Are contributions to the Disaster Management Fund of Vietnam exempted from PIT in Vietnam?

How much do employees contribute to the Disaster Management Fund of Vietnam?

Based on the provisions of Clause 3, Article 12 of Decree 78/2021/ND-CP as follows:

Financial Sources

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3. Vietnamese citizens aged 18 to retirement age under normal working conditions as prescribed by labor laws make annual contributions as follows:

a) Officials and public employees, individuals receiving salaries, allowances, and employees in agencies, organizations, public service providers of the Communist Party, the State, socio-political organizations, and associations supported by the state budget at the central level, in provinces, centrally-run cities, in districts, towns or district-level cities, cities of provinces, cities under centrally-run cities (district level), in communes, wards or commune-level towns (commune-level), in special administrative-economic units, and the armed forces contribute one-half of the statutory pay rate divided by the number of working days in a month.

b) employees working under employment contracts in enterprises contribute one-half of the region-based minimum wage divided by the number of working days in a month according to the employment contract. employees who enter into multiple employment contracts with multiple enterprises are only required to contribute once, based on the longest-term employment contract.

c) Other employees, apart from those specified in points a and b of this clause, contribute 10,000 VND/person/year.

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Thus, employees' contributions to the Disaster Management Fund of Vietnam are determined in the following cases:

(1) For employees in agencies, organizations, public service providers of the Communist Party, the State, socio-political organizations, and associations supported by the state budget at the central level, in provinces, centrally-run cities, in districts, towns, district-level cities, cities of provinces, cities under centrally-run cities (district level), in communes, wards, commune-level towns (commune-level), in special administrative-economic units, and the armed forces:

Disaster Management Fund of Vietnam Contribution = 1/2 x Statutory pay rate / Number of working days in a month

Currently, the statutory pay rate is 2,340,000 VND (According to Clause 2, Article 3 of Decree 73/2024/ND-CP)

(2) For employees working under employment contracts in enterprises:

Disaster Management Fund of Vietnam Contribution = 1/2 x region-based minimum wage / Number of working days in a month

Currently, the region-based minimum wage is 4,960,000 VND/month in Region I, 4,410,000 VND/month in Region II, 3,860,000/month in Region III, and 3,450,000/month in Region IV. (According to Clause 1, Article 3 of Decree 74/2024/ND-CP)

* Note: employees who enter into multiple employment contracts with multiple enterprises are only required to contribute once, based on the longest-term employment contract.

(3) For other employees:

Annual Disaster Management Fund of Vietnam Contribution = 10,000 VND/person.

Are contributions to the Disaster Management Fund of Vietnam exempted from PIT in Vietnam?

According to Official Dispatch 3275/TCT-DNNCN of 2020, which guides the policy on personal income tax (PIT) concerning mandatory contributions to the Disaster Management Fund of Vietnam established under the provisions of Decree 94/2014/ND-CP (replaced by Decree 78/2021/ND-CP from September 15, 2021) as follows:

Based on the provisions of Clause a.2, Point a, Clause 3, Article 9 of Circular 111/2013/TT-BTC on deductions for charitable, humanitarian, and educational contributions as follows:

Deductions

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3. Deductions for charitable, humanitarian, and educational contributions

a) Charitable, humanitarian, and educational contributions are deducted from taxable income for income from business, wages, and salaries before calculating personal income tax for resident individuals, including:

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a.2) Contributions to charitable funds, humanitarian funds, and educational promotion funds established and operated under the provisions of Decree 30/2012/ND-CP dated April 12, 2012 of the Government of Vietnam on the organization and operation of social funds, charitable funds, operating for humanitarian, non-profit educational purposes, and regulations in other relevant documents on the management and use of sponsorship resources.

Proof of charitable, humanitarian, and educational contributions is the lawful receipt issued by central or provincial organizations or funds.

Therefore, if a employee contributes to the Disaster Management Fund of Vietnam established under the provisions of Decree 94/2014/ND-CP (replaced by Decree 78/2021/ND-CP from September 15, 2021), the employee is allowed to deduct the contribution to the Disaster Management Fund of Vietnam from their taxable income for personal income tax from salaries and wages.

Are contributions to the Disaster Management Fund of Vietnam exempted from PIT in Vietnam? (Image from Internet)

What are duties of the Disaster Management Fund of Vietnam?

Based on the provisions of Article 4 of Decree 78/2021/ND-CP on the duties of the Disaster Management Fund of Vietnam as follows:

- Support disaster prevention activities that the state budget has not invested in or has not met the requirements.

- Receive, manage, and use financial resources.

- Implement reporting and accounting policies in accordance with regulations.

- Comply with inspections, examinations, and audits by competent state agencies as prescribed by law.

- Publicly disclose operating regulations, activity results of the Disaster Management Fund of Vietnam, and report on the fund's implementation status as required.