This rule may lead to the double taxation of social insurance for non-Vietnamese employees.
In accordance with the Law on Social Insurance, which went into force early last year but will not cover foreign nationals working in Vietnam until early 2018, foreign workers in Vietnam with a work permit, or a practicing certificate or license will have to contribute insurance.
SOCIAL INSURANCE FOR EXPATRIATE EMPLOYEES
In practice, a certain number of foreign nationals who come to Vietnam for an assignment still maintain social security in their home countries or enter a voluntary healthcare program. For such cases, statutory social and health insurance will result in additional costs for employees and their employers.
The enforcement of social and health insurance for foreign nationals without signing Totalization agreements with any countries would lead to double taxation of income with respect to social security taxes. Totalization agreements are meant to protect the benefit rights of those working between two or more countries and do away with situations where workers pay social security taxes to two countries on the same income.
The Law on Social Insurance, which the National Assembly passed on November 20, 2014, broadens the definition of the salary used as the basis for social insurance contribution (*). Many FDI in Vietnam has expressed concerns about changes in legislation.
Wages and allowances are used as the basis for social insurance in the period from January 1, 2016, to December 31, 2017. However, from early next year onwards, the basis for social insurance contribution will be broadened to include salaries, allowances and other supplementary amounts, making the burden of labor cost heavier (*).
(*) In order to update, manage and optimize the labor cost, many FDI companies have been using outsourcing service for payrolls and other procedures related to expats from consultant firms. The consultant can support to verify situation – design solutions and optimal tools in a tailored manner…
ABOUT VIVA BUSINESS CONSULTING
VIVA is the local expertise for local business compliance procedures, has been trusted by thousands of foreign investors, multinational companies from Europe, Japan, Singapore, India, Korea, USA… for the required business compliance procedures by local laws and regulations since 2006.
Thanks for consistent of practice expertise in Business laws - Employment relations – Tax and accounting – Corporate finance – Corporate services, VIVA has been successfully providing service for thousands of leading companies in such industries: Garment, energy, pharma, advertising, agricultural…
VIVA keeps its signature by offering one-stop business platform with regard to market entry and the mandatory business compliances. We ensure for our client’s good standing, in lawful and optimal manners whenever they are working and doing business in Vietnam.
Read more about social insurance for expatriate employees:
- Vietnam work permit for foreigners – what you need to know
- Temporary residence card in Vietnam – what you need to know
- Three key points on salary and compulsory insurance from Jan 2018
- Full compliance procedures for foreigners who are working in Vietnam
- Social insurance for foreigners in Vietnam – new regulations from 2022
- Chief of representative office or head of branch in Vietnam – role and responsibility
- Personal income tax for foreign employees – methods of declaration and payable amount
- Penalties for administrative violations against regulations on compulsory social insurance in Vietnam