Mazars Vietnam Tax and Legal Updates December 2015 & Tax Labour Calendar 2016

Recently, a number of new Law and Decrees providing guidelines on labour have been issued. In this edition, we would like to highlight some notable points which may be relevant/noteworthy for your payroll calculation as from 2016.

In this edition, we would like to highlight a number of notable points which may be relevant/noteworthy for your payroll calculation from 1/1/2016.

1. Decree 122/2015/ND-CP on new region-based minimum salary from 2016

The region-based minimum salary in 2016 shall be as follows:

o   VND 3,500,000/month shall be applied to enterprises operating in region I.

o   VND 3,100,000/month shall be applied to enterprises operating in region II.

o   VND 2,700,000/month shall be applied to enterprises operating in region III.

o   VND 2,400,000/month shall be applied to enterprises operating in region IV.

Administrative divisions of regions I, II, III and IV are prescribed in the Appendix enclosed with this Decree.

Notably, this change will result in an increase of the capped salary for Unemployment Insurance contribution (20 times of region-based minimum salary), e.g. for region I (Hanoi, Hochiminh City etc.), the cap shall be VND 70 million (the cap in 2015 is VND 62 million).

2. Decree 115/2015/ND-CP guiding the Law on Social Insurance

This Decree comes into effect from 01 January 2016, in which the salary for Social Insurance contribution shall be changed as follows:

o   From 01 January 2016 to 31 December 2017: the salary which includes salary and allowances as regulated in the labour law and stated in the labor contract;

o   From 01 January 2018: the salary which includes base salary, allowances and other extra payments as regulated in the labour law and stated in the labor contract.

Although there are definitions of allowances and other extra payments under the provision of Circular 23/2015/TT-BLDTBXH dated 23 June 2015, this is still not quite clear for various practical cases. To minimize the risk, we suggest the Company to review and improve the labour contracts where necessary.

3. New Law No. 84/2015/QH13 on Occupational Safety and Hygiene dated 25 June 2015

This new Law shall amend parts of the Law on Social Insurance, where it separately governs the Insurance Fund for Labour Accidents and Occupational Diseases. Accordingly, as from 1 July 2016, this kind of insurance shall be compulsory for those under the compulsory Social Insurance scheme (with some exceptions) and the employer must contribute maximum 1% of the employee’s salary to the Insurance Fund. This contribution shall be required to all employers in case where the employee has labour contracts with more than one employer (before, this 1% was included in the employer’s contribution of Social Insurance and hence only the first employer had to make the contribution). The detailed guideline on the exact rate and method of contribution shall be provided in the upcoming Decree and Circular. 

Please also download the file below for Vietnam Tax and Labour Calendar 2016.

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