Vietnam Includes Incentive Pay for Social Taxes, Charges Interest for Late Wages

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By Lien Hoang

Jan. 23 — Wages subject to taxes and social insurance will comprise three parts in Vietnam starting March 1: salary, allowances, and incentives, such as for meals and holidays, the Vietnamese government said Jan. 12 in published changes under Decree 5.

Vietnam used to exempt the third category, so incentive pay was used to minimize the contributions owed for pensions, health insurance, unemployment and other benefits.

In addition, companies that are at least 15 days behind on salary payments are required to add interest to those payments that is no less than the central bank's rate for one-month deposits effective March 1. The current annual interest rate on the state bank's website is 9 percent. If the interest rate is not stipulated, employers should use the rate at their commercial banks.

The salary delay should not last more than one month, the decree says, and only “in special cases due to natural disaster, fire, or other unforeseen reasons where employers have sought remedies but cannot pay on time.”

Decree 5 follows an increase in the mandatory health insurance contribution rate for 2015.

To contact the reporter on this story: Lien Hoang in Ho Chi Minh City at

To contact the editor responsible for this story: Michael Baer at

The official decree can be found in Vietnamese at

More information on payroll issues in Vietnam can be found in the Vietnam country primer.