Mandatory Business Registration for Social Insurance: A Maximum of Nearly VND 12 Million per Month.

A Competitive Salary: Up to VND 11.7 Million/Month

The new Social Insurance Law of 2024, effective from July 1st, expands mandatory social insurance coverage to various groups, including self-employed business owners.

As per points a and b of Section 4, Article 33 of the 2024 Law, the mandatory social insurance contribution rate for self-employed business owners is 3% for sickness and maternity funds and 22% for retirement and death funds.

According to point d, Section 1, Article 31 of the 2024 Law, self-employed business owners can choose their salary as the basis for social insurance contributions, with a minimum of the reference level and a maximum of 20 times the reference level at the time of contribution.

Consequently, the monthly social insurance contribution for self-employed business owners is 25% of their chosen salary. They have the flexibility to opt for monthly, quarterly, or biannual payment methods according to their preferences.

Regarding the reference level, Section 13, Article 141 of the 2024 Law stipulates that until the base salary is abolished, the reference level specified in this Law shall be equal to the base salary. Once the base salary is abolished, the reference level must not be lower than that base salary amount.

Presently, with a base salary of VND 2.34 million/month, the minimum social insurance contribution for self-employed business owners is VND 585,000/month (25% x VND 2.34 million). Meanwhile, the maximum contribution is VND 11.7 million/month (20 times the reference level).

Registration Process and Implementation Timeline

Concerning registration, according to Article 27, Section 2, and Article 28, Section 2 of the 2024 Law, self-employed business owners who fall under the mandatory social insurance category have two options for enrollment:

Firstly, they can register through their employer by submitting a social insurance registration form along with a list of employees participating in social insurance.

Alternatively, they can choose to submit the registration form directly to the social insurance agency within 30 days from the date they become subject to mandatory social insurance.

According to the draft Decree providing detailed guidance on the implementation of mandatory social insurance for self-employed business owners, there is a phased implementation timeline based on the tax payment method of the business:

Self-employed business owners who pay taxes through the declaration method (based on actual monthly or quarterly revenue) will be subject to mandatory social insurance from July 1st, 2025.

For those who pay taxes through the allocation method (based on an annual revenue estimate), the effective date is July 1st, 2027.

Lastly, self-employed business owners who do not fall into the above two categories will be mandated to join social insurance from July 1st, 2029.

Businesses that pay taxes through the declaration method tend to have larger scales and meet specific criteria regarding revenue and labor, allowing them to proactively declare revenue and expenses to calculate payable taxes each period.

On the other hand, businesses paying taxes through the allocation method are typically smaller or medium-sized and are not required to maintain accounting books. Instead, they pay taxes based on a fixed amount determined annually by the tax authority.

According to tax authorities, in 2024, approximately 80,000 businesses paid taxes through the declaration method, while around 2.02 million businesses utilized the allocation method.