Circular No. 58/TC-HCSN guiding temporarily the method of collecting and paying social insurance

CIRCULAR

OF THE MINISTRY OF FINANCE

Regarding temporary guidance on the method of collecting social insurance income

Pursuant to Decree No. 12/CP dated January 26, 1995 of the Government promulgating the Social Insurance Charter and Decree No. 19/CP dated February 16, 1995 of the Government on the establishment of the Vietnam Social Security, pending the issuance by the Government of financial regulations for the Vietnam Social Security and following the opinion of the Vietnam Social Security at Circular No. 115/BHXHVN dated July 4, 1995, the Ministry of Finance provides temporary guidance on the collection and payment of social insurance as follows:

I. OBJECTS OF SOCIAL INSURANCE COLLECTION

The objects of social insurance collection are employers and employees (including those sent to study, intern, or recuperate for work both domestically and abroad who remain on the payroll or remuneration list of their agencies and units) working in the following agencies, units, and organizations:

1. State-owned enterprises.

2. Enterprises belonging to non-state economic sectors employing ten or more workers.

3. Foreign-invested enterprises, export processing zones, industrial parks.

4. Service enterprises under armed forces.

5. Business and service organizations under administrative and public service agencies, Party and mass organizations.

6. Agencies, organizations of foreign countries, or international organizations located in Vietnam, except where international treaties to which the Socialist Republic of Vietnam is a party provide otherwise.

7. Public service units with revenue to offset expenses, public service units funded by foreign aid (including non-governmental organization aid) to pay salaries to staff within the unit.

8. State management agencies, administrative and public service agencies, Party and mass organizations, people's representative bodies from central to district level.

9. Units under the Ministry of National Defense, Ministry of Public Security, and the General Office for Official Communications.

II. AMOUNT OF COLLECTION AND SOURCES OF FUNDS FOR PAYING SOCIAL INSURANCE

1. Amount of social insurance collection: The amount of social insurance collection is 20% of the total monthly wage fund, including:

- Agencies, units, or employers contribute 15% based on the total monthly wage fund of those participating in the Social Insurance Fund.

- Employees contribute 5% of their monthly salary.

2. The monthly wage fund serves as the basis for deducting and paying social insurance.

a) For the administrative and public service sector, Party and mass organizations, people's representative bodies, and armed forces:

The monthly wage fund serving as the basis for deducting and paying social insurance includes: Basic salary according to rank, grade, military rank, position, and various allowances for position, region, hardship, seniority, elected position, and retained differential coefficient (if applicable) as stipulated in Resolution No. 35-NQ/UBTVQHK9 dated May 17, 1993 of the Standing Committee of the Ninth National Assembly, Decision No. 69-QĐ/TW dated May 17, 1993 of the Politburo; Decree No. 25-CP dated May 17, 1993 of the Government; Decision No. 574-TTg dated November 25, 1993 of the Prime Minister, and Decree No. 5-CP dated January 26, 1994 of the Government.

b) Production and business sector:

For enterprises specified in Points 1, 2, 3, 4, and 5 of Part I of this Circular, the total monthly wage fund serving as the basis for deducting and paying social insurance includes: Rank-based salary, position-based salary, contractual salary, retained differential coefficient, and various allowances for position, region, and hardship (if applicable) in accordance with Decree No. 26-CP dated May 23, 1993 and Decree No. 5-CP dated January 26, 1994 of the Government.

If enterprises have signed labor contracts, they shall deduct and pay social insurance based on the total monthly wage fund stipulated in the signed contracts.

c) For units mentioned in Points 6 and 7 of Part I of this Circular, the total monthly wage fund serving as the basis for deducting and paying social insurance is the contractual wage.

3. Sources of deduction and accounting entries.

a) The contribution to social insurance at 15% of the wage fund, which is the responsibility of agencies, units, or employers:

- For units receiving salaries from the state budget, it is included in the quarterly and annual budget estimates and recorded under Item 68 - social insurance expenditure according to the corresponding chapter, type, section, and category.

- For production and business-service units, it is included in production and business-service costs and recorded under the item "social insurance deduction."

- For units with revenue to offset expenses and units funded by foreign aid, it is deducted from revenue and aid sources to pay social insurance and recorded under management costs.

b) 5% of the employee's monthly salary for social insurance.

Agencies, units, or employers shall deduct from each employee's monthly salary and pay into the Social Insurance Fund simultaneously with the 15% contribution of the agency, unit, or employer.

III. METHODS OF COLLECTION AND PAYMENT

1. In principle, the collection of social insurance is carried out by the Vietnam Social Security and recorded in the Social Insurance Book regarding the collection amount for each employee. Until individual Social Insurance Books are issued, the Vietnam Social Security must confirm the list of social insurance payments made monthly by each unit.

2. Initially, collected social insurance funds will be deposited into Account 942 "Social Insurance Revenue" opened at the State Treasury System by the General Director of the Vietnam Social Security as the account holder. When the number of non-state participants in social insurance increases, the opening of a "Social Insurance Revenue" account at the State Treasury or at a specialized bank under the State Bank will be decided by the General Director of the Vietnam Social Security after consulting the Management Board.

3- Methods of collection and payment:

a) Quarterly, agencies and units using labor shall base their registration of payment amounts with the provincial or city-level Social Insurance and the Vietnam Social Insurance (for armed forces and vertically managed agencies and units) on the planned wage fund.

b) Monthly (no later than the last day of the month), along with salary payments, the employing unit shall deduct and pay 20% of the total monthly wage fund, including 15% of the total monthly wage fund contributed by the employer and 5% of the employee's salary.

c) At the end of each quarter, the labor-using agencies and units shall reconcile with the Social Insurance Agency the payroll lists and salary funds, and prepare a confirmation statement for social insurance contributions. If there is a discrepancy between the amount already paid and the amount due, the shortfall must be paid into the subsequent fund (if there is a shortage) or considered as prepaid for the next quarter (if there is an excess), and settled within the year.

d) In case of late monthly social insurance payments, the overdue payment will be subject to a penalty at the short-term savings deposit interest rate of the Bank at the time of collection.

If labor-using agencies, units, and workers intentionally fail to pay social insurance, the Social Insurance Agencies under the Vietnam Social Security system have the right to refuse payment of social insurance benefits, and simultaneously issue a notification to relevant law enforcement agencies.

IV. IMPLEMENTATION PROVISIONS

1. This Circular takes effect from July 1, 1995. All previous regulations on the collection and payment of social insurance that conflict with this Circular are hereby abolished.

2. The recovery of 1994 and the first six months of 1995 social insurance contributions shall still be the responsibility of the Finance Department, Tax Department, and the General Confederation of Labor of Vietnam, who will continue to collect and remit them into the Central Government's account as stipulated in Circular No. 3478-TC/HCVX dated December 27, 1994 issued by the Ministry of Finance.

3. The fee for collecting social insurance contributions will temporarily continue to be implemented according to current regulations.

4. During the implementation of this Circular, if there are any difficulties, localities, agencies, and units are requested to report to the Ministry of Finance and the Vietnam Social Security for examination and supplementary guidance to ensure compliance.