Social Security and Employment Tax
Vietnam | Government boosts minimum basic salary and regional wage from July 2024
Summary
The Vietnamese Government to raise the minimum basic salary by 30% and minimum regional wage by 6% starting 1 July 2024. Effectively, this will increase the mandatory Social, Health and Unemployment Insurance contributions for both employer and employee.
The detail
The salary subject to social insurance (“SI”) and health insurance (“HI”) contributions is the salary stated in the employment contract, but this is capped at 20 times the minimum basic salary set by the Government.
On 30 June, the Government issued Decree 73/2024/ND-CP (“Decree 73”) and Decree 74/2024/ND-CP (Decree 74) on minimum basic salary and regional wage respectively.
As stipulated in Decree 73, effective from 1 July 2024, the minimum basic salary cap for SI/HI contributions will be increased from VND36,000,000 per month to VND46,800,000 per month (approximately USD1,440 to USD1,872 per month).
The salary subject to unemployment insurance (“UI”) contributions is the salary stated in the employment contract, but this is capped at 20 times the minimum regional salary. The new capped salary for UI contributions will range from VND69,000,000 per month to VND99,200,000 per month (approximately USD2,760 – USD3,968 per month), depending on each region.
This means that effective from July 2024, employer will have higher employment costs due to the increase in employer contributions. Whereas employees may be concerned about the additional deduction of their monthly salary for the mandatory insurance scheme. However, note that at present, the statutory employer contributions do not constitute a taxable benefit to the employee, and the employee contributions are deductible for personal income tax purposes.
Contact us
For a deeper discussion on the above, please reach out to your Vialto Partners point of contact, or alternatively:
Brittany Chong
Partner
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Further information on Vialto Partners can be found here: www.vialtopartners.com
Vialto Partners (“Vialto”) refers to wholly owned subsidiaries of CD&R Galaxy UK OpCo Limited as well as the other members of the Vialto Partners global network. The information contained in this document is for general guidance on matters of interest only. Vialto is not responsible for any errors or omissions, or for the results obtained from the use of this information. All information is provided “as is”, with no guarantee of completeness, accuracy, timeliness or of the results obtained from the use of this information, and without warranty of any kind, express or implied, including, but not limited to warranties of performance, merchantability and fitness for a particular purpose. In no event will Vialto, its related entities, or the agents or employees thereof be liable to you or anyone else for any decision made or action taken in reliance on the information in this document or for any consequential, special or similar damages, even if advised of the possibility of such damages.
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