KPMG's GMS Flash Alert – Social Insurance increase for foreign employees from January 2022
December 2021 | KPMG in Vietnam
Under Vietnam’s Law on Social Insurance, contribution rates to compulsory Social Insurance (“SI”) for foreign employees will increase starting January 2022.
While the SI policy would help ensure the foreign employees’ rights and obligations as well as level the playing field with respect to the local hires, it at the same time could increase the employment cost for employers and may result in a potential decrease in net income for the employees (dependent on the terms of their contract), especially from January 2022.
It is important for organisations with expatriates who are subject to SI contributions to consider an effective strategy. Considerations may include:
— Clear communications and updates to employees to foster their understanding of the obligations and benefits when participating in the SI scheme in Vietnam;
— A review of current remuneration models, SI responsibilities, and cost projections for the application of the full SI contributions which takes effect from January 2022.
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