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.
Resolution 68 implementing policies to support businesses and individuals impacted by COVID-19
To support businesses and individuals in Vietnam which have been impacted by COVID-19, especially in recent periods, the Vietnamese Government issued Resolution 68/NQ-CP on 1 July 2021. This Resolution implements policies to decrease and defer contribution payments into a number of Social Insurance funds, provides funding support for businesses, and facilitates allowances for employees, individuals and business households impacted by COVID-19.
Key elements of the Resolution are as follows:
1.Reduction in social insurance contributions for the occupational accidents and diseases fund
Employers are entitled to a 0% payment rate of their salary fund to the Insurance fund for Occupational Accidents and Diseases (one of the three funds that together comprise the compulsory Social Insurance contributions, and which ordinarily requires a contribution of 0.5% from the employer) for 12 months (from 1 July 2021 to 30 June 2022).
Employers are to use the reduction in contributions to the Occupational Accidents and Diseases Fund to support the employees against the COVID-19 pandemic.
Comment: we are waiting for more guidance from the Government on the mechanisms to apply this reduction in Social Insurance contributions, as well as specifics on the use of these funds.
2.Deferral of contributions to the retirement and death fund
Employers who have paid full Social Insurance contributions or have temporarily suspended contributions to the Retirement and Death Fund (one of the three funds that together comprise the compulsory Social Insurance contributions, and which ordinarily requires a contribution of 14% from the employer and 8% from the employee) after April 2021 but are affected by the COVID-19 pandemic, resulting in a downsizing by 15% of their employees participating in Social Insurance (as compared to April 2021), including employees who cease working/suspend labour contracts/agree to unpaid leave.
Payment deferral period
Employees and employers are entitled to deferral of payment to the Retirement and Death Fund for 6 months from application submission.
For the cases entitled to the deferral according to Resolution 42/NQ-CP dated 9 April 2020 and Resolution 154/NQ-CP dated 19 October 2020 by the Government, if being eligible, they are still entitled for deferral per this Resolution, provided that the total deferral period does not exceed 12 months.
3. Training funding support
Employers are entitled to financial support for training, re-training and improvement of vocational skills from the Unemployment Insurance Fund once:
- Fully paying Unemployment Insurance contributions for employees for 12 months or more up to the date of requesting support;
- Changing the structure or technology according to the provisions of Clause 1, Article 42 of the Labour Code: changes in the organisational structure, personnel rearrangement, processes, technology, equipment associated with the employer’s business lines, products or product structure;
- Having revenue of the preceding quarter before requesting support decreasing by 10% or more compared to the same period in 2019 or 2020; and
- Having a plan or cooperating with a vocational education institution in developing a plan for training, retraining and improving vocational skills and qualifications in order to maintain jobs for employees.
Entitlements and applicable period
The entitlement is maximum 1,500,000 VND per employee/month. Entitlement period is for a maximum support term of 6 months.
Applications for this support are to be submitted from 1 July 2021 to 30 June 2022.
4. Allowances for employees temporarily ceasing working without salary
Employees who temporarily cease working without salary for 15 consecutive days or more, in the period from 1 May 2021 to the end of 31 December 2021, by the reason of business operation cessation of the organisations they are working for, following the requirement of competent authority in response to COVID-19, and who participate in compulsory Social Insurances (up to the date right before their cessation date) are entitled to a lump- sum allowance of:
- 1,855,000 VND per person if the cessation period is 15 consecutive days or more
- 3,710,000 VND per person if the cessation period is 1 month or more
5. Allowances for employees suspended from work to implement COVID-19 quarantine
Employees working under labour contracts are entitled to a one-time support of 1,000,000 VND per person if they meet the following conditions:
- Suspended from work and subject to quarantine or in blocked areas at the request of a competent authority for 14 days or more during the period from 1 May 2021 to the end of 31 December 2021, and
- Participating in compulsory Social Insurance (up to the date right before the working cessation date)
Comments: note that according to the Clause 3, Article 99 of the 2019 Labour Code, the above applicable employees also are to receive negotiated salaries from employers for the cessation period, following the stipulated process. Further details are provided in the guidance from the Ho Chi Minh City Labour Union through Official Letter 420/LDLD-CSPL.
6. Allowances for employees subject to loss of employment
Employees of enterprises, cooperatives, public non-business units, and educational institutions are entitled to one-time allowance of 3,710,000 VND per person if they meet the following conditions:
- Have their labour contract terminated by the reason of business operation cessation of the organisations they are working for, during the period from 1 May 2021 to the end of 31 December 2021, following the requirements of a competent authority in response to COVID-19; and
- Participate in compulsory Social Insurance but ineligible for unemployment benefits.
7. Additional allowances for both pregnant employees and children
Applicable employees mentioned in item 4,5 and 6 who are:
- Pregnant, or
- Parents or substitute caregiver taking care of children less than 6 years old
Are entitled to 1,000,000 VND per child (under 6 years old), and the entitlement is only applicable to either mother or father of the child.
Children subject to treatment for COVID-19 or in isolation or quarantine under a decision of a competent authority are guaranteed by the state budget for treatment expenses and meals, and are entitled to an additional support of 1,000,000 VND per child during the treatment and isolation/quarantine period from 27 April 2021 to 31 December 2021.
8. Food allowances for F0 and F1
A food allowance of 80,000 VND per person per day for those who need to be treated for COVID-19 infection (F0), and for those who have to undergo medical isolation (F1) under a decision of a competent authority from 27 April 2021 to 31 December 2021.
The entitlement period is no more than 45 days for F0 and 21 days for F1.
9. Support for tour guides and artists
Lump-sum support of 3,710,000 VND per person for:
- Art directors, actors, and painters holding professional titles at level 4 in public non-business units engaged in performing arts (excluding art units of the armed forces) which must stop working for 15 days or more due to the impact of COVID-19 from 1 May 2021 to 31 December 2021.
- Tour guides holding tourist guide practice cards affected by COVID-19 during the period from 1 May 2021 to the end of 31 December 2021.
10. Support for business households
Business households with business registration and tax registration that cease operating for 15 consecutive days or more from 1 May 2021 to 31 December 2021 at the request of s competent authority in response to COVID-19, a one-time support of 3,000,000 VND per business household is applicable.
11. Loan support to pay salaries for employees ceasing working and salaries during business recovery
Loan support to pay salaries for employees ceasing working
Employers are permitted to receive loans from the Vietnam Bank of Social Policies at a 0% interest rate without security to pay salaries for employees participating in compulsory Social Insurances that cease working for 15 consecutive days or more (as prescribed in Clause 3, Article 99 of the Labour Code) from 1 May 2021 to 31 March 2022, provided that the employers have no bad debts at credit institutions or foreign bank branches.
The maximum loan amount is equal to the regional minimum wage for the number of employees according to the actual period for employees ceasing working, but no more than 3 months. The loan term is for less than 12 months.
Loan Support to Pay Salaries during Business Recovery
- Employers suspending operations from 1 May 2021 to 31 March 2022 under the request of a competent authority in response to COVID-19 returning operations; and
- Employers operating in transportation, aviation, tourism, accommodation services and sending Vietnamese workers to work abroad under contracts during 1 May 2021 to 31 March 2022
These parties are permitted to receive a loan from the Vietnam Bank of Social Policies at a 0% interest rate without security, to pay salaries for employees working under labour contracts and participating in Social Insurances, provided that they have no bad debts at credit institutions and foreign bank branches.
The maximum loan amount is equal to the regional minimum wage for the number of employees who are working under a labour contract, according to the actual salary payment period of up to 3 months. The loan term is for less than 12 months.
12. Support for other individuals without labour contracts
Individuals working without labour contracts that cease working due to operational cessation under the request of a competent authority in response to COVID-19, depending on specific conditions and budgetary capabilities of the provinces/cities, are entitled to allowance of no less than 1,500,000 VND per person per time or 50,000 VND per person per day based on the actual number of cessation days.
Guidance on deferral of trade union contribution payments for employers impacted by COVID-19
On 22 June 2021, the Ho Chi Minh City Labour Union issued guidance 13/HD-LDLD on deferral of trade union contribution payments for employers impacted by COVID-19.
Notable points of the guidance include:
Enterprises having 50% or more of the total of employees participating in Social Insurance temporarily cease working due to the impact of COVID-19.
Payment deferral period
The deferral period will be considered and decided by the Standing Committee of the superior trade union, up to 31 December 2021.
i. A written request for deferral of trade union contribution payments, made according to the form in Appendix I of this guide.
ii. The list of employees with reduced Social Insurance contributions is made according to the form in Appendix II of this guide.
iii. A copy of the written certification document of the Social Insurance Authority or Labour Management Authority about the labour change situation of the enterprise.
- Enterprises to submit the application documents to the Trade Union Authority
- Within 15 working days from the date of the application document receipt, the Trade Union Authority is responsible for checking the application documents and comparing it with the data of employees participating in Social Insurance to consider and settle the deferral period. In case of failure to deferral, the authority replies to the enterprises in writing and clearly state the reason.
Guidance on salary for employees ceasing working in COVID-19 social distancing/quarantine periods
On 14 June 2021, the Ho Chi Minh City Labour Union issued Official Letter 420/LDLD-CSPL on salary for employees ceasing working in COVID-19 social distancing/quarantine periods.
According to the guidance, employees who have to cease working because of implementing social distancing according to Directive 16/CT-TTg dated 31 March 2020 of the Prime Minister or are isolated at hostels, accommodation areas, export processing zones, industrial parks, enterprises, etc., or who must cease working under the decision of a competent authority, are entitled to salary in the period of cessation of work.
Employers and employees need to negotiate the salary in the period of cessation of work, base on the following principles:
- In case of cessation of work for 14 working days or less, the salary in this period shall not be lower than the minimum wage.
- In case the working cessation period is required for more than 14 working days, the salary for this period shall be agreed by the two parties, provided that the salary for the first 14 days is not lower than the minimum wage.
Circular 40 guiding PIT, VAT and Tax Administration for business households and business individuals
On 1 June 2021, the Ministry of Finance issued Circular 40/2021/TT-BTC providing guidance on Value Added Tax (“VAT”), Personal Income Tax (“PIT”) and tax administration for business households and business individuals. The Circular comes into effect on 1 August 2021. Below is a summary of selected notable points:
- Continuing with the annual taxable revenue threshold of 100 million VND for tax exemption.
- Taxpayers to include individuals earning income from e-commerce businesses, providing digital information content products and services, and transferring “.vn” domains.
- Additional subjects of organisations responsible for declaring and paying taxes on behalf of individuals. In particular, organisations owning e-commerce platforms are to declare and pay tax on behalf of the individuals according to the schedule of the tax authority. During the time when it is not yet possible to declare tax on behalf of individuals, the organisations are required to provide information related to the individual’s business activities through the e-commerce platform at the request of Tax Authorities in accordance with the law.
- In addition to the presumptive taxation method and the per payment occurrence method as currently regulated, the declaration method is now applicable for some subjects as prescribed.
- Adjustments to the tax calculation method for individuals leasing properties.
We have released a Client Alert indicating details of notable points of Circular 40. Please find the article in https://vietnam.acclime.com/news-insights/circular-40-guiding-vat-pit-and-tax-administration-for-business-households-and-business-individuals/ for your information.
Cases where the individuals are not required to finalise PIT for 2020
On 12 March 2021, the General Department of Taxation issued Official Letter 636/TCT-DNNCN guiding the finalisation of PIT.
Accordingly, the General Department of Taxation guides many cases where individuals earning income from salaries or wages do not have to declare PIT finalisations (for those directly submitting finalisation with tax offices), for example:
- Individuals who have an additional PI payable after their tax finalisation of a year totalling VND50,000 or less.
- Individuals whose PIT payable is less than the temporarily paid amount and he/she does not wish to claim a refund or offset against future payment in the next periods.
- Individuals who sign a labour contract of 3 months or more at a company, while having current income from other sources and have had PIT withheld at the rate of 10% if there is no request for settlement, it is not required to settle with this income.
- Individuals whose employer buys Life Insurance (except voluntary Pension Insurance), other non-compulsory insurances with accumulated premiums that the employer or insurance enterprise has deducted PIT at the rate of 10% on the premium amount corresponding to the part purchased or contributed by the employer to the employee, the employee is not required to finalise PIT on this income.
Guidance on usage of health insurance e-cards on Vss-ID application
On 31 May 2021, the Vietnam Social Insurance Agency issued Official Letter 1493/BHXH-CSYT guiding the use of health insurance e-cards on Vss-ID application.
Vss-ID is an official mobile application of Vietnam Social Insurance Agency for the purpose of establishing communication channels, accessing information, performing public services for individuals and organisations.
According to the guidance, from 1 June 2021, individuals who go for medical examination and treatment can use the health insurance e-card on the Vss-ID application as an alternative of the paper health insurance card.
Official letters released
Official Letters are releases showing the Tax and other Authorities’ interpretation and application of Vietnam’s Taxation Laws, providing guidance to taxpayers in Vietnam. In this update, we will focus on Official Letters indicating HR & Payroll matters.
Guidance on PIT for employee gifts
On 5 April 2021, the Hanoi Tax Department has released the Official Letter 10145/CTHN-TTHT on PIT for employee gifts. Accordingly, if a company gives in-kind gifts to employees, if the given gifts are not one of the following cases, it is not subject to PIT from receiving the gifts:
- Stocks, share rights, bonds, treasury bills and other types of securities in accordance with the Law Securities; shares in a joint stock company in accordance with the Law on Enterprises.
- Capital/shares in economic organisations and business establishments, such as limited liability companies, business cooperation contracts, etc.
- Real estate such as land use rights, land use rights with assets attached to the land, home ownership, land lease rights, etc.
- Other assets must be registered for ownership or right-of-use with State management agencies, such as motorbikes, cars, etc.
Guidance on PIT and CIT for travel expenses
On 9 April 2021, the Hanoi Tax Department issued Official Letter 10858/CTHN-TTHT providing guidance on PIT and CIT for travel expenses, specifically as follows:
According to Clause 2, Article 2 of Circular 111/2013/TT-BTC stipulates the flat expenditure level not included in taxable income on PIT in some cases as follows:
- For employees working in business organisations and representative offices: the flat expenditure rate applied is consistent with the determination of income subject to CIT.
- For employees working in international organisations and representative offices of foreign organisations: the flat expenditure rate shall comply with regulations of international organisations, representative offices of foreign organisations.
And Clause 2 Article 4 of Circular 96/2015/TT-BTC, If there are sufficient invoices and other supporting documents for payment for business trip allowances, travel expenses and accommodation for employees on business trips, the expenses are treated as deductible expenses when determining CIT.
Where a company pays business trip allowances to staff that follows the company’s financial regulations or internal regulations, this expense will be included in deductible expenses when calculating CIT and not included in the employee’s assessable income subject to PIT.
Reminder of selected key regulations coming into effect in Quarter 3, 2021
|Regulations||Issued date||Effective date||Key HR & Payroll items||Remarks|
|Circular 40/2021/TT-BTC on guiding PIT, VAT and Tax Administration for business households and business individuals||1 June 2021||1 August 2021||Mentioned above||Click here to read our article for this matter|
|Circular 31/2021/TT-BTC on prescribing application of risk management to tax administration||17 May 2021||2 July 2021||· Replacing Circular 204/2015/TT-BTC dated 21 December 2015|
· Four signs indicating special tax supervision of taxpayers
· 3 levels of risk classification for individual taxpayers: High, Medium and Low risk.
|Click here to read our article for this matter|
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.