Expats leaving Vietnam unable to get social insurance refunds

Compulsory social insurance payments for expats working in Vietnam are causing problems for local firms.

Vietnam is becoming an interesting destination for expat professionals as its economy strengthens and draws in overseas investment. According to a report published by the Investment and Trade Working Group attached to the Vietnam Business Forum, compulsory social insurance for expats is yet another tax in an already high-taxed environment and is likely to affect the numbers of skilled expat professionals the country needs to continue its development.

The Vietnamese government’s bill on the proposed change does not allow for an accumulating period of payments for social insurance. For example, an expat worker who’s paid Thailand’s social insurance for a period of five years before moving to Singapore for another five years and paying social insurance cannot accumulate the payments once he begins work in Vietnam. The accumulator rule does exist, but only applies to states with which Vietnam has bilateral agreements. To date, agreements have been signed with South Korea and Germany and Vietnam is now targeting Japan for its next agreement some time in the future.

According to Vietnamese law, expatriates with work permits must legally comply with its social insurance payment requirements. The parameters mirror those for Vietnamese citizens and include sickness, occupational accidents, maternity, retirement and death. Foreign workers can get returns once their contracts or work permits expire as long as they submit an application 30 days before the due date. This rule is causing the majority of problems as expats are being subjected to long delays, meaning many who have jobs overseas to go to aren’t able to receive their due payments. Most, it seems, just give up and go.