Payroll is a crucial component of a company’s financial and HR operations. However, it’s more than just calculating working hours and base salary; it involves various taxes and mandatory deductions that businesses must comply with. In 2025, several tax and insurance regulations are set to change, directly impacting payroll calculations and the financial responsibilities of both employers and employees.

In this article, NIC Global helps you stay updated on the common taxes and deductions in payroll, while offering professional payroll solutions to ensure compliance and efficiency.

1. Personal Income Tax (PIT)

This is the most common tax, which must be withheld at source before paying employees. PIT is calculated using progressive tax brackets for residents and a flat rate of 20% for non-residents.

2025 Update: The personal exemption remains at VND 11 million/month for the taxpayer and VND 4.4 million/month per dependent.

2. Compulsory Social Insurance (SI)

Both employers and employees must contribute based on the declared salary. The minimum base is the regional minimum wage, and the maximum is 20 times the statutory base salary.

2025 Contribution Rates:

• Employee: 8%
• Employer: 17.5%

3. Compulsory Health Insurance (HI)

Deducted monthly to ensure employees are entitled to healthcare benefits under the law.

2025 Contribution Rates:

• Employee: 1.5%
• Employer: 3%

4. Unemployment Insurance (UI)

Provides financial support to employees in the event of job loss.

2025 Contribution Rates:

• Employee: 1%
• Employer: 1%

5. Trade Union Fee

Employers are required to contribute 2% of the salary fund used for social insurance, even if there is no grassroots trade union.

6. Corporate Income Tax Related to Salary Costs

Salary expenses are considered deductible if they comply with Circular 78/2014/TT-BTC and Decree 132/2020/ND-CP on related-party transactions. All salary and bonus payments must be documented to qualify for Corporate Income Tax deductions.

7. Internal Deductions According to Company Policies

Some companies apply internal deductions for non-tax-exempt lunch allowances, uniforms, or voluntary health insurance. These must be clearly stated in company policies and employment contracts.

8. Salary Advances and Internal Loans

If employees have outstanding advances or internal loans, companies may deduct repayments from monthly salaries, but only with prior written agreement.

9. Deductions Due to Disciplinary Measures

According to the 2019 Labor Code, salary deductions for damage compensation must not exceed 30% of the employee’s net salary and must follow legal procedures.

10. Deductions Required by Government Authorities

Includes deductions mandated by tax authorities, courts, police, or enforcement agencies. Companies must strictly comply with these decisions.

Key Changes to Watch for in 2025

• New Social Insurance Law (Effective July 1, 2025): Expands compulsory participation, revises retirement/maternity policies, and strengthens links with freelance workers.
• Tighter PIT enforcement: Includes bonuses (e.g., Tet bonuses), cash benefits, ESOP shares.
• Mandatory electronic reporting nationwide: For labor usage and social insurance contributions.

Why Payroll Deductions Are Prone to Errors

• Constant changes in laws make it hard for HR/accounting to keep up.
• Manual Excel-based calculations are error-prone and hard to audit.
• Lack of payroll software makes it difficult to track history and extract data.
• Misclassification of taxable and non-taxable income for PIT.
• Incomplete documentation impacts tax finalization and cost deductibility.

Solution: Professional Payroll Services by NIC Global

With over 20 years of experience in HR and finance-accounting, NIC Global offers full-package payroll solutions that help your business:

Ensure accuracy, timeliness, and legal compliance
Minimize risks of errors, tax penalties, or employee disputes
Keep payroll data confidential and secure
Generate customized reports and integrate with existing software
Get ongoing support on updated tax, insurance, and labor regulations

Conclusion

Payroll is more than just paying salaries—it reflects your company’s compliance and financial-HR efficiency. With regulations evolving rapidly, professional payroll services offer peace of mind, cost optimization, and more time to focus on core business activities.

Don’t let payroll deduction errors harm your reputation or finances.
Contact NIC Global for precise, transparent, and optimized payroll services in 2025!

For contact and support:

Facebook: NIC Global – Human Resource Solutions
LinkedIn: NIC Global Sourcing JSC
Website: www.nicvn.com
Email: info@nicvn.com
Hotline: (+84) 981.23.43.76
Address:

• Hanoi Office: No. 3A Thi Sach, Pham Dinh Ho Ward, Hai Ba Trung District, Hanoi, Vietnam
• Ho Chi Minh City Office: Dakao Center Building, 35 Mac Dinh Chi, District 1, Ho Chi Minh City, Vietnam

See more:
Payroll service
Staffing service
EOR service