Joint Circular No. 59/2006/TTLT-BTC-BLDTBXH guiding intermediary fees in labor export activities

JOINT CIRCULAR

GUIDELINES ON COMMISSION FEES IN LABOUR EXPORT

Pursuant to Decree No. 81/2003/NĐ-CP dated July 17, 2003 of the Government detailing and guiding the implementation of the Labour Code regarding Vietnamese workers working abroad,
The Ministry of Finance and the Ministry of Labour, War Invalids and Social Affairs jointly issue guidelines on commission fees in labour export as follows:

I. GENERAL PROVISIONS

1. Commission fee (consultation and contract exploitation fee) is the amount of money that workers, or labour export enterprises and workers must pay to intermediaries for obtaining contracts to send workers to work abroad.

2. The commission fee must be reflected in the labour supply contract, or a separate commission fee contract signed between the labour export enterprise and the intermediary. The commission fee can only be paid when the intermediary has completed all intermediary activities to send workers to work abroad according to the contract.

3. The intermediary referred to in Clause 1 of this section is an organization or individual from foreign countries or Vietnamese organizations or individuals providing intermediary services.

4. The commission fee does not apply in cases where the employer extends a new employment contract after the worker has completed the contract with the labour export enterprise.

II. SPECIFIC PROVISIONS

1. Framework for commission fee levels

a. The framework for commission fees for various markets shall not exceed one (1) month's salary according to the contract per worker for one year of work.

b. The monthly salary under the contract, which serves as the basis for calculating the commission fee, is the basic salary excluding overtime pay, bonuses, and other allowances. For officers and seafarers on merchant ships, the monthly salary under the contract for calculating the commission fee includes basic salary and leave pay.

2. Specific commission fee levels

a. Based on the framework for commission fees stipulated in point (a) of Clause 1 of Section II of this Circular, the Ministry of Labour, War Invalids and Social Affairs will specify the maximum specific commission fee level suitable for each market.

b. In special cases, if the market requires a higher commission fee than the framework for commission fees stipulated, the labour export enterprise shall report to the Ministry of Labour, War Invalids and Social Affairs for a specific decision on the collection rate of the commission fee after reaching a consensus with the Ministry of Finance.

3. Currency for collecting commission fees

The labour export enterprise collects the commission fee that workers must contribute in Vietnamese Dong. If the commission fee is calculated in US dollars, the average transaction exchange rate of US dollars against Vietnamese Dong on the inter-bank foreign exchange market published by the State Bank of Vietnam shall be applied; if it is 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, the enterprise 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 transaction exchange rate of US dollars against Vietnamese Dong on the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of collection.

4. Responsibilities of labour export enterprises

a. Labour export enterprises proactively negotiate with intermediaries on appropriate commission fees within the prescribed range based on market requirements.

b. Based on the commission fee agreed with the intermediary, the labour export enterprise agrees with the worker on the commission fee contribution that the worker must make through the labour export enterprise to pay the intermediary. The portion of the commission fee contributed by the worker must be clearly stated in the contract between the worker and the labour export enterprise. This commission fee income is not included in the revenue of the labour export enterprise and is not subject to tax.

c. In cases where workers have to return to their home country before the contract period due to force majeure (natural disasters, war, bankruptcy of the enterprise...) or not due to the fault of the worker, the labour export enterprise is responsible for requesting the intermediary to refund part of the commission fee that the worker has paid, according to the principle: workers who have worked less than 50% of the contract period will receive back 50% of the commission fee paid. Workers who have worked more than 50% of the contract period will not receive a refund of the commission fee.

In cases where the labour export enterprise cannot recover the commission fee from the intermediary, the enterprise is responsible for deducting from the labour export service fee revenue or other business income sources to refund the commission fee to the worker according to the above principle.

d. Labour export enterprises are permitted to allocate commission expenses (if any) from the labour export service fee revenue and record them as reasonable expenses when calculating corporate income tax.

đ. The person deciding to collect or pay commission fees to intermediaries shall bear responsibility for their decisions. If they abuse the provisions on commission fees to collect or pay incorrectly, beyond the intended purpose, or for improper gain, the person making the decision to collect or pay shall be held accountable under the law.

If the commission expense for intermediaries who are Vietnamese citizens is implemented in Vietnamese Dong. If it is for organizations or individuals from foreign countries, it shall be carried out in the foreign currency specified in the labour supply contract or intermediary contract. Any exchange rate differences arising (if any) may be recorded as reasonable expenses when calculating corporate income tax.

e. Labour export enterprises shall implement accounting records and maintain ledgers to track the collection and payment of commission fees according to current accounting regulations.

5. Provisions on vouchers

a. When workers contribute brokerage fees through labor export enterprises, such enterprises must issue a receipt for the brokerage fee to the workers.

b. Documents for collecting and disbursing brokerage fees must bear the signatures of the Director, Chief Accountant, Cashier, payer, or recipient in accordance with the provisions of accounting laws.

III. IMPLEMENTATION

1. This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

2. The Section VI, Part B of the Joint Circular No. 107/2003/TTLT-BTC-BLDTBXH dated November 7, 2003, jointly issued by the Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs guiding the financial regime for workers and enterprises sending Vietnamese workers to work abroad for a fixed term under the detailed regulations and guidance on implementing the Labor Code regarding Vietnamese workers working abroad stipulated in Decree No. 81/2003/NĐ-CP dated July 17, 2003 of the Government is hereby abolished.

3. Labor export enterprises and workers going to work abroad have the responsibility to comply with the provisions of this Circular.

4. During implementation, if there are any difficulties, enterprises and individuals are requested to report them to the Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs for research and resolution.