If the enterprise owes social insurance contributions, how long does it take to pay interest in Vietnam?
May I ask if the enterprise owes the employee's salary to pay social insurance contributions, how long does it take to pay interest in Vietnam? Please advice.
In Clause 3, Article 122 of the Law on Social Insurance 2014, there is a provision:
Article 122. Handling of violations of the law on social insurance
3. Employers that violate Clause 1, 2 or 3, Article 17 of this Law for 30 days or more shall not only fully pay the amount not yet paid or paid late and be handled in accordance with law but also pay an interest equaling 2 times the average interest rate of investment from the social insurance fund in the preceding year, calculated based on the late paid amount and late payment period. If they fail to do so, at the request of competent persons, related banks, credit institutions or state treasuries shall deduct money from the employers’ deposit accounts in order to pay the amount not yet paid or paid late and the interest thereon to the accounts of social insurance agencies.
And Clause 1, 2 and 3 of Article 17 of this Law stipulates:
1. Shirking the payment of compulsory social insurance or unemployment insurance premiums.
2. Delaying the payment of social insurance or unemployment insurance premiums.
3. Appropriating social insurance or unemployment insurance premiums or allowances.
Thus, according to the above-mentioned regulations, enterprises that are late in paying social insurance premiums starting from the second month will have to pay interest. The interest rate is equivalent to 02 times the average investment interest rate of the social insurance fund of the previous year calculated on the amount and time of delay of payment.
The formula for calculating the interest rate of delay of compulsory social insurance, health insurance, unemployment insurance, labor accident insurance, occupational disease insurance is specified in Clause 3, Article 37 of the process attached to Decision 595/QD-BHXH in 2017, specifically as follows:
The late payment interest on premiums compulsory of insurance shall be calculated as follows:
Lcdi = Pcdi x k (VND) (1)
Where:
* Lcdi: The late payment interest on compulsory social insurance contributions or premiums of health insurance, unemployment insurance or occupational accident and occupational disease insurance calculated in the month i (VND)
* Pcdi: Insurance premiums that are paid late and subject to interest in the month i and shall be calculated as follows:
Pcdi = Plki - Spsi (VND) (2)
Where:
Plki: Total accumulated insurance contributions or premiums until the end of the month preceding the month i (excluding late-payment interest and unpaid interest in the previous periods (if any)).
Spsi: Amount of insurance contributions or premiums payable whose payment is not overdue and shall be specified as follows:
+ In case of monthly payment of insurance contributions or premiums: Spsi shall equal to the monthly contributions or premiums of the month preceding the month i;
+ In case of quarterly or biannual payment of insurance contributions or premiums: Spsi shall equal to the total monthly premiums payable of the months preceding the month i in which the contributions or premiums are not mature.
* k: rate of late payment interest at the time of interest calculation and shall be specified as follows:
- Regarding compulsory social insurance, unemployment insurance, occupational accident and occupational disease insurance, k shall be equal to 2 times the monthly average investment interest rate of social insurance fund of the preceding year announced by Vietnam Social Security.
- In case of health insurance, k shall be equal to 2 times the monthly interest rate of the interbank market with a term of 9 months announced by the State Bank of Vietnam on the Portal of the State Bank of Vietnam in the preceding year. If the interest rate of interbank market of the preceding year has it term other than 9 months, the interest rate of the term preceding the 9-month term shall be applied.
Example 12: Calculation of late payment interest on insurance contributions or premiums in case of monthly payment:
The enterprise B makes monthly payment of insurance contributions and premiums. Until the end of February, 2016, the enterprise B owns 200,000,000 VND for premiums of social insurance, unemployment insurance and occupational accident and occupational disease insurance and 35,000,000 for health insurance premiums. In which, the premiums payable of social insurance, unemployment insurance and occupational accident and occupational disease insurance in February, 2016 are 100,000,000 VND and the health insurance premiums payable is 20,000,000 VND. If the average interest rate of investment in social insurance, unemployment insurance, occupational accident and occupational disease insurance funds is 6.39 % per year and the interest rate of inter-bank market for a term of 9 months announced by the Vietnam State Bank, the late payment interest shall be calculated as follows:
The rate of late payment interest on premiums of social insurance, unemployment insurance or occupational accident and occupational disease shall equal: kbhxh = 2 x 6.39%/12= 1.0650%
The rate of late-payment interest on health insurance premium shall equal: kbhyt = 2 x 6.5%/12 = 1.0833%
The abovementioned shall be applied to calculate the late payment interest on insurance premiums of the enterprise B on March 01, 2016 as follows:
The late payment interest on premiums of social insurance, unemployment insurance or occupational accident and occupational disease shall be 1,065,000 VND [(200,000,000 VND – 100,000,000 VND) x 1.0650%].
The late payment interest on health insurance premiums shall be 162,495 VND [(35,000,000 VND – 20,000,000 VND) x 1.0833].
The total late payment interest on insurance premiums that shall be paid by the enterprise B in March, 2016 shall be 1,227,495 VND (1,065,000 VND + 162,495 VND).
Example 13: Calculation of late payment interest on insurance contributions and premiums in case of quarterly or biannual payment. The following example shows the calculation of late payment interest on contributions of social insurance and premiums of unemployment insurance and occupational accident and occupational disease insurance. The calculation of late payment interest on health insurance premiums is similar
The enterprise C makes quarterly payment of insurance contributions and premiums from January, 2016. Until the end of May, 2016, the enterprise C owns 350,000,000 VND for premiums of social insurance and unemployment insurance. In which, the contributions payable of social insurance and premiums payable of unemployment insurance and occupational accident and occupational disease insurance in April, 2016 are 100,000,000 VND and those in May, 2016 are 110,000,000 VND. In May, 2016 and June, 2016, the late payment interest on social insurance, health insurance, unemployment insurance and occupational accident and occupational disease insurance paid by the enterprise C shall be calculated as follows:
According to the formula (2), monthly premiums of social insurance, unemployment insurance and occupational accident or occupational disease that are paid late and are subject to interest (Pcd6) (May and June, 2016) shall be 140,000,000 VND (350,000,000 VND - 100,000,000 VND - 110,000,000 VND);
If the rate of late payment interest is 1.0650% as calculated in Example 2, according to the formula (1), the monthly late payment interest ( May and June, 2016) (Lcd6) shall be 1,491,000 VND (140,000,000 VND x 1.0650%).
Best Regards!
