What are the main characteristics of the Business Licence Fee (BLF) in Vietnam?
Similar to other business entities in Vietnam, FIEs are required to pay BLT on the annual basis at the beginning of a calendar year. The tax amount is based on the entity’s legal capital/ investment capital as follows:
|Levels of BLT||Legal Capital (VND)||BLT amount/ year (VND)|
|Level 1||over 10 billion||3,000,000|
|Level 2||below 10 billion||2,000,000|
|Level 3||Branch, representative office, business office, other business entities||1,000,000|
The deadline for payment of BLF for a running entity is 31 January and within 30 days from the business license date for a newly-established one.
Under the Labour Code, FIEs may either directly recruit Vietnamese employees or via an authorized labour agency. FIEs are then required to register the list of Vietnamese employees with the local labour department and submit the reports of employment and changes of employees to the labour department on a periodic basis.
Do FIEs have to register their expatriate employees with the authorities? What documents are required?
Except for General Director, Deputy General Director, Members of the Board of Management, and workers entering Vietnam to work as experts, managers, chief executive officers or technicians for a period of under 30 days and an accumulated working period of under 90 days per year; all expatriates working in a Company are required to obtain a work permit. The Company (i.e. employer) is required to submit applications to the local labour department to obtain work permits for its expatriate employees; or to get the exemption of work permit for applicable cases.
Are social insurance (SI), health insurance (HI), unemployment insurance (UI) and Trade Union fee (TU) for employees compulsory for FIEs? What are the rates of contribution?
From 1 January 2015, according to Law No. 46, 2014 on HI, the compulsory contribution for HI shall be based on the decision of the Government at each specific time but capped at 6% of the contractual salary and 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 of 20 November 2018, the rate of HI is 4.5% (of which 3% by employers and 1.5% by employees). Law No. 26, 2014 remains un-change on entitlements to employees under the mandatory insurance schemes. Unemployed individuals are entitled to the HI scheme without the contribution requirement.
Decree No. 44, 2017 stipulates that from 1 June 2017, the SI contribution rates for employees decreased by 0.5%. The SI contribution rates are as follows:
|30 June 2017 backward||1 July 2017 onwards|
From 1 January 2018, following Decision 595/QD-BHXH, there are two new SI compulsory participants: people who work under labour contracts with terms from 1 to 3 months, and foreign workers working in Vietnam under work permits or work certificates, having labour contracts with a term of either over 1 year or with an indefinite term.
In particular, for foreign workers, the SI contribution rates are as follows:
|From 1 December 2018 to 31 December 2021||1 January 2022 onwards|
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 the minimum salary, which is regulated by the Government for each specific time.
Unemployment Insurance (UI) scheme, regulated under Law No. 38, 2013, was applicable from 1 January 2015. Both employer and employee contribute the same rate of 1% based on the lower contractual salary/ allowances and the statutory cap which is set at 20 times the region-based minimum salary.
It is noted that the Trade Union fee of 2% salary expenses will be borne by employers from 1 January 2013. The salary basis for TU is similar to SI. Organizations and enterprises shall pay the fee every month at the same time as compulsory SI payment for employees.
In summary, the current rates of insurance and fees are as follows:
|Employee contribution %||Employer contribution %||Total %|
According to Decree 11, 2016 of the Government amended by Decree 140, 2018, the limitation ratio of foreign employees in an enterprise was no longer effective. It means that an FIE can employ as many expatriates as possible, provided that they are satisfied regulations in the above documents, such as having a minimum three-year experience in the career.