4 Regulations On Paying Foreigners HR Need To Know
May 23, 2022
More and more foreigners are working in Vietnam. Therefore, it is vital to clarify our country's paying foreign employees. Talentnet will help you better understand the regulations on paying foreigners under Vietnamese law? Is the salary paid in foreign currency? How do we deal with foreigners working in Vietnam who want to receive salaries in foreign currency?
1. Is it possible to pay foreign employees’ salaries in foreign currency?
According to Article 22 Chapter IV stipulating the use of foreign exchange within the territory of Vietnam, all transactions, payments, listings, and advertisements of residents and non-residents must not be affected by foreign exchange except for transactions with credit institutions and payments made via intermediaries, including authorized collection, entrustment, agency and other necessary cases permitted by the Prime Minister of the Government.
At the same time, Clause 14, Article 4 of Circular No. 32/2013/TT-NHNN that Residents and non-residents being organizations are allowed to make agreements and pay salaries, bonuses, and allowances in labor contracts in foreign currency by transfer or cash to non-residents and residents who are foreigners working in such organizations.
However, Clause 2, Article 95 of the Labor Code 2019, stipulates: The salary written in the employment contract and the salary paid in reality shall be VND unless the employee is a foreigner working in Vietnam.
Therefore, based on the above regulations, Vietnamese enterprises can pay foreigners in foreign currencies via bank transfer or cash (the two parties mutually agree upon salary payment).
2. Labor benefits and treatment for foreign employees
When working in Vietnam, foreign workers can fully receive the same benefits as Vietnamese employees. For example, the salary received during the probationary period is usually 85%, or higher, depending on the agreement of the two parties.
Both Vietnamese and foreign workers are the same regarding the minimum wage, regardless of nationality. In addition, there will be differences due to working capacity, location, nature of work, experience, and professional qualifications.
Moreover, the salary paid above depends on the enterprise’s business activities. In addition to salary, foreign workers can ultimately receive other allowances like Vietnamese workers.
Social insurance for foreigners in Vietnam
An employee being a foreign citizen working in Vietnam is eligible to participate in compulsory social insurance when:
- Having a work permit or practicing certificate or a practicing license issued by a competent Vietnamese authority;
- Having an indefinite-term labor contract or a definite-term labor contract of a full year or more with an employer in Vietnam.
Social insurance contributions for foreign employees in 2022
In Clause 1, Article 12 of Decree 143/2018/ND-CP stipulates:
From January 1, 2022, foreign workers who must participate in compulsory social insurance shall pay 8% of their monthly salary to the retirement and survivorship fund every month.
In addition, the employer shall pay on the monthly salary fund on which social insurance premiums are based on the employee the following amounts:
- 3% to the sickness and maternity fund;
- 0.5% to the labor accident and occupational disease insurance fund;
Particularly for enterprises operating in occupations with a high risk of occupational accidents and diseases, if eligible and approved by the Ministry of Labor or War Invalids social Affairs, they may contribute to the occupational accident and disease fund at a lower rate of 0.3%.
However, based on Resolution 68/NQ-CP dated July 1, 2021, enterprises are allowed to apply the payment rate equal to 0% of the salary fund as a basis for paying social insurance contributions to the Insurance Fund for occupational accidents and diseases in the period. 12 months (from July 1, 2021, to the end of June 30, 2022) for employees who are subject to occupational accident and occupational disease insurance (except for cadres, civil servants, public employees, and people in the workforce) the people’s armed forces, employees in Party and State agencies, administrative agencies and public non-business units receiving salaries from the state budget).
- 14% to the retirement and survivorship fund from January 1, 2022.
Thus, from January 1, 2022, foreign workers must pay 8% of their monthly salary to the retirement and survivorship fund. The employer must pay over the monthly salary fund for which social insurance premiums are based on employees equal 14% to the retirement and survivorship fund.
Health insurance for foreigners in Vietnam
According to Article 18 of Decision 595/QD-BHXH, foreign workers working in Vietnam are also considered subjects to participate in health insurance. Specifically, the premium rates are as follows:
- Employees: 1.5% of the monthly salary.
- Employer: 3% of the monthly salary;
Similar to domestic employees, the HR department is responsible for guiding foreign employees on the procedure for receiving health insurance benefits from the Vietnamese government, along with documents and documents that need to be submitted to ensure good benefits. to workers.
4. PIT for foreigners
According to Clause 1, Article 18, Circular 111/20213/TT-BTC, for non-resident individuals, PIT will be calculated according to the following formula:
Amount payable = Taxable income x 20%.
Taxable income for non-resident individuals is determined as income arising in Vietnam, regardless of income payment. As for revenue from salaries and wages of resident individuals, settlement is not required.