What are guidelines on calculating late payment interest, arrears, and interest of arrears of social insurance in Vietnam?
When are late payment interest and arrears of social insurance calculated in Vietnam?
According to Clause 1, Article 37, and Clause 1, Article 38 of the Procedure issued attached to Decision 595/QD-BHXH in 2017 and Official Dispatch 1952/BHXH-TST in 2023 guided by Ho Chi Minh City Social Insurance, the following cases will be subject to late payment interest and arrears of social insurance:
Regarding late payment interest:
A unit that is late in paying mandatory social insurance, health insurance, unemployment insurance, occupational accident and disease insurance for 30 days or more must pay interest on the unpaid amount. The late payment interest is calculated on the first day of each month.
Regarding arrears:
- arrears due to evasion:
In cases where a unit evades paying social insurance, underpays for mandatory participants, underpays the required amount, or misuses the funds for social insurance, health insurance, unemployment insurance, occupational accident and disease insurance (hereinafter referred to as evasion), as concluded by the social insurance agency's specialized inspection or the competent state inspection agency from January 1, 2016, the unit must back pay the required amount plus interest calculated on the evaded amount and period with the following interest rates:
+ For the entire evasion period before January 1, 2016, the interest rate applies as for 2016;
+ For the evasion period from January 1, 2016 onwards, the interest rate applies as per the year found to be in evasion.
- arrears for employees after terminating the labor contract returning home and paying social insurance for the period working abroad under a labor contract not yet paid: if the arrears is made 6 months after the termination date of the labor contract returning home, it includes: the amount required plus late payment interest.
- arrears due to salary increase adjustments:
For cases where after 6 months of the promotion or salary increase decision or the labor contract (appendix), the arrears of social insurance, unemployment insurance, occupational accident and disease insurance includes: the amount required and late payment interest.
What are guidelines on calculating late payment interest, arrears, and interest of arrears of social insurance in Vietnam?
What are the interest rates for late social insurance payments? What is the formula for calculating late payment interest in Vietnam?
Regarding interest rates for late social insurance payments:
The interest rates for late social insurance payments according to the latest guidance in Official Dispatch 1952/BHXH-TST in 2023 are similar to the rates specified in Article 37 of the Procedure issued with Decision 595/QD-BHXH in 2017 as follows:
- For mandatory social insurance, unemployment insurance, occupational accident and disease insurance, calculated at twice the average annual social insurance fund investment rate of the previous year, published monthly by the Vietnam Social Security.
- For health insurance, calculated at twice the 9-month interbank market interest rate, published monthly on the State Bank of Vietnam’s portal. If there is no 9-month term, the closest term rate applies.
Regarding the formula for calculating late payment interest:
According to the procedure issued with Decision 595/QD-BHXH in 2017, the formula for calculating late payment interest for mandatory social insurance, health insurance, unemployment insurance, occupational accident and disease insurance is:
Lcđi = Pcđi x k (VND)
Where:
- Lcđi: late payment interest for month i (VND).
- Pcđi: unpaid social insurance, health insurance, unemployment insurance, occupational accident and disease insurance amount subject to interest for month i (VND), calculated as:
Pcđi = Plki - Spsi (VND)
Where:
Plki: total cumulative unpaid amount until the end of the previous month.
Spsi: newly generated unpaid social insurance amount, calculated as:
+ For monthly payments: the amount is the previous month’s amount.
+ For 3 or 6-month payments: the unpaid amount is the total of the previous months before the due month.
- k: interest rate at the time of calculation (%)
What are the regulations on arrears of social insurance in Vietnam?
According to Article 38 of the procedure issued with Decision 595/QD-BHXH in 2017 (amended by Clause 2, Article 1 of Decision 888/QD-BHXH in 2018):
- The total arrears amount equals the social insurance, health insurance, unemployment insurance, occupational accident and disease insurance amount plus interest.
- The arrears interest is calculated as follows:
Where:
Ltt: arrears interest;
v: number of months evaded in year j;
y: years to be back paid;
Pttij: monthly arrears social insurance amount for month i in year j;
Nij: evasion period in months from month i of year j to the month before arrears month, calculated as:
Nij = (T0 - Tij) - 1
Where:
T0: arrears calculation month (Gregorian calendar);
Tij: initial month of the outstanding social insurance payment Pttij (Gregorian calendar);
kj: arrears interest rate (%)
- For mandatory social insurance arrearss before January 1, 2016, kj is the monthly late payment interest rate applicable in 2016; from January 1, 2016, the applied late payment interest rates of subsequent years apply.
- For mandatory social insurance, unemployment insurance, occupational accident and disease insurance arrearss at points 1.1 and 1.2, Clause 1, Article 38, kj is the average social insurance fund investment rate of the previous year.
In case of arrearss for evasion before January 1, 2016, k is the late payment interest rate applicable to the months of 2016 according to Clause 3, Article 37 of the Procedure issued with Decision 595/QD-BHXH in 2017.
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