What is the indexation of salaries after payment of social insurance premiums in Vietnam in 2025? Are social insurance contributions deductible when calculating personal income tax in Vietnam?

What is the indexation of salaries after payment of social insurance premiums in Vietnam in 2025?

Pursuant to Clause 2, Article 2 of Circular 01/2025/TT-BLDTBXH (effective from February 28, 2025), the indexation rates for salaries after payment of social insurance premiums are prescribed as follows:

Additionally, the formula for calculating monthly salary for Social Insurance payments and the applicable subjects for adjusted Social Insurance salaries are prescribed as follows:

(1) Formula for calculating monthly salary for Social Insurance payments:

Monthly salary for Social Insurance payments after indexation of each year = Total monthly salary for Social Insurance payments of each year x indexation rate for Social Insurance salary of the corresponding year

(2) Applicable subjects for adjusted Social Insurance salaries:

- Employees under the state's salary policies starting their Social Insurance participation from January 1, 2016 onwards, receiving pensions, lump-sum retirement benefits, lump-sum Social Insurance or deceased with dependents receiving a lump-sum funeral allowance from January 1, 2025, to December 31, 2025.

- Employees paying Social Insurance according to salary policies decided by employers, receiving pensions, lump-sum retirement benefits, lump-sum Social Insurance or deceased with dependents receiving a lump-sum funeral allowance in the period from January 1, 2025, to December 31, 2025.

Note: For employees with both periods of Social Insurance under the state's salary policies and periods under employer-decided salary policies, the monthly salaries for Social Insurance shall be adjusted as prescribed above if Social Insurance participation begins with the state's salary policies from January 1, 2016, and the salaries paid under employer-decided policies.

What is the indexation of salaries after payment of social insurance premiums in Vietnam in 2025?  Are social insurance contributions deductible when calculating personal income tax in Vietnam? (Image from the Internet)

What are regulations on the indexation of monthly salaries after payment of social insurance premiums in Vietnam in 2025?

Pursuant to Clause 2, Article 3 of Circular 01/2025/TT-BLDTBXH (effective from February 28, 2025), the indexation rates for monthly salaries after payment of social insurance premiums are prescribed as follows:

Moreover, the formula for calculating monthly salaries after payment of social insurance premiums and the applicable subjects for Social Insurance incomes are as follows:

(1) Formula for calculating monthly salaries after payment of social insurance premiums

Adjusted monthly income paid for voluntary Social Insurance of each year = Total monthly salaries after payment of social insurance premiums of each year x indexation rate of monthly salaries after payment of social insurance premiums of the corresponding year

(2) Applicable subjects for monthly salaries after payment of social insurance premiums

Applicable subjects for monthly salaries after payment of social insurance premiums are voluntary Social Insurance participants receiving pensions, lump-sum retirement benefits, lump-sum Social Insurance or deceased with dependents receiving a lump-sum funeral allowance from January 1, 2025, to December 31, 2025.

Are social insurance contributions deductible when calculating personal income tax in Vietnam?

Pursuant to Clause 2, Article 9 of Circular 111/2013/TT-BTC (amended by Article 15 of Circular 92/2015/TT-BTC) regarding deductible items when calculating personal income tax. Specifically:

Deductible Items

Deductible items as guided in this Article are those deductible from an individual's taxable income before determining taxable income from salaries, wages, and business. Specifically as follows:

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2. Deductions for Insurance Contributions, Voluntary Retirement Funds

a) Insurance contributions include: social insurance, health insurance, unemployment insurance, professional liability insurance for certain professions required to participate in compulsory insurance.

b) Contributions to voluntary retirement funds, purchase of voluntary retirement insurance

Contributions to voluntary retirement funds or purchase of voluntary retirement insurance can be deducted from taxable income according to actual expenditure but a maximum of one (01) million VND/month for employees participating in voluntary retirement products guided by the Ministry of Finance, including both employer and employee contributions (if any), even in the case of participating in multiple funds. The basis for income deduction is a photocopy of payment proof (or payment fee) issued by the voluntary retirement fund or insurer.

c) Foreign individuals residing in Vietnam, Vietnamese individuals residing but working overseas with income from business, salaries, wages applied for compulsory insurance under the national regulations equivalent to Vietnamese laws like social insurance, health insurance, unemployment insurance, mandatory professional liability insurance, and other mandatory insurance (if any) are deductible from taxable income from business, salaries, wages when calculating personal income tax.

Foreign individuals and Vietnamese individuals participating in the above insurances abroad will have immediate deductions applied to their income for tax withholding during the year (if having documents) and calculated based on actual amounts upon finalizing tax according to regulations. If there are no documents for immediate deduction during the year, a one-time deduction will be applied upon tax finalization.

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According to the above regulations, Social Insurance contributions (or similar insurance for foreign individuals residing in Vietnam, Vietnamese individuals residing but working abroad with income from business, salaries, wages abroad) will be deductible when calculating personal income tax.

Note: Foreign individuals and Vietnamese individuals participating in the above insurances abroad will have immediate deductions applied to their income for tax withholding during the year (if having documents) and will be based on actual amounts upon tax finalization according to regulations. If there are no documents for immediate deduction during the year, a one-time deduction will be applied upon tax finalization.