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WAGES AND ASSURANCES

Region-based minimum wages applied in 2019:

  • Region 1: VND 4,180,000/month
  • Region 2: VND 3,710,000/month
  • Region 3: VND 3,250,000/month
  • Region 4: VND 2,920,000/month

Note: The wages paid to employees must be not lower than region-based minimum wages for untrained workers doing the simplest tasks and be higher than at least 7% of region-based minimum wages for trained workers.

Source: Decree 157/2018/ND-CP dated 16/11/2018

Persons working under definite-term labor contracts with a term of full and above 3 months in all agencies, organizations (regardless of number of employees) are entitled to compulsory social insurance, health insurance and unemployment insurance according to Article 2 of Law on Social Insurance (Law No. 71/2006/QH11 dated 29 June 2006);

Persons working under definite-term labor contracts with a term from 1 to 3 months are entitled to compulsory social insurance.

Article 4, article 13, and article 17 of Decision No. 595/2017/QD-BHXH dated 14/04/2017.

According to Labor Code 2012:

  • A labor contract must be established in writing and made in two copies, one to be kept by the employee and the other by the employer (Article 16)
  • For temporary jobs with a duration of under 3 months, the parties may enter into a verbal labor contract (Article 16)
  • For an employee aged between full 15 years and under 18 years, the labor contract must be entered into with the consent of his/her at-law representative (Article 18)
  • There are three types of labor contract: (a) Indefinite-term labor contract; (b) Definite-term labor contract within a period of between 12 months and 36 months; (c) Seasonal (or work-specific) labor contract with a duration of under 12 months (Article 22)
  • When a labor contract type (b) or (c) expires, within 30 days if no new labor contract is entered into, the contract type (b) becomes type (a) and contract type (c) becomes type (b) (Article 22)
  • In case the two parties enter into a new labor contract with a definite term, only 1 additional definite-term labor contract may be signed; after that, if the employee continues working, an indefinite-term contract must be entered into (Article 22)
  • Probation period: does not exceed 60 days for positions which require professional and technical qualification of college or higher level; does not exceed 30 days for posts which require professional and technical qualifications of intermediate vocational level, professional secondary level, or for technical workers and skilled employees; does not exceed 6 working days for other types of jobs (Article 27)
  • The wage paid during the probation period must be agreed upon by the two parties but must be at least equal to 85% of the official wage for the job (Article 28)

Source: Labor Code No. 10/2012/QH13 dated 18 June 2012

An employee who performs overtime work must be paid according to the wage unit or wage for his/her current job as follows:

  • On normal days, at least equal to 150%;
  • On weekends, at least equal to 200%;
  • On public holidays and paid leave days, at least equal to 300%, excluding the wage for public holidays and paid leave days of employees who receive daily wages.

An employee who performs night work (from 10 p.m to 6 a.m) must be paid with an additional amount at least equal to 30% of the wage calculated according to the wage unit or the wage for a job performed during normal workdays. An employee who performs overtime work at night in addition to wages paid under Clauses 1 and 2 of this Article, he/she must be paid with an additional amount equal to 20% of the wage calculated according to the wage unit or the wage for a job performed during daytime.

Current premium rate of insurances (Social insurance, Health insurance, Unemployment insurance, Labor union fee) applicable are as follows:

  • Social insurance: 25.5%, in which Employer’s proportion of 17.5%, Employee’s proportion of 8%
  • Health insurance: 4.5%, in which Employer’s proportion of 3%, Employee’s proportion of 1.5%
  • Unemployment insurance: 2%, in which Employer’s proportion of 1%, Employee’s proportion of 1%
  • Labor union fee: 2%, fully paid by Employer

The minimum salary for calculation of Social Insurance are region-based minimum wages and the maximum one is of 20 times of base salary. Labor union fee: from 10/1/2014 all of businesses are required to pay labor union fee, including businesses not have labor union yet.

Source: Decision No. 595/QD-BHXH dated 14/04/2017

VALUE ADDED TAX

Taxpayers applying deduction method sells unprocessed agricultural products:

  • For commercial purposes: not required VAT declaration and payment (selling price on the VAT invoice is VAT-exclusive, lines of tax rate and tax must be left blank and crossed out);
  • Non-commercial purposes (to idividuals, consumers), including goods used as gifts and presents: required VAT declaration and payment with tax rate of 5%;

Taxpayers applying direct method sells unprocessed agricultural products for commercial purposes are required to VAT declare and pay tax at the rate of 1% of revenue.

Source: Clause 5 Article 5, clause 5 Article 10 of Circular 219/2013/TT-BTC.

According to Circular 219/2013/TT-BTC dated 31/12/2013 valid since 01/01/2014, input VAT invoices of goods, services since 2014 are declared and deducted without time limitation.

Note: Input VAT invoices before 2014 are declared with limited time of 6 months.

Late payment interest shall be charged on tax debt incurred at: 0.05% per day from the deadline for paying tax.

The late payment period includes days off and holidays. The taxpayer shall self-determine the late payment interest. Late payment interest is determined according to the amount of late payment, the number of days of late payment, and the rate (%) per day as above.

Where the taxpayer engages in a extra-provincial construction, installation, or sale with the value of VND 1 billion or higher inclusive of VAT, or extra-provincial real estate transfer (except for the case in Point c Clause 1 of this Article) without establishing an affiliate in that province (hereinafter referred to as extra-provincial business), the taxpayer must submit a tax declaration to the tax authority of the locality where the extra-provincial business takes place.

Directors of local Departments of Taxation shall decide the place where tax on extra-provincial business is declared.

Term 1dd Article 11 Circular 156/2013/TT- BTC and amended by Circular 26/2015 TT-BTC

1.Provisional tax rate:

  • The goods or services entitled to 10% VAT: the provisional rate shall be 2%.
  • The goods or services entitled to 5% VAT: the provisional rate shall be 1%.

2.Declaration for extra-provincial VAT:

  • The declaration for extra-provincial VAT using form 05/GTGT
  • The declaration for extra-provincial VAT shall be submitted whenever revenue is earned. If many tax declarations must be submitted in one month, the taxpayer may request the tax authority to permit monthly submission of tax declarations.

Theo điều 3 Thông tư 119/2014/TT-BTC ngày 25/8/2014 của BTC

  • The deadline for submitting a monthly VAT declaration is the 20th of the succeeding month
  • The deadline for submitting a quarterly VAT declaration is the 30th of the succeeding quarter
  • Deadline for paying VAT incurred is the deadline for submitting declaration.

PERSONAL INCOME TAX

Levels of personal and dependant deductions:

  • For the taxpayer: 9 million VND/month, 108 million VND/year.
  • For each dependant: 3.6 million VND/month.Dependants include: Children, legitimate adopted children, illegitimate children, stepchildren. In particular: children under 18 years of age; children from 18 years of age and over that are disabled and incapable of work; Children studying in Vietnam or overseas in universities, college, vocational schools, including children from 18 years of age and over in high schools that have no income or the average monthly income in the year from all sources does not exceed 1,000,000 VND.
  • Taxpayer’s spouse, parents, parents-in-law, stepparents, legitimate adoptive parents, Other dependants that the taxpayer has to provide for (brothers and sisters, grandparents, aunts, uncles, nieces and nephews). The person of working age must meet all conditions below: be disabled and incapable of work and have no income or his/her average monthly income from all sources does not exceed 1,000,000 VND. The people outside working age that have no income or their average monthly income from all sources does not exceed 1,000,000 VND.

Source: Article 9, Circular 111/2013/TT-BTC dated 15/08/2013

The rate of personal income tax on incomes from business, wages shall apply the progressive tax table in Article 22 of the Law on Personal income tax:

 
LevelAssessable income/yearAssessable income/monthTax rate
1Up to 60 millionUp to 5 million5%
2Over 60 million to 120 millionOver 5 million to 10 million10%
3Over 120 million to 216 millionOver 10 million to 18 million15%
4Over 216 million to 384 millionOver 18 million to 32 million20%
5Over 384 million to 624 millionOver 32 million to 52 million25%
6Over 624 million to 960 millionOver 52 million to 80 million30%
7Over 960 millionOver 80 million35%
 

Source: Circular 111/2013/TT-BTC dated 15/08/2013

  • Tổ chức, cá nhân trả thu nhập thuộc diện chịu thuế thu nhập cá nhân đối với thu nhập từ tiền lương, tiền công có trách nhiệm khai quyết toán thuế thu nhập cá nhân và quyết toán thuế thu nhập cá nhân thay cho các cá nhân có uỷ quyền không phân biệt có phát sinh khấu trừ thuế hay không phát sinh khấu trừ thuế.
  • An annual final tax return is not required in case income is not paid.

Source: Article 21 Circular 92/2015/TT-BTC.

COPORATE INCOME TAX

Income from disposal of enterprise’s land use rights, houses or construction works attached to land is income from real estate transfer.

Enterprise which does not regularly make real estate transfer shall declare provisional CIT whenever a real estate transfer is made. Such enterprises are companies that are not licensed to trade in real estate.

Source: Article 16 Circular 78/2014/TT-BTC, clause 4 Article 16 Circular 151/2014/TT-BTC.

Income from disposal of enterprise’s land use rights, houses or construction works attached to land is income from real estate transfer.

Enterprise which does not regularly make real estate transfer shall declare provisional CIT whenever a real estate transfer is made. Such enterprises are companies that are not licensed to trade in real estate.

Source: Article 16 Circular 78/2014/TT-BTC, clause 4 Article 16 Circular 151/2014/TT-BTC.

Businesses that suffer a loss after making tax finalization may carry forward continuously the whole loss to subsequent years’ taxable incomes. The maximum duration for loss carry-forward is 5 consecutive years, counting from the year following the year the losses arise.

According to Article 9 Circular 78/2014/TT-BTC

The turnover for calculating taxable income is the total proceeds from the sale of goods, remuneration for processing and charges for provided services, including price subsidies, surcharges and extra fees that an enterprise may earn, regardless of whether or not these amounts have been collected. As a result, turnover which has not been received payment is also determined as taxable income.

Article 5 Circular 78/TT-BTC/2014

Recovered bad debts which have been written off are other income of businesses and are taxable income.

According to Article 7 Circular 78/2014/TT-BTC

Funding for education includes funding for public, people-founded and private schools within the national education system in accordance with the education law which is not for contributing capital to or purchasing shares in the schools; Financing facilities for teaching, learning and school activities; Financing regular school activities; Financing scholarships for pupils and students of general education institutions, vocational education institutions and higher education institutions defined in the Education Law (directly granted to pupils and students or through other agencies and organizations with the fund raising function as prescribed by); Financing contests on subjects taught in schools for contestants who are learners; Financing the establishment of education promotion funds in accordance with the education and training law.

According to item 2.23 Article Circular 78/2014/TT-BTC guiding on expenses for education funding

  • Losses due to exchange differences in the period which are directly related to production and business are deductible.
  • Gain on exchange differences resulted from revaluation of payables of foreign currency origin at the end of the tax period are off-set against the losses incurred. After offsetting, gains or losses on exchange differences which are directly related to principal production and business are determined as income or expenses. Gains or losses on exchange differences which are not directly related to principal production and business are determined as other income or production and business expenses. For receivables and loan receivables of foreign currency origin arising in the period, exchange rate difference allowed to be included in deductible expenses is the difference between the exchange rate at the time of debt or loan recovery and the exchange rate at the time of recording the receivable or initial loan.
  • Losses due to exchange differences resulted from re-valuation of monetary items of foreign currency origin at the end of the tax period, including exchange differences due to re-valuation of year-end balance: cash, deposits, money in transfer and receivables of foreign currency origin (except losses due to exchange differences resulted from re-valuation of payables of foreign currency origin at the end of the tax period) are not deductible according to term 2.22 item 2 Article 6 Circular 78/2014/TT-BTC.

Companies may deduct all expenses that fully satisfy the following conditions:

  • Actual expenses arising in relation to production and business activities of companies;
  • Expenses with adequate lawful invoices and documents as required by law.
  • For expenses for purchase of goods or services with invoices valued at VND 20 million or more (VAT-inclusive prices) each, there must be non- cash payment documents.

Term 2 Article 6 Circular 78/2014/TT-BTC

In case a company has purchased air tickets through e-commerce websites for its employees to go on business trips to serve its production and business activities, documents used as the basis for calculating deductible expenses are electronic air tickets, boarding passes and non-cash payment documents of the company having individuals making the trips. If the company cannot collect boarding passes of its employees, documents used as the basis for calculating deductible expenses are electronic air tickets, mission trip assignment papers and non-cash payment documents of the company having individuals making the trips.

Clause 2.8, term 2, Article 6, Circular 78/2014/TT-BTC

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