Circular No. 47/2015/TT-BLDTBXH providing guidelines for labor contracts, labor discipline and responsibility of employers

On November 16, 2015, the Ministry of Labor – Invalids and Social Affairs promulgates Circular No. 47/2015/TT-BLDTBXH (Circular No.47) providing guidance on labor contracts, labor discipline and responsibility of employers.

Important points are as following:

– The provision stating that employers must pay salary in the month salary is earned as prescribed in Clause 1, Article 5 of Circular No. 23/2015/TT-BLDTBXH is now abolished. This Circular No. 47 defines that monthly wage shall be paid at the time negotiated between the 2 sides based on operation and pace of production of the enterprise.

– Below listed reasons are considered plausible reasons for employees to take absence from work as prescribed in Clause 2, Article 31 of Decree No. 05/2015/ND-CP:

  • A natural disaster or conflagration occurs and the employee is unable to present herself/himself at work regardless of every remedial measure
  • Illness of the employee, his/her parents including parents-in-law, spouse or children including lawfully adopted children and surrogacy child with a certification issued by a health facility founded and operated as prescribed under laws.

– Point a of Clause 1, Article 6 of Circular No. 23/2015/TT-BLDTBXH on actual wage used for overtime wage calculation is amended as follows:

The actual wage is exclusive of overtime pay, extra pay for night work, the wage for public holiday leave, paid leave prescribed in the Labor Law, bonuses prescribed in Article 103 of the Labor Law, initiative bonuses, food provided between shifts, subsidies on petrol, telephone, transportation, housing, child care and raising children, allowances for employees having a dead relative, employees having relatives married and employees’ birthday, benefits for employees facing difficulties due to their labor accidents and occupational diseases, and other allowances and benefits not related to their jobs or positions mentioned in the labor contracts.

– Wage paid for one working day is determined by dividing the monthly wage by number of working days within a month, provided that it does not exceed 26 days.

– The basis of salary used for calculation of pay during suspension period of operation, annual leave, public holidys or salary advance prescribed in Article 26 of Decree No. 05/2015/ND-CP is the salary specified in the labor contract as prescribed in Clause 1, Point a of Clause 2 and Point a of Clause 3 in Article 4 of this Circular.

– Circular No. 47 also provides guidance on other issues such as template of authorization letter to delegate authority to sign labor contracts.

This Circular comes into force on January 1, 2016. The Circular No. 19/2003/TT-BLDTBXH shall be annulled from the effective date of this Circular.


Circular No. 59/2015/TT-BLĐTBXH providing guidance on salary and allowances used for social insurance calculation

On December 29, 2015, Ministry of Labor – Invalids and Social Affairs issued Circular No. 59/2015/TT-BLĐTBXH (Circular No.59) detailing and providing guidance on some articles of Law No.58/2014/QH13 (Law on Social Insurance).

For employees who pay social insurance based on salary decided by employers, salary used for insurance calculation is as follows;

– From January 01, 2016 to December 31, 2017, social insurance is calculated based on the salary and salary allowances which are prescribed in point 1 and point 2a of Article 4 in Circular No. 47/2015/TT-BLĐTBXH.

Per point 2a of Article 4 in Circular No. 47/2015/TT-BLĐTBXH, salary allowances are defined as follows:

The allowances that are amounts offset against the working conditions, the complexity of jobs, the living conditions, and the employee attraction level which is not included or incompletely included in the contractual salary.

Salary allowances include position allowance, responsibility allowance, experience allowance, allowances for arduous, harmful, dangerous works, allowances for jobs that requires frequent business trips, allowance for attracting employees and other allowances having the similar substance.

– After January 1, 2018, social insurance is calculated based on the salary, salary allowances and other amounts prescribed per point a, paragraph 3 of Article 4 in Circular No. 47/2015/TT-BLĐTBXH.

According to Circular No. 59, monthly salary used for insurance calculation does not include other benefits such as:

  • Bonuses prescribed per Article 103 of Law No. 10/2012/QH13 (Law on Labor)
  • Bonus for creativity
  • Payment supporting employees in transportation, telephone, house rental, and child care fee
  • Amount paid to employees in case of wedding, funeral, employees’ birthday.
  • Subsidize paid to employees in case they have difficulties due to accident at work and occupational disease
  • Other benefit and subsidize which are shown in labor contracts according to paragraph 11, Article 4 of Decree No. 05/2015/NĐ-CP detailing some contents in Law on Labor

Circular No. 59 comes into effect as of February 15, 2016.


Official letter on inaccurate foreign exchange rates used in issued invoices

On December 18, 2015, General Department of Taxation issued Official Letter No. 5456/TCT-CS providing guidance how to handle cases where incorrect foreign exchange rates are used in issued invoices.

According to this official letter, starting from January 1, 2015, if (a) a Company issues invoices with inaccurate foreign exchange rates, (b) goods are delivered or services are provided, and (c) the buyer and the seller have already declared tax, seller and buyer shall make a record or a written agreement specifying the errors when an error is identified. Then, the seller shall issue a correct invoice. This is pursuant to paragraph 3, article 20, Circular No. 39/2014/TT-BTC dated March 31, 2014 on sale invoices.

In case the Company has a large number of issued invoices with inaccurate foreign exchange rate, the Company can issue one correct invoice for many issued invoices providing that these invoices were issued to the same customer and same value added tax rate was applied.


Official letter on Corporate Income Tax (CIT)

On December 18, 2015, General Department of Taxation issued Official Letter No. 5478/TCT-CS providing guidance on ancillary products given priority and CIT incentives.

Enterprises are required to check the list of ancillary products given priority and CIT incentives promulgated together with the Decision No. 1483/QĐ-TT dated August 26, 2011 and Decree No. 111/2015/NĐ-CP dated November 3, 2015 to determine whether the products of the enterprises handle are including in the list or not.

The supporting regulations are Clause 1 of Article 11 in Circular No.96/2015/TT-BTC dated June 22, 2015 and Article 11 of Decree No. 111/2015/NĐ-CP dated November 3, 2015.


Official Letter on remittance of profits to foreign countries

On December 16, 2015, General Department on Taxation issued Official Letter No.5413/TCT-CS on remittance of profits earned by foreign organizations and individuals from their direct investment in Vietnam under Law No. 58/2014/QH13 (Investment Law).

This Official Letter clarifies that foreign investors are allowed to remit profits to foreign countries after subtracting the amount foreign investors have used or committed to use for reinvestment in Vietnam from profits only if all of the following conditions are met.

– They have met financial obligations against the State of Vietnam under the laws.

– They have submitted audited financial statements and enterprise income tax finalization to directly managing tax offices.

– They have implement fully all the obligations under the Law on Tax Administration.

The supporting regulations of this Official Letter are found in Clause 1 of Article 3 and Clause 1 of Article 4 in Circular 186/2010/TT-BTC.


Official Letter on deductible expenditure applicable to school fees

On December 18, 2015, General Department of Taxation issued Official Letter No.5452/TCT-CS providing guidance on school fee for CIT purpose.

This official letter states that in case a company directly pays school fees for children of Vietnamese employees, the fees are considered to be deductible for CIT purpose if the following conditions are met.

  • There are legal invoices.
  • The payment of school fee is regulated in the company’s regulation.

However, the deductible amount for CIP purpose is limited to lesser of total direct expenditures on the employees’ welfare incurred in the tax year or the practical average 1 month’s salary in the tax year.

Supporting regulation for above official letter is found in Article 4 of Circular 96/2015/TT-BTC dated June 22, 2015.