JOINT CIRCULAR

JOINT CIRCULAR NO. 107/2003/TTLT-BTC-BLDTBXH OF THE MINISTRY OF FINANCE AND THE MINISTRY OF LABOR, INVALIDS AND SOCIAL AFFAIRS ON NOVEMBER 7, 2003 GUIDING THE IMPLEMENTATION OF THE FINANCIAL REGIME FOR VIETNAMESE WORKERS AND ENTERPRISES BRINGING VIETNAMESE WORKERS TO WORK ABROAD FOR A LIMITED PERIOD IN ACCORDANCE WITH DECREE NO. 81/2003/NĐ-CP OF THE GOVERNMENT ON AUGUST 17, 2003 GUIDING THE DETAIL AND IMPLEMENTATION OF THE LABOR CODE REGARDING VIETNAMESE WORKERS WORKING ABROAD

Pursuant to Decree No. 81/2003/NĐ-CP dated July 17, 2003 of the Government detailing and guiding the implementation of the Labor Code regarding Vietnamese workers working abroad (hereinafter referred to as Decree No. 81/2003/NĐ-CP), the Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs jointly guide the implementation of the financial regime for workers and enterprises bringing Vietnamese workers to work abroad for a limited period as follows:

A. GENERAL PROVISIONS.

1. This Circular guides the financial regime for workers and enterprises bringing Vietnamese workers to work abroad for a limited period (hereinafter referred to as enterprises) as stipulated in Decree No. 81/2003/NĐ-CP, including:

1.1. Fees for issuing export labor activity permits;

1.2. Deposit money;

1.3. Export labor service fees;

1.4. Training and orientation education fees for workers;

1.5. Social insurance and income tax for workers with high income;

1.6. Labor export brokerage fees;

1.7. Contributions to the labor export support fund;

1.8. Other financial provisions.

2. Enterprises are only permitted to collect deposit money, labor export service fees, and labor export brokerage fees after the foreign side has accepted the worker's employment or issued a visa.�l�3. In cases where workers are fully or partially subsidized for expenses, enterprises shall not collect from workers the portion of costs that have been subsidized.

4. Enterprises shall not charge workers any additional amounts beyond those specified in Decree No. 81/2003/NĐ-CP and this Circular.

5. Where agreements or cooperation labor contracts signed between Vietnam and the labor-receiving country contain different provisions from those in Decree No. 81/2003/NĐ-CP and this Circular, such agreements or contracts shall be applied.

6. The enterprise's deposit requirement under Clause 5, Article 9 of Decree No. 81/2003/NĐ-CP shall be implemented according to the guidance of the State Bank of Vietnam.

7. The Overseas Labor Management Bureau, Ministry of Labor, Invalids and Social Affairs, shall collect, manage, and utilize the fees for issuing export labor activity permits for enterprises sending Vietnamese workers to work abroad for a limited period in accordance with the Law on Fees and Charges and related guiding documents.

8. Subjects under Article 2 of Decree No. 81/2003/NĐ-CP shall be subject to financial activities inspections and audits in accordance with the law.

B. SPECIFIC PROVISIONS

B- SPECIFIC PROVISIONS

I- FEES FOR ISSUING EXPORT LABOR ACTIVITY PERMITS

When newly issued or renewed with an export labor activity permit, enterprises must pay a fee of 4,000,000 VND (four million Vietnamese dong) to the Overseas Labor Management Bureau, Ministry of Labor, Invalids and Social Affairs, which will be recorded as part of the enterprise's labor export activity costs.

II- DEPOSIT MONEY

1. Amount, method, and type of deposit money:

a. Amount and method of deposit:

- Based on each market and specific case, enterprises shall negotiate with workers to collect once before the workers depart to work abroad or collect in multiple installments but the total amount shall not exceed the following levels:

- For some labor markets, if it is deemed that the deposit amount prescribed is insufficient for compensation purposes, enterprises may negotiate with workers on measures such as guarantee deposits or guarantees to ensure the fulfillment of their contractual obligations with the enterprise and foreign employers. The implementation of these agreements shall comply with the provisions of the Civil Code.

- For some labor markets or worker categories where deposits are deemed unnecessary, enterprises shall not collect deposit money from workers. The amount and method of collecting deposit money or not collecting deposit money must be clearly stated in the overseas work contract between the enterprise and the worker (hereinafter referred to as the contract).

b. Type of deposit money:

- Enterprises shall collect deposit money in Vietnamese dong.

- Exchange rate application:

If the deposit amount is based on US dollars, the average inter-bank exchange rate of US dollars against Vietnamese dong shall be applied; if based on other foreign currencies, the cross-exchange rate between Vietnamese dong and other foreign currencies announced by the State Bank of Vietnam at the time of collection shall be applied.

For foreign currencies for which the State Bank of Vietnam does not announce a cross-exchange rate against Vietnamese dong, enterprises shall refer directly to Reuters information on the exchange rates of such foreign currencies against US dollars; the conversion from US dollars to Vietnamese dong shall apply the average inter-bank exchange rate of US dollars against Vietnamese dong announced by the State Bank of Vietnam at the time of collection.

2. Management of deposit money:

a. Enterprises shall open a "Deposit Money" account at a state commercial bank located at the main office of the enterprise (or at a subordinate unit authorized to export labor as stipulated in Clause 13, Article 14 of Decree 81/2003/NĐ-CP) and report in writing to the Overseas Labor Management Bureau about opening the "Deposit Money" account, specifying the account name, account number, and bank where the account was opened.

Within fifteen days of receiving deposit money from workers, enterprises must deposit the entire amount collected from workers into the "Deposit Money" account.

The opening of a "Deposit Account" and depositing funds into this account shall be carried out in accordance with the guidelines provided by the state commercial bank where the enterprise opens the "Deposit Account".

b. The enterprise may only withdraw the deposit to pay workers in accordance with the guidance set forth in Clause 3, Section II, Part B of this Circular.

c. The entire balance of deposits that the enterprise has collected from workers prior to the effectiveness of this Circular shall be transferred to the "Deposit Account" mentioned in Point a of this clause and managed and utilized in accordance with the guidance provided in this Circular.

3. Payment of Deposit:

Payment of deposit shall be made concurrently with the termination of the contract.

Within one month from the date when the worker returns to the country, the enterprise is responsible for notifying the worker to terminate the contract through a "Guarantee Letter", and must provide additional notifications at least three times within the following six months. The contract termination process shall be conducted as follows:

a. In the case where the worker (or their authorized representative) comes to terminate the contract:

a.1. For workers who have completed the contract:

- If the worker does not cause economic damage to the enterprise, the enterprise must return the full deposit and interest on the deposit to the worker.

- If the worker causes economic damage to the enterprise, the deposit and interest on the deposit of the worker will be used to offset the damages and reasonable expenses incurred by the enterprise. Any remaining deposit amount (if any) must be returned to the worker by the enterprise.

a.2. For workers who breach the contract or violate the laws of the host country (desertion, fighting, theft, strike) and must return before the contract term expires: In this case, the worker will not receive a refund of the deposit. The enterprise and the worker (or their authorized representative) shall prepare a Contract Termination Record, deducting the deposit and interest on the deposit of the worker to offset the damages and reasonable expenses incurred by the enterprise. No later than fifteen days from the date of contract termination, the enterprise shall submit the entire remaining deposit amount (if any) to the Overseas Labor Export Support Fund, while reporting in writing to the Department of Overseas Labor Management under the Ministry of Labor, Invalids and Social Affairs.

a.3. In cases of force majeure (natural disasters, war, bankruptcy of the enterprise) or if it is not due to the fault of the worker and the worker must return before the contract term expires: The enterprise and the worker shall prepare a Contract Termination Record according to the financial conditions initially agreed upon, returning the full deposit and interest on the deposit to the worker.

b. The enterprise may unilaterally terminate the contract in the following cases: If the worker unilaterally abandons the contract to engage in illegal activities or, after six months from the date the enterprise has issued three "Guarantee Letters", the worker (or their authorized representative) does not come to terminate the contract, then the enterprise may deduct losses (if any) from the deposit and interest on the deposit to offset the damages and reasonable expenses incurred by the enterprise (for cases where the worker caused damage). No later than fifteen days from the date of contract termination, the enterprise shall submit the entire remaining amount (if any) to the Overseas Labor Export Support Fund, while reporting in writing to the Department of Overseas Labor Management under the Ministry of Labor, Invalids and Social Affairs.

III- SERVICE FEES FOR LABOR EXPORT.

1. Basis for calculating service fees.

The monthly wage stipulated in the contract, serving as the basis for calculating service fees, is the basic wage excluding overtime pay, bonuses, and other allowances.

For officers and seafarers on cargo ships: The monthly wage stipulated in the contract, serving as the basis for calculating service fees, includes both the basic wage and holiday pay.

2. Service fee rates.

a. Workers going abroad through labor export enterprises must pay service fees to the enterprise, which should not exceed one month's salary (or training allowance) according to the contract for one year of work; for officers and seafarers working on cargo ships, the service fee should not exceed 1.5 months' salary according to the contract for one year of work.

b. The service fee rate must be recorded in the contract.

c. In cases where the worker extends the contract or signs a new contract, the service fee for the extended period or the duration of the new contract shall be calculated in accordance with the provisions of Point a of this clause.

3. Method of collecting service fees.

a. The enterprise shall agree with the worker to collect labor export service fees either once before the worker departs for overseas work or multiple times during the contract period. For the extension period of the contract, the enterprise collects the service fee during the extension period or when the worker returns to the country.

- In cases where the worker must return to the country before the contract term due to force majeure (natural disasters, war, bankruptcy of the enterprise) or not due to the worker's fault, the enterprise can only collect service fees from the worker based on the actual number of months worked abroad.

- In cases where the worker breaches the contract or violates the laws of the host country (desertion, fighting, theft, strike) and must return early or leaves the contract illegally, the enterprise can collect service fees from the worker based on the contract term signed with the worker.

b. Type of currency for collecting service fees:

The enterprise and the worker shall agree on the type of currency for collecting service fees in the contract and implement as follows:

- Collection in Vietnamese Dong: The enterprise collects service fees based on the service fee calculated in foreign currency converted to Vietnamese Dong according to the exchange rate specified in Point b, Clause 1, Section II, Part B of this Circular.

- Collection in foreign currency: The worker is paid in which currency, they shall pay the service fee in that currency or strong foreign currency (USD, EURO).

The enterprise must convert the portion of the service fee in foreign currency to Vietnamese Dong according to the exchange rate specified in Point b, Clause 1, Section II, Part B of this Circular for accounting purposes and to fulfill financial obligations according to current regulations.

4. Some examples of calculating service fees for labor export (in cases where revenue is collected in Vietnamese Dong).

Example 1:

Worker A signs a contract with Business X to work in Malaysia under the following basic conditions: contract duration of 36 months, contractual salary of 18 RM/day x 26 days/month (468 RM/month), after the contract expires, the worker is extended for an additional 24 months at a rate of 25 RM/day x 26 days/month (650 RM/month). The service fee is determined as follows:

- Service fee according to the contract (cross-exchange rate between Vietnamese Dong and Malaysian Ringgit at the time of payment collection is 1 RM = 4.078 VND):

(36/12) x 468 RM x 4.078 VND/RM = 5,725,512 VND.

- Service fee for the extended period (cross-exchange rate between Vietnamese Dong and Malaysian Ringgit at the time of payment collection is 1 RM = 4.090 VND):

(24/12) x 650 RM x 4.090 VND/RM = 5,317,000 VND.

Example 2:

Worker B signs a contract with Business Y to work in Taiwan under the following basic conditions: contract duration of 24 months, contractual salary of 15,840 NT$/month. However, after three months of working in Taiwan, due to difficulties in production, the factory could not arrange other work for the worker, so the worker had to return home before the contract term expired.

The service fee is determined as follows:

- Pre-departure service fee calculated according to the contract (cross-exchange rate between Vietnamese Dong and New Taiwan Dollar at the time of payment collection is 1 NT$ = 455 VND):

(24/12) x 15,840 NT$ x 455 VND/NT$ = 14,414,400 VND.

- The service fee that the business collects from the worker is:

(3/24) x 14,414,400 VND = 1,801,800 VND.

- The service fee that the business must refund to the worker is:

(21/24) x 14,414,400 VND = 12,612,600 VND.

Example 3:

Expert C signs a contract with Business Z under the following basic conditions:

Contractual salary is: 1,000 USD/month. Contract duration is 3 years. Exchange rate at the time of payment collection is 1 USD = 15,300 VND.

The service fee according to the contract is determined as follows:

(36/12) x 1,000 USD x 15,300 VND/USD = 45,900,000 VND.

Example 4:

Sailor D signs a contract with a business to work on a maritime transport ship under the following conditions: contract duration of 10 months, contractual salary includes base salary of 400 USD/month, overtime pay of 100 USD/month, and vacation pay of 60 USD/month. Exchange rate at the time of payment collection is 1 USD = 15,300 VND.

The service fee according to the contract is determined as follows:

(10/12) x 1.5 x (400 USD + 60 USD) x 15,300 VND/USD = 8,797,500 VND.

IV- TRAINING AND ORIENTATION EDUCATION FEES

1. Based on the framework tuition fees prescribed by the State, the Overseas Labor Management Agency stipulates specific collection levels suitable for the content of each training program and the training duration for each market to ensure the maintenance and development of training and orientation education activities.

2. The tuition fee level does not apply in cases where the foreign side sponsors the training and orientation education costs for workers before departure.

V- SOCIAL INSURANCE AND INCOME TAX

1. Social insurance:

Workers going to work abroad participate in social insurance in accordance with Circular No. 22/2003/TT-BLDTBXH dated October 13, 2003 of the Ministry of Labor, Invalids, and Social Affairs "Guidelines for Implementing Certain Provisions of Decree No. 81/2003/NĐ-CP dated July 17, 2003 of the Government detailing and guiding the implementation of the Labor Code regarding Vietnamese workers working abroad."

2. Income tax:

- Workers pay income tax in accordance with current laws governing high-income earners.

In cases where workers work in countries that have signed Double Taxation Avoidance Agreements with Vietnam, they fulfill their income tax obligations in accordance with the provisions of those agreements.

- Businesses are responsible for collecting income tax (if applicable) from workers to submit to tax authorities.

VI- INTERMEDIARY FEES IN LABOR EXPORT

1. Businesses engaged in labor export are permitted to allocate commission fees from service fee revenues to secure labor supply contracts in accordance with current regulations of the Ministry of Finance regarding commission payments in export transactions and deductions related to commission payments.

2. For some markets, workers bear part of the intermediary costs to support businesses in contract exploitation. The Ministry of Finance and the Ministry of Labor, Invalids, and Social Affairs will base their regulations on the characteristics of each market and the actual situation during each period to set appropriate intermediary fees. The collection of intermediary fees from workers (if applicable) must be clearly stated in the contract. Businesses are responsible for issuing receipts for fee collections, providing transfer documents to foreign partners, and maintaining records of fee inflows and outflows. Intermediary fees paid by workers to foreign intermediaries (foreign companies) are considered agency collections and disbursements by labor export businesses and are not subject to taxation in Vietnam.

3. In cases where workers must return home before the contract term due to force majeure (natural disasters, war, business bankruptcy) or not due to the worker's fault, the business must request the foreign partner to refund part of the intermediary fees to the worker based on the principle: intermediary fees are calculated based on the actual number of months worked abroad. If it is impossible to recover from the partner, the business should take measures to assist the worker in each specific case. This regulation is not mandatory if the worker has completed two-thirds of the contract duration agreed with the business.

VII- CONTRIBUTIONS TO THE LABOR EXPORT SUPPORT FUND

1. Contribution level:

Businesses are required to contribute 1% of service fee revenues from labor export to the Labor Export Support Fund in accordance with the Management Regulations of the Labor Export Support Fund issued by the Ministry of Finance.

2. Method of contribution payment:

Quarterly, businesses self-report and contribute to the Labor Export Support Fund at the level specified in Clause 1 of this section. By the end of the first quarter of the following year at the latest, based on actual service fee revenues, businesses must contribute the full amount to the Labor Export Support Fund of the previous year. Businesses can account for this contribution as an expense in their labor export operations.

VIII- OTHER FINANCIAL REGULATIONS

1. In addition to the aforementioned expenses, the worker shall bear the following costs:

a. Airfare from Vietnam to the country of employment and back (except where the employer covers such costs).

b. Health examination fees as prescribed by the Ministry of Health.

c. Costs for study materials, food, and accommodation (if applicable) during training and orientation education.

d. Expenses for exit-entry procedures for working abroad as stipulated by current state regulations.

2. After being selected to work abroad, if the worker no longer wishes to go, the worker shall bear the costs that the enterprise has incurred from the worker's payment for exit-entry procedures, health examinations, tuition fees, and study material costs, food, and accommodation during training and orientation education (if applicable).

If, six months after the worker is selected to meet the conditions for working abroad, the enterprise has not been able to send the worker abroad, the enterprise must inform the worker of the reasons. In this case, if the worker no longer wishes to work abroad or the enterprise cannot arrange for the worker to go, the enterprise must refund to the worker all payments made to the enterprise, including application fees, tuition for training and orientation education (if applicable), visa fees, airfare, airport fees, deposits, service fees, brokerage fees, and social insurance premiums.

The enterprise shall refund the worker in the same currency in which it collected the payments from the worker.

3. The enterprise shall guide the worker in declaring their pre-departure expenses (according to Appendix No. 05/LT). When collecting money from the worker, the enterprise must prepare a detailed list of receipts along with the payment receipt.

IX- REPORTING REGIME

Enterprises shall implement reporting requirements to the Overseas Labor Management Department under the Ministry of Labor, Invalids, and Social Affairs and the enterprise management authority according to the following provisions:

1. Quarterly report:

By the tenth day of the first month of each quarter, enterprises shall submit reports on the collection of deposit payments, social insurance contributions, income tax (Appendix No. 01/LT), and contributions to the labor export support fund (Appendix No. 02/LT).

2. Annual report:

- Collection and payment status for the entire year (Appendix No. 01/LT), contribution status to the labor export support fund (Appendix No. 02/LT). The deadline for submitting the annual report is January 30 of the following year.

- Report on the operation of labor export activities (Appendix No. 03/LT), with a deadline of January 30 of the following year.

- Next year's plan (Appendix No. 04/LT) based on the implementation status of the first half of the year. The deadline for submitting next year's plan is July 15 each year.

3. Special reports:

Enterprises shall submit special reports upon request of the Overseas Labor Management Department under the Ministry of Labor, Invalids, and Social Affairs, and other relevant state agencies.

X- REWARD AND DISCIPLINARY MEASURES

During the implementation process, collectives and individuals, labor export enterprises, and workers who achieve outstanding results in labor export shall be rewarded. Violators shall be dealt with according to Articles 34 and 35 of Decree No. 81/2003/NĐ-CP and guidelines issued by the Ministry of Labor, Invalids, and Social Affairs.

XI- EFFECTIVE DATE

1. This Circular shall take effect fifteen days after its publication in the Official Gazette, replacing Circular Joint Circular No. 16/2000/TTLT-BTC-BLĐTBXH dated February 28, 2000, and Circular No. 33/2001/TTLT-BTC-BLĐTBXH dated May 24, 2001.

The labor export service fee under this Circular shall apply to workers going to work abroad starting from the effective date of Decree No. 81/2003/NĐ-CP.

For those departing to work abroad before the effective date of Decree 81/2003/NĐ-CP, they shall continue to pay the service fee according to the level prescribed in Joint Circular No. 33/2001/TTLT-BTC-BLĐTBXH dated May 24, 2001. If the worker's contract is extended or a new contract is signed from the effective date of Decree 81/2003/NĐ-CP, the service fee for the extension period and the new contract shall be implemented according to the guidance provided in this Circular.

2. Within ninety days from the effective date of this Circular, enterprises must pay the management fee as prescribed in Decree No. 152/1999/NĐ-CP dated September 20, 1999, Joint Circular No. 16/2000/TTLT-BTC-BLĐTBXH dated February 28, 2000, and Joint Circular No. 33/2001/TTLT-BTC-BLĐTBXH dated May 24, 2001 for the number of workers sent abroad before the effective date of Decree 81/2003/NĐ-CP.

XII- IMPLEMENTATION ORGANIZATION

1. Enterprises and workers have the responsibility to comply strictly with the provisions of this Circular.

2. Ministries, sectors, localities, and enterprise management authorities have the responsibility to inspect, supervise, and urge enterprises under their management to implement these provisions.

3. During the implementation process, if there are any difficulties, they are requested to reflect them to the Ministry of Finance and the Ministry of Labor, Invalids, and Social Affairs for research and resolution.