REGULATIONS ON SALARIES AS THE BASIS FOR MANDATORY SOCIAL INSURANCE CONTRIBUTIONS

I. Introduction 

On September 5, 2025, the Department of Wages and Social Insurance under the Ministry of Home Affairs issued Official Letter No. 1198/CTL&BHXH-BHXH in response to inquiries from the American Chamber of Commerce in Vietnam (AmCham Vietnam) regarding salaries as the basis for mandatory social insurance (SI) contributions under Decree No. 158/2025/ND-CP, effective from June 25, 2025. This document provides detailed guidance on salary components subject to SI contributions, based on the Law on Social Insurance No. 41/2024/QH15 and relevant implementing regulations, to ensure consistent enforcement across the business community. 

II. Key Provisions 

1. Salary as the basis for SI contributions 

According to Official Letter No. 1198/CTL&BHXH-BHXH, the salary forming the basis for mandatory SI contributions for employees subject to employer-determined wage regimes consists of three main components: 

(1) Salary based on job or title: Determined in accordance with the wage scale and payroll system developed by the employer under Article 93 of the 2019 Labor Code and stipulated in the labor contract. 

(2) Salary allowances: Including amounts compensating for working conditions, job complexity, living conditions, or the attractiveness of certain positions not yet fully reflected in the basic salary, as agreed in the labor contract. 

(3) Other additional payments: Specific, regular, and stable amounts paid in each pay period, as stipulated in the labor contract. 

2. Distinction from other regimes and benefits 

Other regimes and benefits recorded separately in the labor contract under Clause 5, Article 3 of Circular No. 10/2020/TT-BLDTBXH are not included in the salary base for SI contributions. This ensures that only fixed, job-related salary components are used for calculating SI contributions. 

III. Analysis 

Official Letter No. 1198 reaffirms the provisions of the 2024 Law on Social Insurance and Decree No. 158/2025/ND-CP, clearly distinguishing between regular salary components (with wage characteristics) and welfare/benefit items (without wage characteristics). 

This clear classification is significant in defining employers’ obligations for SI contributions and employees’ entitlement to SI benefits. 

Although issued in response to AmCham Vietnam, the Official Letter can serve as a general reference for enterprises operating in Vietnam. 

IV. Conclusion and Recommendations 

Official Letter No. 1198/CTL&BHXH-BHXH dated September 5, 2025 clarifies the scope of monthly salaries used as the basis for mandatory SI contributions and affirms that welfare and benefit items without wage characteristics are excluded. This provides enterprises with a solid foundation to differentiate between SI-contributable and non-contributable items, ensuring compliance with the 2024 Law on Social Insurance and Decree No. 158/2025/ND-CP. 

Based on this, enterprises are recommended to: 

• Review and update the classification of salary, allowances, and additional payments to accurately determine the SI contribution base. 

• Develop and issue wage scales, payrolls, and allowances in compliance with Article 93 of the Labor Code, and record them clearly in labor contracts. 

How ALTAS Can Assist You: 

ALTAS LAW is uniquely positioned to assist your business in navigating these complex administrative reforms. We offer a comprehensive suite of legal and business services designed to provide seamless support during this transition period: 

• Accounting and Tax Services: We also offer accounting and tax services to help your business manage the financial implications, including tax planning, tax settlement, tax auditing and tax refund. 

• Licensing & Regulatory Compliance: We will meticulously review your existing licenses and permits, advise on necessary amendments or renewals, and guide you through the process of obtaining any new approvals. Our team will also ensure your compliance with all relevant regulatory changes. 

Please feel free to reach us via email contact@altas.vn to discuss your specific concerns and explore how we can navigate these reforms successfully. 

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Prepared by:
Partner, Managing Director at ALTAS Accounting - Ms. Nguyen Nhac Thien An & Senior Legal Associate at ALTAS Law - Tran Anh Hoang  
Date: 11/9/2025