A Treaty That Exists on Paper Only
In 2015, US and Vietnamese negotiators signed a Double Taxation Agreement. Over a decade later, it still hasn't cleared ratification in both countries and remains legally not in force. For tax planning purposes, Vietnam functions exactly like Oman or Saudi Arabia, no treaty protection, no Totalization Agreement, despite having taken the diplomatic first step that those Gulf countries never did.
Why "Signed" Doesn't Mean "In Effect"
A tax treaty typically requires ratification, formal approval by each country's legislative process, before it takes legal effect. The US Senate must give advice and consent to any tax treaty, and the 2015 Vietnam agreement has not received that. Until ratification happens (if it ever does), Americans in Vietnam should plan as though no treaty exists at all, don't rely on treaty provisions you may have read about assuming they're already active.
Your Actual Relief: FEIE and the Foreign Tax Credit
Both the Foreign Earned Income Exclusion and the Foreign Tax Credit operate under US domestic law (IRC Sections 911 and 901 respectively) and require no treaty to function. This is genuinely good news, unlike countries where treaty absence removes a real planning tool, Vietnam's missing treaty mostly just means no reduced withholding rates on dividends/interest/royalties and no treaty-based residency tie-breaker, edge cases most salaried expats never encounter.
No Totalization Agreement: The Self-Employment Tax Trap
Totalization Agreements prevent double payment of social security taxes between two countries. None exists between the US and Vietnam, so self-employed Americans, freelancers, sourcing agents, small business owners, generally owe the full 15.3% US self-employment tax on net earnings, with no Vietnamese social insurance contribution to offset it against.
Employees vs. Self-Employed
A standard payroll employee of a US company working remotely from Vietnam does not pay self-employment tax, their employer handles standard withholding. The gap specifically hits independent contractors, freelancers, and business owners structuring their own income. If you're transitioning from employee to freelance status, or setting up a sourcing/manufacturing entity, model the 15.3% SE tax cost carefully.
Worked Example: A Sourcing Agent Freelancer
An American freelance sourcing agent based in Ho Chi Minh City bills $88,000 to US import clients. The FEIE shields the income from US income tax, but self-employment tax is calculated separately: she still owes roughly $12,400 in SE tax (15.3% of net earnings after the standard adjustment), unaffected by the FEIE and unaffected by the unratified treaty, since neither addresses self-employment tax.