5 Items Deducted from Employee Monthly Salary in 2020 in Vietnam

05 Items Deducted from Employee Monthly Salary in 2020 in Vietnam - Illustrative image

According to current regulations, salary is the amount paid by the employer to the employee as agreed to perform the job, including the salary according to the job or title, salary allowances, and other additional amounts. However, this monthly salary of the employee in Vietnam may be deducted by the following amounts:

1. Compulsory Social Insurance into the Retirement and Survivorship Fund in Vietnam

Based on Clause 1, Article 85 of the Social Insurance Law 2014, Clause 1, Article 5 of Decision 595/QD-BHXH, monthly, employees must contribute compulsory social insurance into the Retirement and Survivorship Fund at the following rates:

- The following employees must contribute compulsory social insurance at 8% of their monthly salary used as social insurance payment into the Retirement and Survivorship Fund:

+ Persons working under indefinite-term labor contracts, definite-term labor contracts, seasonal labor contracts, or specific job contracts with a term from 03 months to under 12 months, including labor contracts signed between the unit and the legal representative of individuals under 15 years old according to the labor law;

+ Persons working under labor contracts with a term from 01 month to under 03 months (effective from January 01, 2018);

+ Officials and public employees as prescribed by the law on officials and public employees;

+ National defense workers, public security workers, persons performing other tasks in cryptographic organizations in the case of social insurance handled by the Ministry of Defense, People's Public Security transferred to Provincial Social Insurance;

+ Managers of enterprises, cooperative executive managers receiving salaries;

+ Persons working abroad under contracts as per the Law on Vietnamese Guest Worker, participating in compulsory social insurance as regulated in Decree 115/2015/ND-CP applicable to contracts sending laborers abroad with enterprises winning contracts, receiving contracts, or organizations, individuals investing abroad sending laborers abroad.

- For part-time workers in communes, wards, commune-level towns, the monthly contribution is 8% of the statutory pay rate into the Retirement and Survivorship Fund.

- For persons working abroad under contracts as per the Law on Vietnamese Guest Worker participating in compulsory social insurance according to Decree 115/2015/ND-CP, applicable to contracts sending laborers abroad with service enterprises, public non-business units permitted to send laborers abroad; contracts for laborers to work abroad in the form of skill improvement internships with enterprises sending laborers for skill improvement internships and individual contracts, the monthly contribution to the Retirement and Survivorship Fund is 22% of the monthly salary used as social insurance payment of the laborer before working abroad for those who have participated in compulsory social insurance; 22% of twice the statutory pay rate for those who have not participated in compulsory social insurance or have participated but have received a lump-sum social insurance payment.

2. Unemployment Insurance in Vietnam

According to Point a, Clause 1, Article 57 of the Employment Law 2013, monthly, employees must contribute unemployment insurance at a rate of 1% of the monthly salary used as social insurance payment into the Unemployment Insurance Fund.

3. Health Insurance in Vietnam

According to Point a, Clause 1, Article 13 of the Health Insurance Law 2008 and Point a, Clause 1, Article 7 of Decree 146/2018/ND-CP, the monthly health insurance contribution of employees working under indefinite-term labor contracts, definite-term labor contracts of 3 months or more; managers of enterprises, public service providers outside the public sector, and cooperative executive managers receiving salaries; officials and public employees is 4.5% of the monthly salary used as social insurance payment, of which the employer contributes 2/3 (equivalent to 3%), and the employee contributes 1/3 (equivalent to 1.5% of the monthly salary used as social insurance payment).

Thus, monthly, employees will contribute 1.5% of the monthly salary used as social insurance payment into the Health Insurance Fund.

4. Trade Union Fees in Vietnam

According to Article 23 of Decision 1908/QD-TLD, in case an employee joins the union, the monthly trade union fee is 1% of the salary used as the basis for social insurance payment.

5. Personal Income Tax in Vietnam

Monthly, employees with incomes of 11 million VND/month or more may have to pay personal income tax depending on their deductible and exemptible income amounts.

Note:

- Deductible amounts when calculating personal income tax include:

- Deduction for the taxpayer

- Family circumstance deduction for dependents

- Contributions to social insurance, health insurance, professional liability insurance for some professions

- Donations to charity, humanitarian, education promotion funds

- …

- According to Resolution 954/2020/UBTVQH14, the family circumstance deduction for personal income tax applicable from the 2020 tax year is:

+ 11 million VND/month (132 million VND/year) for the taxpayer;

+ 4.4 million VND/month for each dependent.

In 2020, for the months of January, February, March, April, and May, taxpayers temporarily paid personal income tax according to the old deduction rate (9 million VND/month for the taxpayer and 3.6 million VND/month for each dependent). When settling taxes at the beginning of 2021, the tax authority will recalculate the tax payable according to the new deduction rate in Resolution 954 (11 million VND/month for the taxpayer and 4.4 million VND/month for each dependent) and refund the whole or part of any excess tax paid.

Nguyen Trinh

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