I. Legal Basis

Laborers Working Abroad under Contract Law (Law No. 72/2006/QH11): This law regulates the activity of sending Vietnamese workers abroad under contracts and related conditions.

Decree No. 138/2020/ND-CP dated November 27, 2020: This decree provides detailed regulations and guidance on issuing operation licenses for businesses that send Vietnamese workers abroad under contract.

Circular No. 25/2019/TT-BLDTBXH dated November 11, 2019: This circular provides guidelines for the implementation of some provisions of Decree No. 138/2020/ND-CP, including licensing, management, and related procedures.

Companies wishing to operate in this field must comply with these legal documents and complete the licensing procedures at the Department of Overseas Labor Management.

II. Conditions for Issuing a License

According to the 2007 Personal Income Tax Law, amended and supplemented by the amended Laws in 2012, 2014, and 2019, all income from wages and salaries is subject to PIT.

1. Regulations on overtime pay

Overtime pay:

• Regular days: At least 150% of the wage.
• Weekly holidays: At least 200% of the wage.
• Public holidays, Tet holidays, and paid leave: At least 300% of the wage (excluding the wage for the holiday).
• Night work: An additional 30% of the regular wage.
• Overtime at night: In addition to overtime and night work wages mentioned above, an additional 20% of the regular wage for the day or holiday.

Note:

• Monthly wage: Calculated based on the actual wage for the job, divided by the actual working hours in the month, not exceeding 48 hours per week.
• Daily or weekly wage: Daily/weekly wage divided by the actual working hours, not exceeding 8 hours per day, excluding overtime.
• The actual hourly wage does not include overtime, night work, holidays, or non-work-related bonuses and allowances.

2. Exemption from PIT for night work and overtime pay:

Exempt portion: Income from night work and overtime pay is exempt from tax if it exceeds the regular daytime wage. Specifically, the exempt amount is calculated as the night/overtime wage minus the daytime wage.

Document requirements:

The organization or individual paying income must provide a detailed list of the time worked and the additional pay for night work or overtime.

This list must be stored and presented when requested by tax authorities.

3. How to calculate PIT on overtime wages:

According to Circular 111/2013/TT-BTC, overtime wages are included in taxable income as follows:

Income from overtime wages: When an employee works overtime, the income received for the overtime will be added to the total taxable income for the tax period.

Tax calculation: PIT is calculated according to the progressive tax rate schedule, with different tax brackets based on monthly income. The total income from wages, including overtime, will be subject to the tax rate schedule to determine the tax payable.

III. Rights and Obligations of Employees

Although overtime wages are not exempt from PIT, employees still have the right to enjoy benefits and fulfill obligations as required by law:

Family deductions: Employees may be eligible for family deductions for themselves and dependents, as specified in Article 19 of the PIT Law. These deductions can reduce the amount of tax payable.

Insurance deductions: Contributions to social insurance, health insurance, and unemployment insurance are deductible from taxable income, which can reduce the PIT payable.

IV. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm:

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