Vietnam

How to hire contractors in Vietnam?

Companies hiring contractors in Vietnam usually choose one of two routes: Engaging the contractor directly or working through an Agent of Record (AOR). The right route depends on how much of the contracting, payment, and tax work the business wants to handle itself.

Hire contractors directly

Engaging a contractor directly means the company finds, contracts, and manages the contractor itself. The steps are straightforward:

• Clearly outline the project scope, required skills, and deliverables.
• Use online platforms such as LinkedIn and freelance marketplaces such as Guru.com, VietGigs, Truelancer, and Upwork.
• Draft a comprehensive service contract outlining terms, payment, intellectual property (IP), and dispute resolution.
• Provide the information and resources the contractor needs to start working.
• Handle invoicing, payments, and any tax withholding that applies.

Hiring contractors through Skuad AOR

Engaging a contractor directly in Vietnam leaves your company holding worker classification, tax coordination, and cross-border payment compliance, and each one carries real risk if it is handled inconsistently.

Skuad's AOR service supports contractor engagement from onboarding through payment, so your team can bring on contractors without keeping that admin in-house. Here is what Skuad helps with:

• Onboarding contractors with locally compliant agreements that reduce misclassification exposure
• Built-in worker classification checks that flag risk before it becomes a compliance issue
• Invoice generation, approval workflows, and payment processing from a single dashboard
• Contractor payouts across 70+ currencies with no manual reconciliation
• The move from contractor to full-time employee through Skuad's EOR platform when a role becomes permanent

Book a demo to see how Skuad helps you hire and pay contractors in Vietnam without an entity.

How to pay contractors in Vietnam?

Companies are not required to transfer statutory employee benefits when engaging an independent contractor in Vietnam. When engaging contractors directly, a company handles compliance under Foreign Contractor Tax (FCT) and keeps detailed records of payments, invoices, and tax documents. From there, a few payment methods are common:

Skuad's contractor payments support payouts in 70+ currencies, along with invoice generation and approval workflows so each payment stays documented, and payment records are kept in one dashboard for reporting. This helps keep payment activity consistent and traceable as the number of contractors grows.

What are the challenges of hiring contractors in Vietnam?

Hiring an independent contractor in Vietnam offers flexibility and cost efficiency. A few challenges are worth planning for.

Managing service contracts

A service contract is the right instrument for engaging a contractor, because it keeps the relationship outside the statutory protections that a labour contract carries, but the real risk is misclassification.

If the working relationship starts to look like an employment- direct managerial control, fixed hours, a regular monthly salary- the authorities can treat the contractor as an employee. That brings back taxes, social insurance, and penalties the company did not plan for.

The pattern that tends to get reclassified is a contractor who has not registered as a business and works full-time for one company under close day-to-day direction.

Foreign Contractor Tax (FCT)

Vietnam's Foreign Contractor Tax (FCT) gets pulled into contractor-hiring content often, and it is usually the wrong tax for this situation. FCT applies to foreign contractors, meaning foreign companies or individuals that earn Vietnam-sourced income under a contract with a Vietnamese party without a local entity.

The Vietnamese party withholds it at Corporate Income Tax (CIT) of 0.1% to 10% and Value-Added Tax (VAT) of 2% to 5% under the direct method.

A foreign company engaging a local Vietnamese contractor is not in that situation. The contractor is a Vietnamese resident who files and pays their own personal income tax (PIT), so FCT does not attach to the engagement. FCT becomes relevant only in the reverse case, when a Vietnamese entity pays a foreign contractor.

The practical challenge is making sure the contractor handles their own tax and business registration correctly, rather than applying an FCT withholding that does not belong to this arrangement.

Talent acquisition

Skilled contractors in Vietnam are in high demand, so the strong ones have options and room to negotiate. Agreeing on terms that work for both sides and keeping good contractors engaged across a project takes more effort than it would in a looser market.

How much does it cost to hire contractors in Vietnam?

The biggest line in the budget is the contractor's fee, and that tracks the going rate for the skill. Specialized work such as software, data, and engineering costs more than general or entry-level work, and an experienced contractor with a track record charges more than someone early in their career.

Vietnam is a large software market, so tech pay is a useful reference point. Median monthly pay runs from about VND 12.4 million for an entry-level back-end developer up to around VND 54.9 million for a senior one, with tech leads near VND 51.8 million and data engineers at three to four years of experience around VND 56.9 million.

Contract and freelance rates for the same skills usually sit above the salaried equivalent, since a contractor covers their own tax and receives no benefits.

Where contractors save a company money is the on-costs they do not carry. Hiring an employee means paying mandatory employer social insurance of 17.5%, on top of health and unemployment insurance. A genuine contractor invoices their fee and handles their own tax, so those employer contributions fall away. Routing the engagement through an Agent of Record (AOR) adds a service fee instead.

Hiring contractors directly vs hiring contractors via Skuad

Here's how directly hiring contractors compares with hiring through Skuad's AOR.

Customer story: How did Microsense Networks hire contractors across three markets in Asia with Skuad?

Microsense Networks, a networking company that provides internet connectivity for the hospitality industry, needed to hire contractors across Indonesia, Sri Lanka, and Thailand without setting up entities or taking on classification risk. Skuad supported localized contractor agreements, cross-border contractor payments, and compliance onboarding across all three markets. The result was 9 contractors hired and paid for technical support and management roles through a single platform.

Read the full case study.

Simplify contractor hiring in Vietnam with Skuad

Hiring a contractor in Vietnam is quick to start, but two things catch companies out. First, misclassification: if a contractor works fixed hours under close direction and has not registered as a business, the authorities can treat them as an employee and pull back taxes, social insurance, and penalties. Second, tax: Foreign Contractor Tax often gets applied to local contractors it does not cover, so the withholding is wrong from the start. On top of both, you are paying across borders in a currency that moves.

That is why many companies turn to an Agent of Record like Skuad for the contractor relationship. Skuad supports contractor onboarding, classification checks, and payments from one platform, with access to talent across 160+ countries.

Hire and pay contractors in Vietnam without a local entity. Book a demo

FAQs

1. Can you hire a contractor in Vietnam without a local entity?

You do not need a local entity to engage a contractor in Vietnam. You sign a service contract directly, setting out scope, payment, intellectual property, and dispute terms. The contractor invoices you and handles their own tax. The classification call and cross-border payment sit with your company.

2. Does Foreign Contractor Tax (FCT) apply when you hire a local Vietnamese contractor?

Foreign Contractor Tax (FCT) applies when a Vietnamese entity pays a foreign contractor. A foreign company paying a local Vietnamese contractor is outside FCT, because that contractor is a Vietnamese resident who files their own personal income tax. Applying an FCT withholding here is a common mistake.

3. Who handles a Vietnamese contractor's income tax?

A local Vietnamese contractor is a resident taxpayer who files and pays their own personal income tax, so your company does not withhold it. The practical thing to confirm is that the contractor is properly registered and handling their own tax correctly.

4. What is the risk of misclassifying a contractor in Vietnam?

Vietnam judges the working relationship over the job title. If a contractor works full-time for one company under fixed hours, close direction, and a regular monthly payment, and has not registered as a business, the authorities can treat them as an employee, bringing back taxes and social insurance.

5. How much can hiring a contractor save versus an employee in Vietnam?

Contractors save you the employer on-costs an employee carries. Hiring an employee in Vietnam means paying employer social insurance of 17.5%, plus health and unemployment insurance, on top of salary. A genuine contractor invoices their fee and covers their own tax, so those employer contributions fall away.

6. How do you pay a contractor in Vietnam?

You can pay a contractor in Vietnam by direct bank transfer, international wire, or a platform like Wise or PayPal. Vietnam's currency is the dong (VND), so paying from abroad brings currency conversion costs and, for wires, slower processing. Keeping invoices and payment records for each contractor matters for reporting.