Using foreign workers, what should enterprises pay attention to? Enterprises need to pay attention to applying for a work permit for foreign workers. Let us learn about this topic with LSX law firm as follow:
Enterprises employing foreign workers need to pay attention to a number of issues such as Work permits; corporate responsibilities related to personal income tax of employees such as tax declaration; payment and finalization, sign labor contracts; participate in social insurance…
Enterprises need to pay attention to applying for a work permit for foreign workers
According to the law, a foreigner entering Vietnam to work falls in one of the following two cases:
(i) Not subject to a work permit;
(ii) Must have a work permit.
In case the foreigners are exempt from work permits in Vietnam:
Decree 11/2016/ND-CP stipulates cases where foreign workers are not eligible for work permits. In this case, at least 07 (seven) working days in advance from the date the employee starts work; enterprises must carry out procedures to confirm that foreign workers are not subject to work permits at the provincial Department of Labor, War Invalids and Social Affairs where the workers regularly work.
In addition, in case the employee must have a work permit; enterprises must submit an application for a work permit at the Department of Labor, War Invalids and Social Affairs; where the employee works full-time for the enterprise at least 15 (fifteen) days in advance from the date the employee schedule to work.
Enterprises need to pay attention to how to calculate personal income tax for foreign workers
Employees being foreign individuals when working in Vietnam must pay personal income tax. Personal income tax for foreign workers is applied to wages and salaries and is divided into two cases: resident workers and non-resident employees.
In case the foreign worker is a non-resident individual
Clause 2, Article 1 of Circular 111/2013/TT-BTC stipulating that non-resident individuals being foreigners (employees) are as follows:
(I) Firstly, not present in Vietnam for 183 days or more in a calendar year; or calculated according to 12 consecutive months from the first day of presence in Vietnam;
(ii) Secondly, no permanent place of residence in Vietnam; including having a registered residence for permanent residence or having a rented house to live in in Vietnam under a fixed-term rental contract.
Personal income tax for foreign employees is determined as follows:
Taxable income is the total salary; wages received by non-resident foreign workers for performing work in Vietnam; regardless of where the income is paid and the applicable tax rate is 20%.
Enterprises paying income subject to personal income tax; regardless of whether there is a tax deduction or not, the person is responsible for declaring and finalizing personal income tax; and finalize personal income tax on behalf of authorized individuals.
In case the foreign worker is a resident individual
A resident individual, for a foreign worker, meets one of the following conditions:
(I) Firstly, being present in Vietnam for 183 days or more in a calendar year; or for 12 consecutive months from the first day of presence in Vietnam; Individuals present in Vietnam under the provisions of this Point are those present in the Vietnamese territory.
(ii) Secondly, having a regular place of residence in Vietnam in one of the following two cases: Having a registered place of permanent residence according to the provisions of the law on residence; Having a rented house to live in Vietnam in accordance with the law on housing; with the term of lease contracts from 183 days or more in the tax year.
Moreover, personal income tax for foreign employees:
Taxable income is income generated inside and outside the territory of Vietnam. The tax rate is applied according to the partial progressive tax schedule as prescribed by law in the Law on Personal Income Tax.
Resident foreign workers must declare personal income tax on wages and salaries in accordance with the law on specific cases.
Enterprises must sign labor contracts with foreign workers
After being granted a work permit; the employer and foreign worker must sign a written labor contract in accordance with the provisions of Vietnamese labor law; before the expected date of employment for the employer.
How to sign a labor contract depends on the needs of Vietnamese enterprises to use foreign workers; as well as the agreement of the two parties. The Labor Code 2019 has two types of contracts:
(i) Firstly, an indefinite term labor contract is a contract in which the two parties do not specify a term; the time of termination of the contract;
(ii) Secondly, a fixed-term labor contract is a contract in which two parties determine a term; the time of contract termination within a period not exceeding 36 months from the effective date of the contract.
However, the employer needs to base on the duration of the work permit to choose the appropriate type of contract. Within 5 working days; from the date of signing the labor contract; The employer must send a copy of the signed labor contract to the Department of Labor, War Invalids, and Social Affairs where the work permit issued.
Foreign workers must participate in social insurance
The 2014 Law on Social Insurance stipulates:
Employees are foreign citizens to work in Vietnam; have a work permit or practice certificate; or a practicing license issued by a competent Vietnamese agency; subject to compulsory social insurance (implemented from January 1, 2018, according to the Government’s regulations).
From January 1, 2022, foreign workers pay 8% of their monthly salary to the retirement and survivorship fund. From December 1, 2018, the employer contributes 3% to the sickness and maternity fund; 0.5% to the labor accident and occupational disease insurance fund; 14% to the retirement and survivorship fund from January 1, 2022.
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Related questions
The responsibility to pay insurance premiums for employees does not depend on the number of employees; which depends on the nature of the employment contract. Accordingly, if certain conditions are met; enterprises are obliged to pay insurance for employees; and will be penalized if there is an act of evasion; or delay in paying insurance premiums for employees.
Accordingly, businesses could pay taxes in the following places:
The State Treasury, tax management department organizations; authorized by tax authorities to collect taxes commercial banks; other credit institutions, and service organizations.
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