Help!
Sadly my time in VN is coming to an end due to constricting budgets.
I have been offered two months' severance pay, calculated with tax deduction.
I have been done, however, that this should be non-taxable.
Does anyone have experience with this?
I would appreciate any advice.
My thanks
Richard
Severance pay
reg2000
08 January 2016 04:54:24
1
Teacher Mark
09 January 2016 15:22:50
978
Be glad that you're actually getting severance! The laws are so slanted in the flavor of the employer that they could just tell you that you're terminated; gather up your personal effects and get the he!! off of the property (first-hand experience)! I've only heard of one foreigner that felt that they were wrongly terminated; took it to "the people" and won the case.
In this case you're talking about money that the government, a.k.a. "the people", has apparently claimed, so it's gone baby gone, IMHO.
You could actually find yourself having to pay taxes in your home country as well, dependant on the law of your land. The US, for example, will hit it's citizens up regardless, if they touch US soil for more than 30 days in a year, or more than once in that year, if I'm not mistaken. I knew a guy that got dinged twice and it was for a substantial amount of cash. Needless to say - he was livid!
Teacher Mark
09 January 2016 17:22:06
978
I stand corrected, insofaras the actual law in concerned, if what I've found is still actually the law and if it's something that's actually enforced:
Severance PaymentUpon the termination of a labor contract, including unilateral termination, theemployer must pay an employee who has worked for the enterprise for at least12 months an amount equal to one-half months salary for each year that he or shehas worked in the enterprise. Workers who have less than a year of service are noteligible for severance payment. In the case of disciplinary terminations, severancepayments are forfeited.7In the case of layoffs due to the restructuring of an enterprise or changing technology,the employer is required to pay employees who have worked for at least 12 monthsan amount equal to one months salary for each year such employees worked forthe enterprise, but not less than two months salary.8 Employees who are subject tolabor contract termination following corporate merger, consolidation, separation orsplitting, transfer of the right to own, manage or use assets of enterprises, are alsoentitled to the same allowances.96 Labour Code, Article 38.7 Labour Code, Article 42(1).8 Labour Code, Article 179 Labour Code, Article 31.Guide to Mergers and Acquisitions662 Baker & McKenzieVIETNAMEmployers having 10 employees or more, and Vietnamese employees workingunder labor contracts with a term of 12 months or more for such employers willbe subject to the unemployment insurance regulations. Employees contribute 1%of their salary capped at 20 times the general minimum wage, and employers andthe State each contribute an amount equivalent to 1% of the total payroll used tocontribute to social insurance of employees participating in the unemploymentinsurance fund.If an employee terminates a labor contract or loses his or her job after 1 January 2009, he or she will receive a severance allowance or job loss allowance from the employer for the duration of service before, and enjoy unemployment benefits provided by the social insurance fund for the duration of service that he or she participated in the unemployment insurance scheme beginning 1 January 2009.10 That means after the effective date of unemployment insurance, the severance allowance for the employees duration of service before 2009 will still be carried forward to the termination of labor contracts, but the employer will not have to pay severance allowance for the employees duration of service in which employees and employers make the contribution to unemployment insurance fund after 1 January 200
But...:
Non-deductible Expenses Expenses are tax deductible if they relate to the generation of revenue, are properly supported by suitable documentation including bank transfer vouchers where the invoice value is VND20 million or above and are not specifically identified as being non-deductible. Examples of non-deductible expenses include: ... Provisions for severance allowance (except for companies not subject to mandatory unemployment insurance contributions) and payments of severance allowance in excess of the prescribed amount per the Labour Code.
You need to speak with a professional, though that could lead to a scenario wherin you lose it all, or even worse - lose it all and have a remaining balance due for the legal work.
You may also want to check with the tax man and see if they've actually paid the tax, or if they're being economical with the truth and pocketing the cash...
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