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Quarterly Vietnam HR & Payroll Updates in January 2024.

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Quarterly vietnam hr & payroll updates in january 2024

Each quarter, Acclime Vietnam releases our Quarterly HR & Payroll Updates focusing on relevant legislation, regulations, and 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 or upcoming reporting obligations to authorities.

Reminder: 2023 Year-end Lodgements and finalisations

Corporate taxpayers are reminded that they are required to finalise and lodge 2023 Personal Income Tax Finalisation (together with Corporate Income Tax, Financial Statements and associated schedules/appendixes) with the authorities no later than the last day of the third month of the following year after year end (31 March 2024, for those taxpayers with a standard 31 December 2024 financial year end).

Individual taxpayers should ensure that their tax finalisation matters for 2023 are in hand, where (generally) (i) they have a tax liability to the state, or (ii) they wish to claim a refund or credit.

Taxpayers can authorise their employers to finalise on their behalf where the taxpayer has had only one single source of employment income during the tax year.

Otherwise, individuals will need to undertake a self-finalisation or authorise another party (commonly a service provider or another individual) to conduct on their behalf. In this case, the finalisation returns are required to be lodged by the end date of the fourth month of the next calendar year(i.e., by 30 April 2024).

Notice to businesses in Ho Chi Minh City on the submission of Reports on Labour and Salary in 2023 and the plan for Tet bonuses in 2024

On 4 December 2023, the Department of Labour, War Invalids and Social Affairs issued Official Letter 27634/SLDTBXH-LD concerning reports on labour and salary situation in 2023 and the 2024 Tet bonus plan.

This document recommends businesses in Ho Chi Minh City to report on the 2023 salary payment and the 2024 New Year bonus plan (according to the form attached to the Official Letter) before 22 December 2023.

Concurrently, it is imperative for corporations to strategise and communicate the specifics of the New Year bonus structure for 2023. This includes various components such as allowances, ticket assistance, and train tickets for the Tet holiday. By doing so, employees are provided with a sense of security, enabling them to concentrate on their respective roles and contribute to the overall business operations. The information disseminated should encompass explicit details regarding the timeline for salary and bonus disbursement, as well as the schedule for the Tet holiday. This professional communication fosters a transparent and supportive work environment.

The Department of Labour also noted that the enterprise needs to ensure that salary and bonus payments are undertaken fully and timely as published according to the announced plan, avoiding salary and bonus debts leading to the risk of labour disputes. Where enterprises have difficulties paying salaries and Tet bonuses, they should inform and discuss with the grassroots Trade Union and report to the Department of Labour, Invalids and Social Affairs, and the District Labour Union to coordinate and support.

Regarding the Lunar New Year holiday schedule, enterprises must ensure compliance with the provisions of Points b, Clause 1 and Clause 3, Article 112 of the Labour Code. If combined with the Lunar New Year with annual leave, it must be agreed, with the consent of employees and publicised before implementation.

Data protection notice in accordance with Decree 13/2023/ND-CP

On 17 April 2023, the Government issued Decree 13/2023/ND-CP focusing on Personal Data Protection and introduces several notable highlights as below:

1. Cases where personal data can be processed without the consent of the data subject:

  • Processing personal data in emergency situations to protect the life and health of the data subject or others. The burden of proof lies with the Personal Data Controller, Personal Data Processor, Personal Data Controller and Processor, or Third Party involved
  • Disclosure of personal data as required by law
  • Processing personal data by competent state agencies in emergency situations related to national defense, national security, social order and safety, major disasters, dangerous epidemics, prevention and combat of riots, terrorism, crimes, and violations of the law
  • Processing personal data to fulfill contractual obligations between the data subject and relevant agencies, organisations, and individuals
  • Processing personal data to support the activities of state agencies as defined by specialised laws.

2. Measures for personal data protection, which include:

  • Management measures implemented by organisations and individuals involved in the processing of personal data
  • Technical measures implemented by organisations and individuals related to personal data processing.
  • Measures implemented by competent state management agencies in accordance with this Decree and other relevant laws
  • Investigation and litigation measures undertaken by competent state agencies
  • Other measures as prescribed by law

3. Conditions to ensure personal data protection activities:

  • Establishing a specialised force responsible for protecting personal data within the designated agency
  • Appointing departments and personnel within agencies, organisations, and enterprises with the responsibility of protecting personal data
  • Mobilising organisations and individuals to participate in safeguarding personal data
  • The Ministry of Public Security is tasked with developing programs and plans to enhance human resources for personal data protection

4. The agency responsible for protecting personal data is the Department of Cyber Security and High-Tech Crime Prevention, under the Ministry of Public Security. This agency assists in the state management of personal data protection.

5. Violations of personal data protection regulations by agencies, organisations, and individuals may result in disciplinary actions, administrative sanctions, or criminal penalties, depending on the severity of the violation

To be compliant with the decree, companies and organisations are recommended to be mindful of (i) including supplementary content pertaining to Data Protection when preparing Labour Contracts, Appendixes and other relevant documents; (ii) obtaining written consent from employees and candidates for all activities in the personal handling process through specific actions; (iii) developing/updating the Labour Regulations with regulations prohibiting buying, selling and sharing personal data information; (iv) designating individuals and departments whose functions are to protect sensitive personal data; (v) establishing and maintaining records assessing the impact of processing personal data.

Decree 13/2023/ND-CP took effect on 1 July 2023.

Update on the basis to determine salary fund for Trade Union fee payment

Decision 8086/QD-TLD of 2023 issued by the Vietnam General Confederation of Labour on 10 October 2023, regulating the principles of preparing and delivering the Trade Union financial forecast in 2024.

In general, the salary level for calculating 2% Trade Union fees in 2024 is as follows:

  • 2% Trade Union fees are calculated on the total salary of employees who are required to pay Social Insurance according to the provisions of the Law on Social Insurance. Therefore, the basis for determining the salary fund to pay 2% Trade Union fees in 2024 is calculated on the average salary paid for Social Insurance in the first 6 months of 2023 multiplied by the number of employees subject to Social Insurance payment according to the provisions of Law on Social Insurance.
  • Trade Union fees are collected based on the number of union members according to salary and allowances in each region and according to Decision 1908/QD-TLD dated 19 December 2016.

Decree 8086/QD-TLD took effect on 1 January 2024.

New significant improvements underpin Work Permit procedures in Vietnam under Decree 70

On 18 September 2023, the Government issued Decree 70/2023/ND-CP (Decree 70) amending Decree 152/2020/ND-CP (Decree 152) regulating foreign employees working in Vietnam.

Some notable changes of the Decree include:

  1. Relaxation in time requirements for seeking approval for foreign employment: In particular, employers are required to announce job vacancies for Vietnamese workers in the roles intended for foreigners via the Department of Employment portal or Provincial Employment Service Centers, at least 15 days (instead of 30 days as previous regulation) before starting the process of Work Permit application. If no Vietnamese candidate is selected thereafter, the Work Permit application can be submitted.
  2. Changes in the key regulatory bodies involved in Work Permit and Work Permit Exemption approvals: The Vietnamese government has consolidated the authority to issue Work Permits and Work Permit Exemptions, transferring it solely to the Department of Labour, War Invalids and Social Affairs (DOLISA) and Department of Labour, War Invalids and Social Affairs (MOLISA). The Provincial Management Boards of Economic Zones generally stopped accepting applications for Work Permit and Work Permit Exemption from 18 September.
  3. Simplifying the role provisional requirements for Foreign Experts category
  4. Expanding the scope for managerial level positions and updating documentation
  5. Changes to requirements for Technical Worker roles which are more accommodating and accessible for wider sectors
  6. Adding cases where employment announcement of foreign labour need is not required for foreign individuals married with Vietnamese citizens
  7. Supplementing the requirements to report to authorities where foreign employees work at multiple locations (headquarter, branches, etc.) which have not listed in the Work Permit application form.
  8. Simplifying Work Permit renewal process

Details of the changes can be found in our Client Alert here.

Decree 70 took effect on 18 September 2023.

Deferral of Trade Union payments for some businesses

On 31 August 2023, the Vietnam General Confederation of Labour issued Decision 7823/QD-TLD on delaying Trade Union dues for businesses whose orders are cut or reduced.

Specifically, the Vietnam General Confederation of Labour agrees to allow businesses with a reduction of 50% or more of employees participating in Social Insurance compared to 1 January 2023 (including employees who stop working or temporarily postpone the implementation of labour contracts, unpaid leave agreements) due to businesses being cut or reducing orders, Trade Union fee payment will be postponed until 31 December 2023.

Announcing 4 amended and supplemented administrative procedures under the jurisdiction of Vietnam Social Insurance

On 19 September 2023, Vietnam Social Insurance issued Decision 1318/QD-BHXH announcing 4 amended and supplemented administrative procedures under the jurisdiction of Vietnam Social Insurance, including:

  • Register and adjust payment of compulsory Social Insurance, Health Insurance, Unemployment Insurance, Labour Accident Insurance, and occupational diseases; issue Social Insurance books and Health Insurance cards
  • Register, re-register, and adjust voluntary Social Insurance contributions; issue Social Insurance books
  • Register to pay and issue Health Insurance cards for people who only participate in Health Insurance
  • Reissue, change, and adjust information on Social Insurance books and Health Insurance cards

Detailed content of procedures in Decision 1318/QD-BHXH was effective from 19 September 2023.

Official Letter 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.

Social Insurance changes foreign exchange rates In the first six months of 2024

According to Official Letter 02/BHXH-TST issued by Ho Chi Minh City Social Insurance Department, there will be changes to the foreign exchange rates for social insurance purposes in the first six months of 2024. Starting from 1 January 2024, a conversion rate of 23,848 VND/1 USD will be applied for employees whose salary are specified in foreign currency in their Labour Contracts during this period.

Taxes and rental payments must be grossed up when calculating Personal Income Tax

In respect of issues with converting income from NET salary to calculate Personal Income Tax (PIT), on 24 November 2023, the General Department of Taxation issued the Official Letter 5250/TCT-DNNCN.

Accordingly, where a foreign employee, who signed a labour contract with a company, received a net salary and had the company pay Health Insurance, housing rental and PIT on their behalf, notes for determining the assessable income for PIT calculation are:

  • Health Insurance allowances paid on behalf of the company are the income, which is added and excluded simultaneously in the conversion formula as health insurance is deducted.
  • Taxable housing rental is added according to the actual amount paid but must not exceed 15% of total taxable income.

Unemployment Insurance payment period exceeding 12 years not considered a subsidy and not reserved

On 17 October 2023, the Ministry of Labour, War Invalids and Social Affairs (MOLISA) released Official Letter 4379/LDTBXH-VL on preserving the Unemployment Insurance (UI) payment period of over 144 months.

According to Clause 2, Article 50 of the Law on Employment, where employees have paid UI for more than 144 months, they are only entitled to unemployment benefits at the maximum level of 12 months (corresponding to 144 months of Insurance payment) and there is no reservation for the remaining UI payment period (exceeding 144 months).

Where an employee stops receiving unemployment benefits but has the UI payment time reserved, the UI payment time is reserved only on the basis of 144 months of payment to receive benefits (no reservation for the UI payment period over 144 months) and the UI payment period corresponding to the time the employee has received benefits.

Cases with a UI payment period of over 144 months that have been resolved to enjoy benefits from 1 January 2021 but with UI payment period of over 144 months that are reserved, must be reviewed to reduce and reduce the reservation for the period of the UI payment period over 144 months.

Instructions for determining where to submit Personal Income Tax finalisation and refund documentation

On 20 September 2023, the General Department of Taxation issued Official Letter 4172/TCT-DNNCN on accelerating the processing of PIT refund applications.

In order to remove problems and speed up the time to process tax refund documents for individuals directly submitting PIT finalisation, the General Department of Taxation has provided unified guidance on determining where to submit tax refund documents according to the provisions at point b. 2 Clause 8 Article 11 Decree 126/2020/ND-CP as follows:

  • Individuals who calculated family deductions for themselves at any income-paying organisation are required to submit the final tax return to the managing tax authority of that income payer.
  • If during the year, individuals change their workplace and calculate family deductions at the last workplace, they need to submit the final tax return to the managing tax authority of their last workplace
  • If individuals change their workplace and do not calculate family deductions at the last workplace or at any organisation, they need to submit the final tax return to the managing tax authority of their residential place
  • If individuals do not have or have labour contracts with less than 3 months, or are no longer working anywhere at the time of finalisation, they need to submit final tax return at their place of residence.

Reminder of upcoming periodical reports in Quarter 1, 2024

Upcoming Periodical Reports Deadline
Monthly Report on Labour Change Prior to 3 each month of 2024
Annual Report on Employment of Foreign Employees Prior to 5 January 2024
Annual Report on Labour Accidents Prior to 10 January 2024
Annual Report on Occupational Safety and Hygiene Prior to 10 January 2024
Annual Report on Unemployment Insurance Contributions Prior to 15 January 2024
Annual Operation Report of the Representative Office (applicable to Representative Office only) By 30 January 2024
Report on Using PIT Withholding Certificate for Quarter 4, 2023 (where required) By 31 January 2024
PIT Declaration Report and Payment for Quarter 4 of 2023 By 31 January 2024
PIT Finalisation for 2023 By 31 March 2024

 

Updated on February 28, 2024
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