Circular No. 58-TC/HCSN provides temporary guidelines on the method of collecting and paying social insurance contributions.

CIRCULAR

DECISION NO. 58-TC/HCSN OF JULY 24, 1995 BY THE MINISTRY OF FINANCE GUIDING TEMPORARILY THE METHODS FOR COLLECTING AND PAYING SOCIAL INSURANCE

Pursuant to Decree No. 12-CP dated January 26, 1995 of the Government promulgating the Charter of Social Insurance and Decree No. 19-CP dated February 16, 1995 of the Government on the establishment of the Vietnam Social Security, while awaiting the issuance by the Government of the financial collection and disbursement 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 guides temporarily 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, recuperate, or 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 agencies, and mass organizations.

6. Agencies, organizations, 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 covering expenses, 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 agencies, mass organizations, people's representative bodies from central to district levels.

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

II. LEVEL OF COLLECTION AND SOURCES OF FUNDS FOR CONTRIBUTING TO SOCIAL INSURANCE

1. Level of social insurance contribution: The level of social insurance contribution is 20% of the total monthly wage fund, including:

- Employers or user entities 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. Monthly wage fund as the basis for contributing to social insurance.

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

The monthly wage fund serving as the basis for contributing to social insurance includes: Basic salary according to rank, grade, position, and various allowances for position, region, hardship, seniority, elected position, and retention differential coefficient (if applicable) as stipulated in Resolution No. 35-NQ/UBTVQHK9 dated May 17, 1993 of the Standing Committee of the 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 for contributing to social insurance is the total monthly salary of those participating in social insurance, including: Rank-based salary, position-based salary, contract-based salary, retention 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 will contribute to 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 for contributing to social insurance is the contractual wage.

3. Sources of contributions and accounting entries.

a) The 15% contribution to social insurance from the monthly wage fund is the responsibility of the agency, unit, or employer:

- 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 relevant chapter, type, section, and category.

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

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

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

The agency, unit, or employer deducts from the monthly salary of each individual and pays 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 contribution level of each employee. Until individual Social Insurance Books are issued, the Vietnam Social Security must confirm the monthly social insurance payment lists submitted by each unit.

2. Temporarily, collected social insurance funds are 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 "Social Insurance Revenue" accounts at the State Treasury or specialized banks under the State Bank, 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 base their plans for the monthly wage fund to register their payment levels with the Provincial Social Security and the Vietnam Social Security (for armed forces and vertically managed agencies and units).

b) Monthly (no later than the last day of the month), concurrently with salary payments, the employing unit deducts and pays 20% of the total monthly wage fund, including 15% from the employer and 5% from 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 establish a confirmation sheet for social insurance contributions. If there is a discrepancy between the amount already paid and the amount due, the shortfall will be paid in 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 - EFFECTIVE 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 recover 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 any difficulties arise, localities, agencies, and units are requested to report to the Ministry of Finance and the Vietnam Social Security for examination and supplementary guidance as appropriate.