According to the proposal of the Government of Vietnam in the Report on the evaluation of the implementation of the 2019 State Budget, the State Budget estimate and the Central Budget allocation plan for 2020 reported to the National Assembly on the afternoon of October 21, 2019, the statutory pay rate for 2020 applied to officials and public employees in Vietnam will be increased to VND 1.6 million, which makes an increase of VND 110,000 compared to 2019.
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If the salary increase is approved by the National Assembly of Vietnam, the statutory pay rate in 2020 will be the highest salary level ever. Alongside the increase in the statutory pay rate, the contributions calculated based on the statutory pay rate will also increase accordingly, specifically:
- Changes in Social Insurance Contributions in Vietnam
According to the current regulations in Clause 1, Article 85, Clause 1 Article 89 of the Law on Social Insurance 2014 and Clause 1 Article 6 of Decision 595/QD-BHXH, the social insurance contributions of officials and public employees are stipulated as follows:
Social Insurance Contributions = Monthly Salary x 8% = (Salary + allowances calculated based on statutory pay rate) x 8%
Thus, if the Government of Vietnam's proposal is approved, from July 1, 2020, the statutory pay rate for officials and public employees will be 1,600,000 VND/month. Consequently, social insurance contributions will also increase, and the maximum salary for calculating social insurance contributions will significantly change.
Specifically, Article 89 of the Law on Social Insurance 2014 stipulates that if the salary is more than 20 times the statutory pay rate, the monthly salary for social insurance contributions equals 20 times the statutory pay rate.
Thus, the maximum salary for calculating social insurance contributions, expected from July 1, 2020, will be 1,600,000 VND x 20 = 32,000,000 VND (the current rate is 29,800,000 VND corresponding to a statutory pay rate of 1,490,000 VND).
- Increased Health Insurance Contributions for Many Subjects in Vietnam
According to the provisions of Point đ Clause 1 Article 7 and Clauses 2, 3, 4 Article 2 and Article 3 of Decree 146/2018/ND-CP, non-specialized staff at the commune level; individuals receiving monthly social insurance allowances; workers on leave receiving sickness benefits; children under the age of 6; revolutionary contributors; individuals from near-poor households; etc., have health insurance contributions equal to 4.5% of the statutory pay rate.
Therefore, from July 1, 2020, if the statutory pay rate increases to 1,600,000 VND/month, the contributions for these groups will also increase, specifically 72,000 VND/month (previously 67,050 VND/month).
Nguyen Trinh
- Key word:
- statutory pay rate
- Vietnam
