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Two significant changes to the Vietnamese government compulsory insurance scheme (SMUI) and the Personal Income Tax (PIT) deductions deliver higher net salaries with a small increase in company cost.
SMUI Cap Increase
On 10th Nov 2012, the Vietnam National Assembly approved a new common minimum wage rate of VND 1,150,000, increasing VND100,000 from the current minimum rate. This salary rate to be valid from July 1 2013. The common minimum wage is used as the basis for calculating the compulsory Social Medical and Unemployment insurance (SMUI) scheme contribution cap.
Accordingly, the salary contribution cap for SMUI will increase to VND23m from the current VND21m. Therefore, an employee who has a gross base salary (contract salary) of VND21m or more, will have to pay an additional monthly amount of maximum VND190,000 in contributions. Employers will have to pay an additional maximum VND420,000 month in contributions.
We are waiting on the implementing decrees and will announce these when the are issued.
Personal Income Tax Deductions Increase
Today Dec 07 2013, the new law no. 26/2012/QH13 has been just amended and approved that from July 01 2013, The ‘Personal’ income tax deduction for individual taxpayers will increase to VND9m from the current VND4m per month. The deduction for ‘dependents’ will increase to VND3.6m from the current VND1.6m per month. In addition the third child may now qualify for the dependent deduction.
Progressive tax rates are kept as current.
We are waiting on the implementing decrees and will announce these when the are issued.
Below are some examples calculations showing the effect of these changes.
Sample Calculations - how this affects you
Example 1 shows the effect of these two changes with a focus on the SMUI cap effect.
Example 2 shows the effect PIT Dependent Deduction Increase
Example 3 shows the effect of PIT Personal Deduction Increase
What you have to do
If you are an HR2B Payroll Services customer you don’t have to do anything. HR2B will take care of changing the calculations and informing your staff. If you are not yet an HR2B customer, call today for a no obligation free quote
Business Development Department
Ms Nguyen Thi Bich Hong
Deputy General Director
contact@hr2b.com
+84 (0) 907 073388
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