News & Events

Updates on superannuation and health care contributions – the private sector

By Quan Nguyen | 02 Dec, 2015 | Posted in: News & Events

From 1st January 2016, these new rules on compulsory superannuation and health care contributions apply to private sector employers and employees:
For employers, contributions are:
1. Superannuation = 14% base salary
2. Health care = 3% base salary
3. Work safe = 1% base salary
4. Parenting benefits = 3% base salary
For employees, contributions are:
1. Superannuation = 8% base salary
2. Health care = 1.5% base salary
The government decrees on base salary in according to regions. If contract salary is higher than base salary, then the base salary is replaced by the contract salary.
For skilled workers, then contributions are calculated on base salary plus 7%.
For hazardous working environment, then contributions are calculated on base salary plus 5%.
The contribution rates are quite high if compared with other countries, but the government seems determined to bring the superannuation and health care system to the mass of the workforce. News headlines suggest that the Social Security Department may increase inspections and penalties for non-compliance with the rules.
References:
1. Law on Social Security 2014 (Law No.58/2014/QH13)
2. Decision 959/QD-BHXH dated 09/09/2015

Government-Approved Consumer Contracts

By Quan Nguyen | 26 Aug, 2015 | Posted in: News & Events

In Decision 35/2015/QĐ-TTg dated 20/8/2015, the Prime Minister decided these contracts below to sell the goods and services to consumers in Vietnam must be approved by and registered with the Ministry of Industry and Commerce in order to be effective:
1. Household electricity
2. Household water
3. Cable TV
4. Fixed phone
5. Mobile phone
6. Internet
7. Air ticket
8. Railway ticket
9. Corporate apartments
10. Credit cards, personal bank accounts, consumer loans
11. Life insurance

Conventional practices in Vietnam suggests that where goods and services are supplied not in the terms of statutory contracts, suppliers may face administrative penalties by the Ministry of Commerce and Industry. Consumers may insist that statutory terms and conditions apply if they find their contracts with the suppliers are less favourable.

The 2014 amendment on Value added tax law: is the taxman serious about businesses’ cash flow?

By Quan Nguyen | 17 Jan, 2014 | Posted in: News & Events, Publications

The 2014 Amendment on VAT Law, effective 01/01/2014, looks like the taxman cares about your cash flow: now monthly or quarterly, businesses can take out the VAT paid in purchases from the VAT in turnover and pay the tax man the difference only.
While this credit subtraction system is commonplace in tax laws around, in Vietnam the tax office collected VAT liability on sales up front monthly or quarterly. Businesses can claim repayment of VAT credits on purchases by the end of the year, and only if the VAT credit amount is large enough.
Given the time for the tax office to process claims, it can takes several years before you can receive payment of VAT credits the tax office owes you. To businesses, this is like a coronary artery disease: part of the cash flow is sucked into the government’s coffer, no interest!
During economic downturn, it seems cash flow as blood of businesses is as importance as the cash stream into the budget. The National Assembly passed an Amendment to VAT Law 2008 in June 2013, and the government published Decree 209/2013/NĐ-CP to implement the change from the 1st of January 2014.
It is interesting to note that the Tax Office issued Guidance to implement the Amendment on the 1st of January 2014 while awaiting the Government to draft the Decree to implement the Amendment. Does it mean the tax man is quite serious about business cash flow? I wait to see how smooth and quick the process is for my clients to claim their VAT credits in their first quarterly submissions in April 2014.

National Assembly drops business income tax to 20% for SMEs

By Quan Nguyen | 04 Jul, 2013 | Posted in: News & Events

In the latest Amendment to the Law of Business Taxation (Law No. 32/2013/QH13), the National Assembly reduced business income tax to 20% for businesses with annual turnover of less than 20 billion VND.
Debates in the National Assembly when this bold measure was proposed by the Economic Committee focus on the current budget deficit of between 50% to 60% GDP, and the Government’s ability to curb spending. In the last few years, poor management and investment decisions in state-owned conglomerates such as Vinalines or Vinacomin have caused serious bleeding in the budget. Last month, Prime Minister Nguyen Tan Dung and his team survived confidence ballot.
There are still questions if this Government can afford this tax reduction for SMEs or there may be some claw-backs in business deductions which are decreed by the Ministry of Finance.

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