Update the Trade Union funds and deduction amount

Ho Chi Minh 3934

Dear Valued Client,

We would like to update some information related to Trade Union funds, deduction amount for personal and dependent for your reference

1. Trade Union funds for foreign employees working in Vietnam

According to Article 5, Decree No. 191/2013/ND-CP and Clause 1, Article 2 and Article 17, Decree No. 143/2018/ND-CP):

- Employers are obliged to pay Trade Union funds for foreign employees who are subjected to mandatory social insurance schemes as regulated by the law.

- The contribution rate of trade union funds is equivalent to 2% of the total salary of statutory social insurance for these foreign employees.

- Commencing on December 1st, 2018, the payment of trade union funds will be implemented monthly with the social insurance contribution for employees.

Therefore, HR2B would like to inform the clients that the payroll of June 2020 will be added 2% of Trade Union funds on the salary of statutory social insurance for foreign employees.

HR2B has continued to update the Official Documents related to the Trade Union funds from December 1st 2018 to May 2020 and notify the clients as soon as possible.

2. Regulation on Trade Union funds for Non-governmental organization-NGO

Subjects of remitting trade-union fee as prescribed as followings:

- According to Clause 2 Article 26 of the Law on Trade Union: Trade Union funds are paid by agencies, organizations and enterprises in 2% salary funds based to pay social insurance for laborers.

- According to Clause 6 and 7, Article 4, Decree 191/2013/ND-CP:

+ The foreign agencies and organizations, international organizations operating on Vietnam’s territory, related to organization and operation of Trade Union, executive offices of foreign parties in business cooperation contracts in Vietnam employing Vietnamese laborers.

+ Other organizations employing laborers in accordance with the law on labor.

Based on the regulation on Trade Union funds as above mentioned, if the organizations belong to Clause 6 or 7 of Article 4, Decree 191/2013/ND-CP, the Trade Union Funds have contributed as regulated by the law.

3. Propose to increase the deduction amount of personal and dependent, new deduction is expected to be applicable for the tax period of 2020. The cases have temporarily paid PIT based on the former reductions and dependents will be adjusted according to the new deduction amount when doing Personal Income Tax Finalization 2020.

Category Former deduction amount VND/per/month New deduction amount VND/per/month
Personal 9,000,000 11,000,000
Dependent 3,600,000 4,400,000

How will these new regulations affect employers and employees?

● For Employers:

- Trade Union funds for foreign employees working in Vietnam:

+ Increase the cost (equivalent to 2% of the total salary of statutory social insurance).

- Trade Union funds for Non-governmental organization (NGO):

+ Increase the cost

● For Employees:

- Increasing the deduction amount (personal and dependent):

+ Decrease the PIT amount paid to Tax Authority.

HR2B continues to update more information on this issue and notify the clients once getting the official documents from the Government.

What can we do for you?

Currently, we are following and updating the Labour Laws. We are ready to support you timely in order to ensure that labor-related matters are carried out accurately and in accordance with applicable laws. In case, if you have any questions or concerns regarding the above issues, please do not hesitate to contact us for advice and assistance.

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