Each quarter, Acclime Vietnam releases Quarterly HR & Payroll Updates focusing on relevant legislation and regulations, changes released in the previous quarter, official letters released by Vietnam authorities, together with reminders for key dates for implementation of HR & Payroll changes coming into effect.
Reminder for 2021 Personal Income Tax finalisation
31 March 2022 is the deadline for enterprises to finalise 2021 Personal Income Tax (PIT) for their employees, whilst 30 April 2022 is the deadline for lodging self-declared finalisations for tax-resident individuals working or doing business in Vietnam.
Individuals will need to determine whether they will need to undertake an annual tax finalisation to ensure that their tax finalisation matters are in hand where necessary by the deadline of PIT finalisation.
If employees only have income from a single employer during the year, or other income in limited circumstances, then they can authorise their employer to finalise on their behalf by the last day of the third month from tax year end (i.e., 31st March). Otherwise, they are required to self-finalise the PIT by the end day of the fourth month of the following year from the year end (i.e. 30 April)
In addition, if Tax Resident individuals in Vietnam wish to claim a tax refund, a tax credit for future years, or has a tax liability to the tax authorities, then they must complete a tax finalisation by 30 April.
Full Social Insurance contributions for foreign employees working in Vietnam effective from 1 January 2022
From 1 January 2022, foreign individuals working in Vietnam and their employers are required to fully participate in Vietnam’s compulsory Social Insurance program, resulting in an increase in the Social Insurance contributions for both employers and employees. Enterprises employing foreign individuals in Vietnam should review the latest updates from the authorities and carefully plan their 2022 budgeting and salary calculations, in order to account for the increased Social Insurance contributions arising.
In particular, from 1 January 2022,
- Foreign employees are required to make the Social Insurance contribution equal to 8% of the monthly salary. Prior to this date, no Social Insurance was required to be contributed by employees.
- Employers are required to make the standard Social Insurance contribution equal to 17.5% of the monthly salary. Prior to this date, only reduced Social Insurance of 3.5% was required to be contributed. (Enterprises are entitled to apply the 0% contribution rate to the labour accident and occupational disease fund from 1 July 2021 to 30 June 2022, reducing contributions by 0.5%, consequently, the required Social Insurance will be 17% during this period)
We have released an article delving into the details on how the Social Insurance contributions apply for foreign individuals working in Vietnam and the organisations employing them, with insights on insurance rates, salary thresholds, and specific benefits. Click here to read the full article.
New guidance on PIT and tax management for business households and individuals
On 15 November 2021, the Ministry of Finance issued Circular 100/2021/TT-BTC amended Circular 40/2021/TT-BTC guiding Personal Income Tax (PIT), and tax administration for business households and individuals. The circular takes effect from 1 January 2022.
The following are the main points of the Circular.
E-commerce organisations are not required to declare taxes on behalf of the sellers from 1 January 2022
Organisations, including owners of e-commerce platforms, will declare and pay taxes on behalf of the individual sellers if they are authorised by the individuals following the provisions of Civil law.
(According to the prevailing provisions of Circular 40, e-commerce platform owners will declare and pay taxes on behalf of sellers according to the tax authority’s roadmap)
Thus, from 1 January 2022, there is no longer a requirement that e-commerce platforms pay taxes on behalf of individual sellers without authorisation.
Individuals leasing properties with less than VND 100 million per year in revenue are not required to pay taxes
The circular amended the tax policy for individuals leasing properties as follows:
- Individuals who engage in property leasing activities and the rental period is less than a year and have rental revenue of VND 100 million per year or less, are not required to pay VAT and PIT
- In the case of advance payment for several years, the revenue level to determine if an individual must pay taxes is the one-time payment allocated to each calendar year
(According to the prevailing provision of Circular 40, annual revenue of VND 100 million is a basis for determining tax exemption for individuals leasing properties. However, individuals with a monthly average of more than VND 8.33 million are still subject to tax even if the lease period is less than a year).
Expansion of scenarios where employers and employees are entitled to support under Resolution 68
On 8 October 2021, the Government issued Resolution 126/NQ-CP amending Resolution 68/NQ-CP in 2021 on several policies to subsidise employees and employers facing difficulties due to the COVID-19 pandemic.
Key points of the Resolution include:
1. Adjusting the conditions for employers to entitling to deferral of contributions to Retirement and Survivorship funds, stipulated at Clause 2, Section II, as follows:
- Those have fully paid Social Insurance contributions or temporarily suspended contributions to the Retirement and Survivorship funds (one of the three funds of the compulsory Social Insurance contributions requiring 14% contribution from the employer and 8% contribution from the employee) until the end of January 2021 (previously April 2021).
- Those are affected by the COVID-19 pandemic, resulting in downsising by 10% (previously 15%) of their employees participating in Social Insurance (compared to January 2021), the employers and their employees will be entitled to deferral of payment to the Retirement and Survivorship funds for 6 months from the submission date.
2. Amending regulations at Clause 5, Section 2 on supporting policies for employees suspended from work as follows:
Employees entitled to one-time support of VND 1 million per person are those:
- Working under a labour contract but being suspended for 14 consecutive days or more from 1 May 2021 to 31 December 2021, by the reasons specified in Clause 3, Article 99 of the Labour Code.
- Participating in compulsory social insurance up to the time before the cessation of work and being one of the following scenarios:
- Being treated for Covid-19, in medical isolation, in blockade areas or unable to go to the workplace due to the request of state agencies following Directive 16/CT-TTg of the Prime Minister
- The employer has to suspend operations at the request of a competent authority or has a head office, branch, representative office in the area to conduct measures to prevent and control the epidemic according to Directive 16/CT-TTg or re-organise production and labour for epidemic prevention and control
Previously, the regulation only applies to those subjects to medical isolation or blockade areas at the request of competent authorities for 14 days or more from 1 May 2021 to 31 December 2021.
3. Amending regulations at Clause 6, Section II, on allowances for employees subject to loss of employment but ineligible for unemployment benefits.
Accordingly, employees who are entitled to one-time support of VND 3,710,000 per person are those working under labour contracts and participating in compulsory social insurance but having terminated their labour contracts from 1 May 2021 to 31 December 2021, and belong to one of the following scenarios:
- Being on medical isolation, in blockade areas, or unable to go to the workplace due to the request of competent state agencies to prevent and control the COVID-19 epidemic
- The employer has temporarily suspended operations at the request of a competent state agency to prevent and control the COVID-19 epidemic; the employer’s head office, branch, representative office, production, and business location is in the blockade area, or the employer has re-organised production to prevent and control the COVID-19 epidemic under Directive No. 16/CT-TTg and the employees are not qualified for unemployment benefits.
The Resolution took effect from 8 October 2021.
Decision 3022 on support for Trade Union members and employees
On 9 August 2021, the General Confederation of Labour issued Decision 3022/TD-TLD amending Decision 2606/QD-TLD dated 19 May 2021 on emergency support expenses for Trade Union members and employees affected by the COVID-19 pandemic.
Accordingly, additional cases where union members and employees affected by COVID-19 are supported by Trade Union include:
- Union members and employees (including enterprises with or without a Trade Union) who are F0 and do not violate the epidemic prevention and control requirements are entitled to up to VND 3,000,000 per person
- Trade Union members and employees (at agencies, units and enterprises with Trade Union contributions) who are F1 and undergo medical isolation at the request of competent state agencies, without violating regulations on epidemic prevention and control, are entitled up to VND 1,500,000 per person
- Trade Union members and employees (at agencies, units and enterprises with Trade Union contributions) who must cease working for medical isolation, or are residing in blocked areas at the request of the Government or competent state agencies, are entitled up to VND 500,000 per person if being in one of the following cases:
a. Having difficult circumstances
b. Getting pregnant or raising a child under 6 years old
c. Trade Union members and employees (at agencies, units and businesses that pay Trade Union fees) who die due to infection with the SARS-CoV-2 virus since 27 April 2021 will be supported at VND 5,000,000 per person (excluding the support mentioned in the above items)
Decision 3022/QD-TLD took effect from the date of signing, 9 August 2021, and promulgation.
Official Letters released
Official Letters are releases showing the interpretation and application of Vietnam’s Taxation Laws by applicable authorities, providing guidance to enterprises and individuals in Vietnam. In this update, we will focus on Official Letters indicating HR & Payroll matters.
Increasing 7.4% of pensions, Social Insurance allowances and monthly allowances for some subjects
On 7 December 2021, the Government issued Decree 108/2021/ND-CP on the adjustment of pensions, Social Insurance allowances, and monthly allowances.
Accordingly, from 1 January 2022, beneficiaries of pension, Social Insurance allowance, and monthly allowance before 1 January 2022 are entitled to an increase of 7.4% on the benefits in December 2021.
Decree 108/2021/ND-CP takes effect from 20 January 2022 and replaces Decree 44/2019/ND-CP dated 20 May 2019.
Plan of care activities on Lunar New Year 2022 for Trade Union members facing difficulties
On 28 October 2021, the General Confederation of Labour issued Plan 146/KH-TLD on organising activities to take care of Trade Union members and employees on the Lunar New Year in 2022.
Accordingly, employees participating in Social Insurance at enterprises and non-public, non-business units with trade union contributions; cadres, civil servants, and public employees in difficult are subject to a financial support of VND 300,000 per person from the trade union’s financial source.
Total estimated funding sources are 8,000,000 (person) x 300,000 (VND per person) = VND 2,400 billion.
In addition, Plan 146/KH-TLD also mentions other supportive policies for employees such as:
- Visiting and giving gifts to Trade Union members and employees in extremely difficult circumstances or suffering from serious diseases;
- Organising transportation or fully or partially supporting train tickets, cars, planes, vehicles to get employees back home to celebrate Tet, return to work, etc.
Depending on the locality, the value of the gift and the level of support for Trade Union members and employees will be different.
Reminder of selected key regulations coming into effect in Quarter 1, 2022
|Regulations||Issued date||Effective date||Key HR & Payroll items||Remarks|
|Regulations on full Social Insurance contributions and benefits for foreign employees in the Decree 143/2018/ND-CP on Occupational Safety and Hygiene, and compulsory Social Insurance, for employees who are foreign nationals working in Vietnam||15 October 2018||1 January 2022||Mentioned above (on page 2)||Click here|
|Circular 100/2021/TT-BTC amending Circular 40/2021/TT-BTC guiding PIT, VAT and tax administration for business households and individuals||15 November 2021||1 January 2022||Mentioned above (on page 2)|
|Decree 108/2021/ND-CP on adjustments to retirement pensions, social insurance allowances and monthly benefits||7 December 2021||20 January 2022||Mentioned above (on page 5)|
For more information on HR & Payroll Updates and other compliance requirements for businesses operating in Vietnam, follow our monthly releases on the website and social media channels at vietnam.acclime.com.