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Quarterly Vietnam HR & Payroll Updates July 2024.

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Quarterly vietnam hr & payroll updates july 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.

The expected increase in the Minimum Monthly Wage for regional areas from 1 July 2024

On 22 March 2024, the Ministry of Labour, War Invalids and Social Affairs announced a draft of Decree regulating the Minimum Monthly Wages for employees working under labour contracts. According to the draft, the Minimum Monthly Wages in regional areas will increase 6% on average as follows:

ZONEMinimum Monthly Wages (VND)Increase
Until 30 June 2024 Increase (expected)From 1 July 2024 (expected)
Zone I4,680,0004,960,000280,000
Zone II4,160,0004,410,000250,000
Zone III3,640,0003,860,000220,000
Zone IV3,250,0003,450,000200,000

And Minimum Hourly Wage will increase as follows:

ZONEMinimum Hourly Wage (VND)Increase
Until 30 June 2024 Increase (expected)From 1 July 2024 (expected)
Zone I22,50023,8001,300
Zone II20,00021,2001,200
Zone III17,50018,6001,100
Zone IV15,60016,6001,000

Minimum Monthly Wages forms the basis for salary calculations and negotiations between commercial employers & employees, which is evidenced in labour contracts. It is also used as a threshold upon which the maximum payment for Unemployment Insurance (UI) is calculated. Minimum Monthly Wages are applied at different rates using “zones” to align with areas with different economic and living standards.

This increase is expected to be applied from 1 July 2024. Although it is still awaiting final approval from the National Assembly, history shows that this proposal will likely pass and we suggest that enterprises should take this proposed increase into account for their budget planning, along with updating payroll calculations in terms of Unemployment Insurance contributed by employers and employees.

Instructions for Submitting Reports on Foreign Labour Employment in the First 6 Months of 2024 in Ho Chi Minh City

The Department of Labour, War Invalids and Social Affairs of Ho Chi Minh City issued Official Letter 12725/SLDTBXH-VL-ATLD on the implementation of reports on foreign labour employment in the first 6 months of 2024, and reminders about the conditions for foreign employees to work in Vietnam.

Instructions for submitting reports

The Department requests employers to report on employment of foreign employees according to the provisions of Article 6 of Decree 152/2020/ND-CP, specifically as follows:

  • Report form: Form No. 07/PLI in the appendix issued with Decree 70/2023/ND-CP.
  • Reporting period data: foreign employees’ data from 15 December 2023 to 14 June 2024.
  • Report submission period: from 15 June 2024 to 5 July 2024.
  • Submission form: organisations access the Google Form at: https://forms.gle/kNqRgsH42Vu4evwj8 or scan the QR code in the Official Letter to access the Report on foreign labour employment and send reports online to the Department of Labour – Invalids and Social Affairs (through the Department of Labour Safety) including foreign employees’ data and a signed, red-stamped copy of the report (PDF file).

Conditions for foreign individuals working in Vietnam

Conditions for foreign individuals working in Vietnam according to Article 151 of the 2019 Labor Code are as follows:

  • Foreign employees working in Vietnam must meet the following conditions:
    • Be 18 years of age or older and have full civil act capacity
    • Have professional qualifications, technical skills, work experience; healthy in accordance with the regulations of the Minister of Health
    • Not serving a sentence or has not had his/her criminal record expunged or is being prosecuted for criminal liability according to the provisions of foreign law or Vietnamese law
    • Have a Work Permit issued by an authorized government agency of Vietnam, except for the cases specified in Article 154 of the 2019 Labour Code
  • The duration of the labour contract for foreign employees working in Vietnam must not exceed the duration of the Work Permit. When employing foreign employees to work in Vietnam, the two parties may agree to enter into multiple fixed-term labour contracts.
  • Foreign employees working in Vietnam must comply with Vietnamese labour laws and are protected by Vietnamese law, except where international treaties to which the Socialist Republic of Vietnam is a member have other provisions.

Instructions for submitting reports

Conditions for employing foreign individuals to work in Vietnam according to Article 152 of the 2019 Labor Code are as follows:

  • Enterprises, agencies, organisations, individuals, and contractors are only allowed to recruit foreign workers to work in managerial, executive, expert, and technical positions that Vietnamese workers cannot meet according to production and business needs.
  • Enterprises, agencies, organisations, and individuals must explain their labour needs and obtain written approval from an authorised government’s agency before recruiting and employing foreign individuals to work in Vietnam.
  • Before recruiting foreign individuals to work in Vietnam, contractors must specifically declare the job positions with professional qualifications, technical skills, work experience, and working time that require foreign individuals to perform the bidding package and obtain written approval from an authorised government’s agency.

Official Letter Release

Deduction for house rent for non-resident foreign employees

On 23 April 2024, the Hanoi Tax Department issued Official Letter 23289/CTHN-TTHT regarding accommodation costs for non-resident foreign employees.

As per the provisions outlined in Point d.1, Clause 2, Article 11 of Circular 92/2015/TT-BTC, when a company pays house rent on behalf of a foreign employee who is not a tax-resident in Vietnam, the house rent (included utilities and service fee) must be included in their taxable income. However, it should be based on the actual amount paid by the employer, but it should not exceed 15% of the total taxable income arising in Vietnam (excluding house rent, electricity, water, and accompanying services which are paid separately beside total rental fee)

For foreign employees who are non-tax resident in Vietnam, the applicable tax rate is 20% (as specified in Article 18 of Circular 111/2013/TT-BTC).

Authorisation for employers to finalise the Personal Income Tax in instances where the employee’s tenure is less than 12 months

On 2 April 2024, the Hanoi Tax Department released Official Letter 16888/CTHN-TTHT on authorisation for employers to finalise the PIT in instances where the employee’s tenure is less than 12 months.

Accordingly, where an individual has income from salary or wages, signs a labour contract of 3 months or more and is actually working at a company at the time the entity executes the Tax finalisation, it is allowed to authorise for the company to perform PIT finalisation on their behalf. This is applicable even in instances where the individual has not worked for the entire 12-month period within the fiscal year. To qualify for such authorisation, the individual must not have been employed by any other entity during the preceding months of the fiscal year, ensuring that the income for the year is exclusively attributed to the authorising employer. In cases where the individual has concurrent income from another source, it must not exceed an average of VND 10 million per month, and a tax at 10% is deducted.

Guidelines for identifying employees exempt from Dual Social Insurance Payments under the Vietnam-Korea Agreement

On 29 March 2024, the Vietnam Social Insurance (SI) issued Official Letter 862/BHXH-TST, providing guidance on several aspects related to the implementation of the SI Agreement between Vietnam and the Republic of Korea.

The Official Letter covers the following key points:

  • Identifying employees from both Vietnam and Korea who are exempt from participating in SI payments twice
  • SI Entity Certificate issuance for Vietnamese employees
  • SI Entity Certificate collection for Korean employees
  • Conditions and procedures for stopping SI payments and confirming the compulsory SI participation period for Vietnamese employees employed in Korea under contract are provided.

Accordingly, Vietnamese individuals working in Korea and Korean individuals working in Vietnam, if they meet the specified regulations, fall into the categories of “dispatched employees” or “on-site recruited employees”. In such cases, they are exempted from paying SI contributions twice. However, it is essential to apply for a Certificate of SI Entity as the basis for this exemption.

Reminder Of Upcoming Periodical Reports in Quarter 3 of 2024

Upcoming Periodical ReportsDeadline
Semi-annual Report on Labour Accidents 20245 July 2024
Semi-annual Report on Employment of Foreign Employees 20245 July 2024
Monthly Report on Labour Change in July 20243 August 2024
Monthly Report on Labour Change in August 20243 September 2024
Monthly Report on Labour Change in September 20243 October 2024
PIT Declaration in Quarter 2, 202430 July 2024
Report on Using PIT withholding certificate in Quarter 2, 202431 July 2024

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.

Updated on July 1, 2024
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