Social insurance collection for employers

Questions

If the employee quitted from September 2023, but in October 2023, HR reported a reduction in insurance, resulting in arrears of health insurance.In October 2023, that employee still had income from severance pay. So according to the law, is the employee's 1.5% health insurance arrears out of the total 4.5% health insurance arrears payable be allowed to be deducted from income? The employee's income, or the entire 4.5%, is completely borne by the company, and the employee is not responsible for paying it.In case the company must pay 4.5%, is this amount considered a reasonable expense when calculating corporate income tax?

Answer:

i) The company will be charged arrears for health insurance when reporting a late reduction and will be fully responsible for paying health insurance for the months of late notification. Employees are not obligated to pay these arrears. Pursuant to the provisions of Clause 2, Article 50, Decision No. 595/QD-BHXH dated April 14, 2017:

“Article 50. Responsibilities of participants, employers and authorized collectors

2. Responsibilities of employers and authorized collectors

2.1. Responsibilities of an employer:

1. a) Prepare documents, pay insurance contributions and premiums in accordance with this document and relevant laws.In the cases where the employer fails to notify the social security authority of decrease in number of workers in a month, the employer shall pay health insurance premiums incurred in that month and the health insurance cards are valid until the end of the month”

    ii) The 4.5% arrears is considered a reasonable expense when calculating corporate income tax because this is an actual expense incurred related to the production and business activities of the enterprise, meeting the conditions of Clause 1, Article 9 and do not fall into the cases specified in Clause 2, Article 9 Law on Enterprise Income Tax No. 14/2008/QH12 amended and supplemented in 2013.

“Article 9. Deductible and non-deductible expenditures

1. 1.Except for the expenditures mentioned in Clause 2 of this Article, all expenditures are deductible when calculating taxable income if they meet the conditions below:
2. a) Actual expenditures related to the business of the enterprise; expenditures on National defense and security of enterprise according to law;
3. b) Expenditures that have sufficient invoices and documents according to law. The invoice for any purchase of goods or services of at least 20 million VND must be enclosed with proof of cashless payment, except for the cases in which proof of cashless payment is not required by law.
4. 2.Non-deductible expenditures when calculating taxable income:
5. a) The expenditures that fail to meet all conditions in Clause 1 of this Article, except for the loss cause by natural disasters, epidemics, and other force majeure that are not compensated.
6. b) Fines for administrative violations;
7. c) The expenditures that are covered by other budgets;

………….

1. p) Expenditures on businesses: banking, insurance, lottery, securities, and some other special businesses specified by the Minister of Finance. 

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