your annual tax return by the end of April each year. According to PwC, business income must be declared and paid on a receipt basis.

VAT information for independent contractors in Vietnam

If you provide goods or services in Vietnam, you must charge VAT, regardless of your level of income. You must submit and pay your VAT declarations through e-invoices on the General Department of Taxation website.

In Vietnam, the standard VAT rate is 10%, although some goods and services are charged at lower rates. 

Liability considerations for independent contractors in Vietnam

As a sole proprietor, you are personally liable for finance and tax debts, which means your private assets can be forcibly used to settle your business debts. Many independent contractors purchase liability insurance to help mitigate this risk.

It’s also important to cover yourself when drafting and signing agreements with clients. Our legal experts can provide you with fully compliant contract templates, for both Vietnamese and international clients.

Accounting requirements for independent contractors in Vietnam

As a sole proprietor, it’s unlikely that you will need to publish financial statements or accounts. However, you should still keep organized, accurate records of all your income and expenditure (including client invoices, VAT invoices, purchase orders, bank statements, and receipts). This will help you correctly file your taxes, give you a stronger picture of your financial situation, and generally make life easier if you are audited by the tax authorities.

You can either manage these records yourself using an accounting or bookkeeping tool, or hire a professional bookkeeper or accountant.

The dangers of contractor misclassification in Vietnam

As we’ve mentioned, independent contractors are classified differently to employees in Vietnam. Many of the protections and benefits employees enjoy do not typically apply to contractors.

As a result, companies may deliberately misclassify you to circumvent their legal obligations, while at other times, it may happen accidentally. Whether it’s intentional or not, misclassification can result in penalties and fines for both you and your client.

As an independent contractor, you can work with your clients to ensure this doesn’t happen. Discuss your role and responsibilities with them, and review the working arrangement regularly.

If your working relationship changes over time and you become more integrated into a client’s company, you can ask to be converted into an employee.

Use our Contractor Compliance Checklist to avoid misclassification

Work through this checklist to help determine if a new hire should have a contractor or employee relationship.

Download

How do I ask the company I’m working with to convert me to an employee in Vietnam?

Open a dialogue with your client and carefully discuss the risks and benefits of moving to an employer-employee relationship. In particular, be clear about how it can benefit both parties — not just you.

You can even suggest the help of a third-party solution, such as Remote, to ease the transition. Our global employment services help both parties stay compliant by taking care of key HR functions (like payroll management and benefits administration) in line with Vietnamese law.

4 ways Remote makes life easier for contractors and their clients

As you can see, there’s a lot to take on board when setting up as an independent contractor. Remote can help you with many of these challenges, allowing you to focus on growing your business and delivering to your clients. Here’s how:

1. International payments in countries around the world

Navigating all of your clients’ different invoicing, approvals, and payments systems can be complicated and time-consuming. And manual methods of invoicing and collecting payments can increase the risk of fees, errors, and delays.

Remote gives you access to a highly secure, streamlined dashboard that makes invoice management and international payments cost-effective and efficient. You can use our platform to get paid in Vietnamese đồng (or other currencies), without any hidden fees.

2. Localized in-app contracts and advice

When you draft agreements and contracts for your clients, you run the risk of non-compliance with local labor laws — especially when working with international clients. Remote offers localized contracts tailored to Vietnamese laws, ensuring that you stay compliant. Our legal experts can also provide guidance on complex issues, such as local classification and intellectual property protections.

3. Invoicing automation

With Remote, you no longer need to rely on spreadsheets and other manual tools to invoice for payments; we remove many of the inaccuracies and delays caused by archaic processes and manual management. Our platform lets you create invoices, submit them for approval, and subsequently get paid in your local currency without needing to switch to any other tool or software.

4. Tax management

Tax management is notoriously complex work. Remote helps you quickly and efficiently deal with tax management by compiling data about your income based on your invoices and payments received.

Setting up as an independent contractor in Vietnam

Having the freedom and flexibility to work on your own terms is liberating. But your administrative responsibilities can distract from what you really want to be doing: helping your clients, delivering great work, and collecting invoices.

By using a stable, trusted platform like Remote, you can manage these obligations quickly and efficiently, allowing you to focus on your business goals. Specifically, we can help you:

• Avoid intermediary fees and delays with international client payments

• Draft compliant contracts for Vietnamese and foreign clients

• Enhance your invoice management and avoid manual processes

• Comply with local labor laws regarding work practices

Our platform makes it quick, simple, and seamless to get started as an independent contractor. Learn more about how our expertise can save you time and resources today.