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

JOINT CIRCULAR

Guidelines on brokerage fees in labor export

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Based on 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,

The Ministry of Finance and the Ministry of Labor, Invalids and Social Affairs jointly issue guidelines on brokerage fees in labor export as follows:

I. GENERAL PROVISIONS

1. Brokerage fee (consultation fee for contract exploitation) is the amount of money that workers, or labor export enterprises and workers must pay to intermediaries to obtain contracts sending workers to work abroad.

2. The brokerage fee must be reflected in the labor supply contract, or in a separate brokerage fee contract signed between the labor export enterprise and the intermediary. The brokerage fee can only be paid when the intermediary has fully 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 foreign organizations or individuals, or Vietnamese organizations or individuals providing intermediary services.

4. The brokerage fee does not apply in cases where the employer extends the signing of a new labor contract after the worker has completed the contract signed with the labor export enterprise.

II. SPECIFIC PROVISIONS

1. Regulation on the framework level of brokerage fees

a) The framework level of brokerage 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 salary according to the contract (calculated monthly) serving as the basis for calculating the brokerage fee is the basic salary excluding: overtime pay; bonuses and other allowances. For officers and seafarers on transport ships: the salary according to the contract (calculated monthly) serving as the basis for calculating the brokerage fee includes: basic salary and vacation pay.

2. Specific level of brokerage fee:

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

b) In special cases, if the market requires a higher level of brokerage fees than the framework level of brokerage fees stipulated, the labor export enterprise reports to the Ministry of Labor, Invalids and Social Affairs for a specific decision on the collection of brokerage fees after reaching a consensus with the Ministry of Finance.

3. Currency for collecting brokerage fees

Labor export enterprises collect the portion of the brokerage fee that workers must contribute in Vietnamese dong. If the brokerage fee is calculated in US dollars, the average transaction rate of US dollars against Vietnamese dong in 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-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-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 rate of US dollars against Vietnamese dong in the inter-bank foreign exchange market published by the State Bank of Vietnam at the time of collection.

4. Responsibilities of labor export enterprises

a) Labor export enterprises proactively negotiate with intermediaries on appropriate brokerage fees within the prescribed level of brokerage fees based on market requirements.

b) Based on the brokerage fees agreed with intermediaries, labor export enterprises agree with workers on the brokerage costs that workers must contribute through labor export enterprises to pay to intermediaries. The portion of the brokerage fee contributed by workers must be clearly recorded in the contract between the worker and the labor export enterprise. This brokerage fee income is not included in the revenue of the labor 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 labor export enterprise is responsible for requesting intermediaries to refund part of the brokerage fee that the worker has paid, according to the principle: workers who have worked less than 50% of the contract period will receive 50% of the brokerage fee paid back. Workers who have worked more than 50% of the contract period will not receive a refund of the brokerage fee.

In cases where the labor export enterprise cannot recover from intermediaries, the enterprise is responsible for deducting from the labor export service fee revenue or other business income to refund the brokerage fee to workers according to the above principle.

d) Labor export enterprises are allowed to spend brokerage fees (if any) from labor export service fee revenue and can be accounted for as reasonable expenses when calculating corporate income tax.

đ) The person deciding to collect and spend brokerage fees for intermediaries is responsible for their decisions. If they abuse the regulations on brokerage fees to collect and spend improperly, not according to the intended recipients, or for personal gain, the person making the decision to collect and spend must bear responsibility under the law.

If the cost of brokerage for intermediaries who are Vietnamese citizens is implemented in Vietnamese dong. If it is for organizations or individuals who are foreigners, it is implemented in the foreign currency specified in the labor supply contract or the brokerage contract. Any exchange rate differences arising (if any) may be accounted for as reasonable expenses when calculating corporate income tax.

e) Labor export enterprises implement accounting and bookkeeping records to track the collection and expenditure of brokerage fees according to current accounting regulations.

5. Regulations on documentation

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

b) Documents for collecting and disbursing brokerage fees must bear the signatures of the Director, Chief Accountant, Cashier, person paying money, or person receiving money in accordance with the provisions of accounting law.

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 implementation of financial regulations for workers and enterprises sending Vietnamese workers to work abroad under the detailed regulations and guidance provided in Decree No. 81/2003/NĐ-CP dated July 17, 2003 of the Government on the Labor Code regarding Vietnamese workers working abroad is hereby repealed.

3. Enterprises exporting labor and workers going to work abroad are responsible for implementing the provisions of this Circular.

4. In the course of 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 study and resolution./.