Starting from 2018, enterprises have to pay social insurance for employees working under labor contract from 1 month or more
From 1st January, 2018, employees working under the employment contract from 1 month to less than 3 months will be included in the participants of compulsory social insurance. The supplement of this kind of participant aims to create the equality between short-term form and long-term form employment, contributes to raise awareness of the community about participating in the social insurance, creates the sense of self-security for all employees.
From 2018, besides the employees working under indefinite term employment contract, term employment contract, seasonal employment contract or certain work with the term from 3 months to less than 12 months, enterprises will have to pay compulsory social insurance for the employees working under the employment contract from 1 month to less than 3 months. This is a special attention-required regulation to all enterprises. Many enterprises used to sign the less than 3 month labor contract in series in order not to pay the social insurance. If enterprises keep doing this “trick”, it might lead to a risk of being administratively punished and have to pay back the unpaid premium and the interest of the unpaid premium according to the interest rate of investment activities of Social Security Fund in the year.
One other new regulation relating to the social insurance of employees in the enterprise is the regulation about company income tax relating to the cost of the company paid for the benefits of employees, for example: life insurance, supplementary pension insurance,...
According to previous regulation, costs that enterprises use to deduct to the voluntary retirement funds, to pay for employee’s voluntary retirement insurance exceeding 1 million VND and thecost exceeding the level prescribed by the law on social insurance, health care insurance to deduct to the funds having social security nature like social insurance, supplementary retirement insurance, health care fund and unemployment fund will not be subtracted when calculating the taxable income. Starting form 1st February 2018, this regulations will be applied in accordance with the new Decree no 146/2017/ND-CP as following:
“Costs not subtracted when calculating the taxable income:
o) The cost exceeding 03 million/month/person to deduct to voluntary retirement fund, to pay for employee’s voluntary retirement insurance, life insurance; the cost exceeding the level prescribed by the law on social insurance, health care insurance to deduct to the funds having social security nature like social insurance, supplementary retirement insurance, health care fund and unemployment fund”
As stipulated by the law, the highest cost to deduct to voluntary retirement fund, to pay for employee’s voluntary retirement insurance can be subtracted when calculating the taxable income has risen to 3 million/month/person. Nevertheless, the cost that used for employee’s life insurance didn’t limit before now have limited for 3 million maximum. Enterprises need to pay attention to this new regulation to release the suitable employment policy not exceeding the prescribed level, so that the taxable income can be subtracted and the enterprises can both encourage employee’s spirit and balance the operation cost. If the company costs exceed the prescribed level but company still subtract the taxable income, it might lead to the risk of being fined for tax fraud.
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