Guide to Calculating Gross and Net Salary - Latest 2025 Updates

Significance of base salary:

• Basis for calculating salaries for officials, civil servants, and public employees
• Calculate allowances and benefits according to law
• Calculate activity fees and living expenses
• Calculate deductions and other benefit schemes

• Region I: 4,960,000 VND/month (23,800 VND/hour)
• Region II: 4,410,000 VND/month (21,000 VND/hour)
• Region III: 3,920,000 VND/month (18,800 VND/hour)
• Region IV: 3,450,000 VND/month (16,600 VND/hour)

• Taxpayer: 11,000,000 VND/month (132 million/year)
• Per dependent: 4,400,000 VND/month

Taxable Income = Gross Income - Non-taxable items - Personal Deduction - Dependent Deduction - Insurance paid

Tax calculated on taxable income as follows:

• Level 1: Up to 5,000,000 → 5%
• Level 2: Over 5,000,000-10,000,000 → 10%
• Level 3: Over 10,000,000-18,000,000 → 15%
• Level 4: Over 18,000,000-32,000,000 → 20%
• Level 5: Over 32,000,000-52,000,000 → 25%
• Level 6: Over 52,000,000-80,000,000 → 30%
• Level 7: Over 80,000,000 → 35%

Gross Income (Total/Pre-tax Income) is the total income of an employee including all:

Net Income (After-tax Income) is the actual amount received after deducting:

6.1. Labor Contract (Permanent Employee)

• Social Insurance: 8% of social insurance contribution base
• Health Insurance: 1.5% of health insurance contribution base
• Unemployment Insurance: 1% of social insurance contribution base
• Personal Income Tax: Calculated on taxable income

Note: Social insurance contribution base may differ from actual salary (maximum 20 times base salary = 46,800,000 VND).

6.2. Service Contract (Contractor/Service/Freelancer/Task-based)

• No social insurance, health insurance, or unemployment insurance contributions.
• Personal Income Tax: 10% withholding on income (if 2 million VND or more per payment), employee must file annual tax return for refund or additional payment if insufficient.
• Income < 2 million VND per payment: No withholding.
• Income ≥ 2 million VND per payment: 10% withholding.

6.3. Probation Contract

• No social insurance, health insurance, or unemployment insurance unless probation is within a labor contract ≥ 1 month.
• Maximum duration: 6 days to 180 days (depending on position).
• Minimum salary: 85% of official salary.
• Only one probation period per job.

Except for the allowances below, other allowances are still subject to personal income tax

• Meal allowance: After July 1, 2025, NO maximum limit of 730,000 VND/month applies.
• Hazardous and dangerous work allowance.
• Regional and attraction allowances.
• Emergency hardship allowance.
• Defense and security allowance.

Housing allowance:

• Taxable portion ≤ 15% of total taxable income (excluding housing allowance).
• Portion exceeding 15% is non-taxable.

Rent paid by company on behalf of employee is only subject to personal income tax for the actual amount paid or 15% of taxable income (before adding this housing amount), whichever is lower.

Conditions: (i) Company signs contract directly with landlord; (ii) lease contract clearly states purpose for employee accommodation; (iii) Labor contract with employee clearly specifies this arrangement.

The following 14 allowances and benefits are not subject to insurance if listed as separate items in the labor contract:

• Attendance bonus
• Innovation bonus
• Meal allowance
• Fuel allowance
• Phone allowance
• Transportation allowance
• Housing support
• Childcare support
• Child support
• Support when employee's family member dies
• Support when employee's family member gets married
• Support for employee's birthday
• Support for employees in difficult circumstances due to work accidents
• Support for employees in difficult circumstances due to occupational diseases

Other allowances and benefits paid regularly with salary will be included in the social insurance contribution base.

In practice, these two calculation methods do not create differences in total costs for businesses and actual employee income.

9.1. Advantages of Gross Income

• More transparent about benefits
• Easier to calculate insurance contributions
• Clearly shows total job value
• Clearly shows social insurance contribution level

9.2. Advantages of Net Income

• Provides clear view of actual income
• Easier personal financial planning
• Avoids unexpected tax situations
• Suitable for less experienced employees

Need to review:

• Address and work location to apply correct regional minimum wage; if new zoning results in lower minimum wage than before, still apply the old rate
• Contract type to determine social insurance or tax-only contributions
• Allowances with invoices for tax optimization
• Social insurance contribution base to ensure employee benefits

Avoid violations:

• Contributing social insurance below regulations
• Incorrectly declaring taxable income
• Not paying tax on cash allowances