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Are social insurance (SI), health insurance (HI) and health insurance (UI) for employees compulsory for FDI Enterprises? What are the rates of contribution?


From 1 July 2009, according to Law No. 25/2008 on health insurance, the compulsory contribution for HI will be based on decision of the Government in each specific time but capped at 6% of the contractual salary/allowances. Of this amount, 2/3 is contributed by employers and 1/3 is contributed by employees.

The provision of the ceiling contribution rate of 6% would give the Government the flexibility to stipulate the appropriate contribution rate from time to time. As at 1 July 2013, the rate of HI is 4.5% (of which 3% by employers and 1.5% by employees). We noted that the ceiling 6% rate is not likely applied in the near future as in current economic condition an increase in HI will give much burden on companies and employees.

Law No. 25/2008 also introduces new entitlements to employees under the mandatory insurance schemes, including maternity leave and unemployed individuals will be entitled to the HI scheme without the HI contribution requirement.

Law No. 71/2006 on social insurance stipulates that from 2010, the SI rates will increase by 1% every two years until they reach 8% for the employees and 18% for the employers. The SI rates are as follows:

2012 to 2013

2014 onwards (highly potential)







The compulsory contributions for the SI and HI mentioned above are calculated at the respective rates of whichever is lower, the contractual salary/allowances or the statutory cap which is 20 times of the minimum salary, which is regulated by the Government for each specific time. As at 1 July 2013, the monthly minimum salary is from VND 1,650,000 to VND 2,350,000 depending on the working area.

Unemployment Insurance (UI) Scheme introduced under the Law No. 71/2006 was applicable from 1 January 2009. Both employer and employee will contribute the same rate of 1% based on whichever is lower – the contractual salary/allowances or the statutory cap which is set at 20 times the minimum salary.

It is noted that for companies where Trade Union are set up, the Union fee of 2% total salary expenses will be borne by employers.

In summary, the current rates of insurances are as follows:

Employee contribution %

Employer contribution %

Total %


















Are there any limitations on number of foreign employees in a FDI Enterprises?


According to the Decree 34/2008 of the Government and Circular 08/2008 by the MOLISA, the limitation ratio of foreign employees in an enterprise was no longer effective. It means that an FDI Enterprise can employ as many expatriates as possible, provided that they are satisfied regulations in the above documents, such as having minimum five-year experience in career.

What is new on CIT?


The new CIT Law No. 32/2013 amended some key regulation in the 2008 Law and came into effect on 1 July 2013.

The current CIT rate is 25%. From 1 January 2014, the new basis rate is 22%. This is an incentive policy to encourage business activities in Vietnam.

Specifically, from 1 July 2013, the CIT rate of 20% will be applied for companies with revenue of not over VND 20 billion. The base of is the company’s prior year revenue.


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