Vietnam is a large contractor market for software, design and support work, and engaging a contractor there is legal and routine. The two things to get right are classification, because the Labour Code looks past a contract’s title, and the contractor’s tax route, which changed in 2026: the lump-sum tax for household businesses is gone, a new Personal Income Tax Law applies to 2026 income, and revenue up to VND 1 billion a year is now tax-free for household businesses. This guide covers the legal forms, the contract and the currency rules. The payment side is on our Vietnam payouts page. It is general information, not legal advice.
Two ways a Vietnamese contractor can work
As an unregistered individual. Fees a foreign company pays a Vietnamese individual are generally treated as salary and wage income under Article 3 of the 2007 PIT Law (Tuoi Tre, checked 2026-09-28). With no local payer to withhold, the contractor declares directly with the tax office on Form 02/KK-TNCN, quarterly since the April 2026 period (EY Vietnam, May 2026), and finalises the year by 30 April (Viet An Law, checked 2026-09-28). Law No. 109/2025/QH15 applies its employment and business income rules to the whole 2026 tax year (KPMG, checked 2026-09-28). Residents deduct VND 15.5 million a month for themselves and VND 6.2 million per dependant, then pay:
| Monthly taxable income | Rate |
|---|---|
| Up to VND 10 million | 5% |
| VND 10–30 million | 10% |
| VND 30–60 million | 20% |
| VND 60–100 million | 30% |
| Over VND 100 million | 35% |
Source: Vietnam Law Magazine, checked 2026-09-28. Residency starts at 183 days in Vietnam in a calendar year or in 12 consecutive months.
As a household business (hộ kinh doanh), registered with the commune-level business registration office (Decree 168/2025, checked 2026-09-28). The lump-sum method ended on 1 January 2026 under Resolution 198/2025/QH15, and households now self-declare actual revenue (Viet Nam News, checked 2026-09-28). Decree 141/2026 lifted the tax-free threshold from VND 500 million to VND 1 billion a year, effective from 1 January 2026: at or below it, no PIT and no VAT; above it, the business must issue electronic invoices (Vietnam Law Magazine, April 2026). Above the threshold and up to VND 3 billion, the business chooses between an industry percentage of revenue and 15% of revenue minus expenses; 17% applies up to VND 50 billion (EY Vietnam, December 2025).
The gap between the routes is large. At USD 3,000 a month, about VND 77.9 million at the mid-market rate Wise showed on 2026-09-28, the individual route costs roughly VND 9.2 million a month in PIT with no dependants. The same revenue, VND 935 million a year, stays under a household business’s VND 1 billion threshold and pays none. Which route applies is the contractor’s decision, made with the tax office; your part is a contract and invoices that match it.
Reclassification risk
Article 13 of the Labour Code defines an employment contract by content: a document with a different name “is also considered an employment contract if it contains the agreement on the paid job, salary, management and supervision of a party.” A monthly retainer, fixed hours, a manager who assigns daily tasks and a single client together look like that agreement, whatever the contract is called.
Reclassification brings employer contributions for social insurance (17.5%), health insurance (3%) and unemployment insurance (1%), 21.5% of salary in total (PwC, reviewed 2026-09-23). For a foreign company without a Vietnamese entity, the exposure tends to surface later: when you open a local entity, when a contractor brings a labour dispute, or in due diligence. Project-scoped work with the contractor’s own schedule and other clients is low-risk. For the general test, see contractor misclassification.
What to put in the contract
- A written services agreement scoped to deliverables, rate, currency and payment dates, with the contractor as an individual or as their household business.
- IP in writing. Under Article 39 of the Law on Intellectual Property, the party that contracts with an author to create a work owns the economic rights, unless otherwise agreed. The default helps you, but a contract under foreign law, or one that says little, leaves room for argument, so assign all economic rights in code and deliverables expressly. Moral rights are narrower to move: since the 2022 amendment an author may transfer only the rights to publish and to title the work, and keeps attribution and integrity (Tilleke & Gibbins, checked 2026-09-28). Add the author’s advance consent to modification of the code.
- The payout currency. Name USD or VND and who bears conversion and bank fees; dong received into a VND account cannot be moved back into a foreign-currency account by the individual.
- Independence markers: the contractor’s own equipment and hours, deliverable-based acceptance and the right to serve other clients.
Taxes and paperwork
The contractor’s side. Choose a route, declare quarterly (an individual on Form 02/KK-TNCN, a household business on its revenue), and finalise by 30 April. For Vietnamese citizens the tax code has been their 12-digit personal ID number since 1 July 2025 (baochinhphu.vn, checked 2026-09-28).
The client’s side. Pay gross against invoices. A Vietnamese entity would withhold 10% on service payments to residents from VND 5 million (Acclime, checked 2026-09-28); a foreign payer leaves the declaration to the contractor. US payers collect a W-8BEN and file no 1099. There is no US–Vietnam income tax treaty in force: it was signed in 2015 and still awaits US Senate approval, and Vietnam is not on the IRS treaty list (checked 2026-09-28). Keep the contract, invoices and proof of each payment.
Currency rules on the contractor’s side
A resident individual may receive foreign currency transferred from abroad into a foreign-currency payment account, hold it and withdraw it as cash (SBV Circular 16/2014, Art. 4, checked 2026-09-28). Inside Vietnam, prices and payments must be in dong (SBV Circular 32/2013), so the contractor sells dollars to a bank, which quotes within a 5% band around the State Bank’s daily central rate (VnExpress, July 2026). Banks report every international transfer of USD 1,000 or more to the State Bank’s anti-money-laundering unit (Duane Morris, January 2026), and may ask the contractor for the contract and invoice behind a payment.
How to pay contractors in Vietnam
Wise delivers dong to Vietnamese bank accounts, up to VND 499,999,999 per transfer (Wise Help Centre, checked 2026-09-28). Payoneer and PayPal pay USD balances that the contractor withdraws to a local bank, and a SWIFT wire can go straight to a USD account. Rails, costs, failure points and the platforms that pay Vietnamese contractors are compared on our Vietnam payouts page.
Contractor of Record in Vietnam
A Contractor of Record signs the contract with the Vietnamese contractor, keeps the invoices and documents that support their quarterly declaration, and checks independence before the relationship drifts into what Article 13 describes. It fits long engagements and teams. Where the role is really a job, hire through an EOR and budget for the 21.5% employer insurance. Compare providers in our COR rating.