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.
In accordance with the Law on Social Insurance (SI), which went into force in early 2018, the employers and employees have to contribute compulsory insurance and trade union as follows:
| The payers | Social insurance | Health insurance | Unemployment insurance | Trade Union fee | Total |
|---|---|---|---|---|---|
| Employee | 8% | 1.5% | 1% | 10.5% | |
| Employer | 17.5% | 3% | 1% | 2% | 23.5% |
TOTAL: 34% ON THE SALARY AND WAGES
- For the employer: 23,5%
- For the employee: 10,5%
The cap of the salary used as the basis for social insurance contribution is: 29.800.000VND. It means, in case the salary exceeds the cap, the maximum contribution amount will be: 34% x 29.800.000VND only.
Besides the compulsory insurance, you shall declare and pay PIT 20% on local incomes for non-resident expats and pay progressive tax rates from 5% to 35% depending on income levels for resident expats and local employees. The representative office only has to pay PIT.
Foreign workers in Vietnam with a work permit, or a practice certificate or license also going have to contribute health insurance and social insurance. The basis for social insurance contribution will be broadened to include salaries, allowances and other supplementary amounts.
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.
Cases of the one-off Social Insurance refund for Foreign Employees in Viet Nam: 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, or his/her labor permit, practicing certificate or practicing license expires without being permitted for renewal.
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