Payroll obligations are subject to change again in 2020 after the major November 2018 changes brought by 143/2018/ND-CP decree on compulsory social insurance payments and the payroll for foreign employees working in Vietnam. We will examine below the changes to consider soon and, as a quick reminder, we will pinpoint the most important of Vietnam recent payroll management modifications.
Increasing contributions rate in 2020 are to be planned in the payroll of foreign workers in Vietnam
On 1 January 2020, the social insurance contributions of one company paying for employees will be:
|
Paid by the employer |
From the employee’s salary |
| Social Insurance |
17.5% |
8% |
| Health Insurance |
3% |
1.5% |
| Trade Union Fee |
2% |
0 |
The benefits of death and Retirement for foreign workers will also come into force at the same time (at the beginning of 2020).
Reminder on compulsory Social Insurances for foreign workers in Vietnam payroll to this day
Which foreign employees are eligible for social insurance in Vietnam ?
Not all foreign workers are eligible for compulsory Social Insurance contributions. Social Insurance only applies if they meet these below requirements:
- Their employment contract is indefinite or, in case of definite contracts, the term of the contract is at least one full year.
- Having a work permit, a practicing certificate, or a practicing license.
AND NOT
- internally transferred to Vietnam from an office abroad.
- reached the retirement age in Vietnam which is 60 for men and 55 for women.
What kind of insurance are applicable to foreign workers in Vietnam?
There are two types of compulsory insurance in a company for foreign employees:
- Health insurance
- Social insurance
Following the 143/2018/ND-CP decree, non-Vietnamese workers would be granted the same benefits as their Vietnamese partners because they would receive compensation for sickness and maternity leave, occupational diseases, accidents, retirement, and death.
Moreover, when leaving Vietnam, foreign employees would get a one-time pension payment.
Contribution rates
As following the new decree, the employment taxes for non-Vietnamese employees are:
| PAYROLL TAXES IN VIETNAM FOR FOREIGN EMPLOYEES |
| Social Security |
Personal Income Tax |
Trade Union Fee
|
| Health Insurance |
Social Insurance |
5-35% for residents
20% for non-residents
|
2%
|
3% paid by employer
1.5% paid by employee
|
3.5% paid by employer
0% paid by employee
|
These above-mentioned taxes are applied from 1 December 2018 to 31 December 2021.
The increase in Vietnam minimum wages in 2019
Common minimum wage and Regional minimum wage are two types of minimum wages in Vietnam.
About Common minimum wage
This kind of wage applies to workers employed in state-owned enterprises and companies. In November 2019, Vietnam Government increased the common minimum wage from 1,490,000 VND/month (~ US $64.4) to 1,600,000 VND/month (~ US $69.2). Although the Common minimum wage in Vietnam has constantly increased annually, this is the highest rise within recent seven years from 2013.
Total salary is the result of the multiplication between Common minimum wage and the wage coefficient. The wage coefficient depends on your degree and position.
About Regional minimum wage
Other enterprises and companies in Vietnam will pay for their employee following the Regional minimum wage. There are four regions reflecting the socio-economic conditions of this country. The first one includes urban areas of Hanoi, Hai Phong, and Ho Chi Minh city, Dong Nai, and Binh Duong province. The fourth one covers the most rural areas of Vietnam.
As the releasing of Decree No.90/2019/ND-CP, the regional minimum wages in Vietnam at the starting of January, 2020 are:
| Region |
Monthly minimum wage |
| I |
4,420,000 (~US$ 191) |
| II |
3,920,000 (~US$ 169) |
| III |
3,430,000 (~US$ 148) |
| IV |
3,070,000 (~US$ 133) |
These above-mentioned numbers show the rise in the Region minimum wage comparing to this wage in 2019, especially the minimum wage for region I. On average, the minimum monthly wage in Vietnam increased by 195,000 VND (~US$ 8.43) which makes it an 11.43% climb.
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