What are regulations on deduction of money from the taxpayer’ salary or income in Vietnam?

What are regulations on deduction of money from the taxpayer’ salary or income in Vietnam?

Pursuant to Clause 3, Article 130 of the Law on Tax Administration 2019, regulations on the deduction of money from the taxpayer’ salary or income are as follows:

- Deduct a portion of wages or income of the entity subjected to the enforcement of the administrative decision on tax management and transfer the deducted amount to the state budget account at the State Treasury according to the details specified in the enforcement decision regarding the administrative decision on tax management. This applies from the nearest salary or income payment period until the full amount of tax debt is deducted, while also notifying the person who issued the enforcement decision and the entity subjected to enforcement.

- In the event that the full amount of tax debt is not deducted according to the enforcement decision and the labor contract of the entity subjected to enforcement is terminated, the organization or entity using the labor must notify the person who issued the administrative decision on tax management enforcement within 5 working days from the termination date of the labor contract.

- The organization or entity using the labor managing the wages or income of the entity subjected to enforcement deliberately does not comply with the enforcement of the administrative decision.

What are regulations on deduction of money from the taxpayer’ salary or income in Vietnam? (Image from the internet)

What Is the deduction rate for salary or income in Vietnam?

According to Clause 2, Article 130 of the Law on Tax Administration 2019, the regulations are as follows:

Enforcement by deduction of money from the taxpayer’ salary or income

1. The measure of deducting part of wages or income applies to taxpayers subjected to the enforcement of an administrative decision on tax management who are working under a labor contract of 6 months or more or are receiving retirement or disability benefits.

2. The deduction rate for wages, retirement benefits, or disability benefits for individuals is not less than 10% and not more than 30% of the individual's total monthly wages or benefits; for other types of income, the deduction rate is based on actual income, but not more than 50% of total income.

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Thus, the deduction rate for salary or income is prescribed as follows:

- The deduction rate for wages, retirement benefits, or disability benefits for an individual is not less than 10% and not more than 30% of the individual's total monthly wages or benefits.

- For other types of income, the deduction rate is based on actual income, but not more than 50% of total income.

What are the penalties for deducting from employees’ salaries in breach of law of Vietnam?

Based on Clause 2, Clause 5, Article 17 of Decree 12/2022/ND-CP, the regulations are:

Violation of Wage Regulations

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2. Fines for employers committing one of the following acts: Not paying wages on time according to legal regulations; not paying or underpaying wages as agreed in labor contracts; not paying or underpaying overtime wages; not paying or underpaying night work wages; not paying or underpaying downtime wages as per the law; limiting or interfering with employees' self-determination over wage spending; forcing employees to spend wages on purchasing goods or services from the employer or designated units; deducting from employees’ salaries in breach of law*; not paying or underpaying wages as prescribed when temporarily assigning employees to different work than specified in labor contracts or during strikes; not paying or underpaying wages for days of annual leave not taken when the employee resigns or loses a job; not pre-advancing or under-advancing wages for employees during work suspension as prescribed by law; not paying enough wages for employees during work suspension if not being disciplining according to one of the following levels:*

a) From 5,000,000 VND to 10,000,000 VND for violations affecting 1 to 10 employees;

b) From 10,000,000 VND to 20,000,000 VND for violations affecting 11 to 50 employees;

c) From 20,000,000 VND to 30,000,000 VND for violations affecting 51 to 100 employees;

d) From 30,000,000 VND to 40,000,000 VND for violations affecting 101 to 300 employees;

đ) From 40,000,000 VND to 50,000,000 VND for violations affecting 301 or more employees.

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5. Measures to Remediate Consequences

a) Compel the employer to pay the full wage plus interest on the delayed or unpaid wage, calculated at the highest non-term deposit interest rate of state commercial banks announced at the time of penalty imposition for the acts specified in Clause 2, Clause 3 of this Article;

b) Compel the employer to pay the full amount equivalent to the compulsory social insurance, health insurance, unemployment insurance contribution plus interest on that amount calculated at the highest non-term deposit interest rate of state commercial banks announced at the time of penalty imposition for the acts specified in Clause 4 of this Article.

The act of deducting employees' wages non-compliantly is subject to fines ranging from 5,000,000 VND to 50,000,000 VND depending on the number of affected employees.

Note: According to Clause 1, Article 6 of Decree 12/2022/ND-CP, the fines mentioned above apply to individuals. The fine for organizations is twice the amount for individuals.

Thus, deducting from employees’ salaries in breach of law are subject to fines ranging from 10,000,000 VND to 100,000,000 VND depending on the number of employees subjected to illegal deduction.

Additionally, the company is compelled to pay the full wage along with interest on the underpaid wage to employees at the highest non-term deposit interest rate of state commercial banks announced at the time of penalty imposition for the violation.