The 2014 Law on Social Insurance adds three more groups of subjects to be covered by compulsory social insurance, among them, inclusive of foreigners working in Vietnam and possessing work permits, practice certificates, or licenses issued by competent Vietnamese authorities. It means that foreigners working in Vietnam with work permits or practice certificates or practice licenses granted by competent Vietnamese agencies will be covered by compulsory social insurance from January 1, 2018.
Specifically, the foreign employee will have to pay 8% of his/her monthly wage while his/her employer will have to pay 18% of the employee’s full pensionable wage, making a total contribution of 26% to the social insurance fund, based on their wage, allowances and other additional amounts stated in their labor contract.
Under Vietnamese law, the employees are also provided by their employer with information on the annual payment of social insurance premiums once every six months, and have their annual social insurance premium payment certified by the social insurance agency annually.
BASED ON DECREE
No. 143/2018/ND-CP – Hanoi, October 15, 2018
WHO SHALL BE REQUIRED TO PARTICIPATE IN THE COMPULSORY SOCIAL INSURANCE IN VIETNAM?
Employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory social insurance (SI) program if they obtain work permits, practicing certificates, practicing licenses issued in Vietnam, indefinite-term employment contracts, or employment contracts valid for at least one year with employers in Vietnam.
Employers participating in the compulsory social insurance, including foreign or international bodies or organizations operating within the territory of Vietnam; enterprises, cooperatives, single-person households, cooperative associations, other organizations, and persons who are licensed to do business as per laws, shall be required to participate in the compulsory social insurance if they hire and employ personnel to work under employment contracts.
WHO SHALL BE EXCLUDED FROM PARTICIPATION IN THE COMPULSORY SOCIAL INSURANCE
Employees who are foreign nationals working in Vietnam shall be excluded from participation in the compulsory social insurance as provided herein if:
- They are intra-company transferees as stipulated in the law.
- They reach retirement age under the Labor Code.
CONTRIBUTION RATES AND AFFECTED TIME
For the employees:
About the contribution rates and methods from January 1, 2022, the employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory social insurance (SI) program shall, on a monthly basis, make an SI contribution accounting for 8% of his/her monthly pay to the retirement and death benefit fund.
For the employers:
The employer, on a monthly basis, makes social insurance (SI) contribution in proportion to the employee’s payroll in the SI payment month as follows:
- 3% of the abovementioned payroll paid into the sickness and parental insurance benefit fund;
- 0.5% of the abovementioned payroll paid into the occupational accident and disease benefit fund;
- 14% of the abovementioned payroll paid into the retirement and death insurance benefit fund, in effect from January 1, 2022.
CASES OF THE ONE-OFF SOCIAL INSURANCE REFUND
Cases of the one-off Social Insurance benefit entitlement for foreign workers in Vietnam: Employees who are foreign nationals working in Vietnam shall be required to participate in the compulsory Social Insurance and if those employees wishes to receive the one-off payment, he/she shall be entitled to the one-off benefit entitlement provided that:
- He/she reaches the retirement pension entitlement requirements age, but has not yet reached the period of 20 years of SI contribution;
- He/she is currently suffering from one of the deadly diseases regulated by the Ministry of Health
- He/she has fully satisfied retirement pension entitlement requirements, but has discontinued residing in Vietnam; His/her employment contract is terminated,
- His/her labor permit, practicing certificate or practicing license expires without being permitted for renewal.
MORE NOTES AND TIP
The employee who neither works nor receives salaries or wages for a period of at least 14 working days in each month shall not be bound to pay the SI contribution in that month. This month shall not be taken into account to determine entitlement to SI benefits, except for parental leaves.
For the employee who enter into multiple employment contracts with more than one employer and are required to participate in the compulsory social insurance (SI) program, both the employee and the employer shall only have to pay SI contributions as agreed upon in the first employment contract. If wishing to participate in the occupational accident and disease insurance fund, the employee shall be required to pay SI contributions per each employment contract
If the insured employee who is currently entitled to monthly retirement pensions and SI benefits is not residing in Vietnam, he/she may authorize another person to receive these amounts. The one-off benefit payment in his/her wish shall be approved.
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- Compulsory insurance in Vietnam – What you need to know
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- Expat in Vietnam – managing the required compliance procedures – in 2024
- Taxable income and methods of declaration for Expats – personal income tax in Vietnam
- Full compliance procedures for foreigners who are working in Vietnam
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- Expat in Vietnam 2024 – the local required compliance procedures by laws – one-stop solution
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