Alert on Social Insurance for foreign employee - Mazars Tax Alert

On 15 October 2018, the Government has promulgated Decree 143/2018/ND-CP providing detail guidelines for the Law on Social Insurance (“SI”), Law on Occupational safety and Hygine for the foreign employees with the following notable points:

-          Foreign employee who works in Vietnam under a work permit, practicing license, or practicing certificate issued by a competent body of Vietnam with labour contract  with term of 01 year or more shall be subject to SI contribution except for the following cases:

  • Internal transfer in accordance with Clause 1, Article 3 of Decree 11/2016/ND-CP of the Government;
  • Foreign employee out of working ages in accordance with Clause 1, Article 187 of Labour Code.

-          The contribution to SI fund shall be made under schedules as follows:

  • From 01 December 2018 until 31 December 2021, the SI scheme shall cover Sickness and Maternity Fund and Occupational Disease and Accidents Fund, in which the contribution rate by the employer shall be 3.5%, the employee is not required to make contribution during this period;
  • From 01 January 2022, SI scheme will be expanded to cover retirement and death, in which the total SI contribution rate shall be 17.5% by employer and 8% by employee.

-          The foreign employee shall be entitled to the same benefits as Vietnamese employee including sickness allowance; maternity allowance; labour accident and occupational disease allowance; survivorship allowance, pension with the same schedules of contribution to such funds.For the one-time claim SI allowance, foreign employee can apply for this allowance at the end of of labour contract or upon the expiration (without extension) of work permit, practicing license, or practicing certificate (while the Vietnamese employee must wait for a year without working and contribute to SI funds).

The foreign employee who works under labour contract with term of 03 months or more is still subject to contribution of Health Insurance under the Law on Health Insurance (as usual) and not subject to contribution of Unemployment Insurance. Together with the contribution to SI funds from 01 December 2018, the employer is required to pay trade union fee (2% of Social Insurance salary funds) for foreign employees as well.

Our support

We do trust the above points are notable and sufficient, but should you have any question or need a deeper discussion on this issue, please do not hesitate to contact us.

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