When hiring new employees, businesses must fully comply with regulations from the Social Insurance, Labor, and Tax authorities. This is because risks can arise from not fully implementing these regulations, whether for one or multiple employees. To date, many businesses have not updated this information accurately. Penalties for underpaying social insurance contributions. Therefore, there is still a great deal of subjectivity in the process of implementing social insurance for employees.
Below, Expertis will summarize the penalties and forms of social insurance fines for businesses that underpay their social insurance contributions, aiming to help businesses understand and stay updated on the severity of current regulations. This will allow them to adjust their HR practices to minimize penalties from the Social Insurance and Tax authorities.
There are two cases where a company fails to pay sufficient social insurance, health insurance, and unemployment insurance contributions:
Case 1: Failure to contribute to social insurance, health insurance, and unemployment insurance for the full number of employees who are subject to mandatory insurance as required by law.
Case 2: Insufficient contributions are calculated based on the percentage and salary used for calculating mandatory insurance contributions as stipulated by regulations.
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Both of the above cases, if discovered during an inspection, will be subject to penalties depending on the severity:
- The full amount due will be recovered, and interest will be calculated based on the applicable interest rate and the number of days of late payment.
- More serious violations will be classified as tax evasion according to the levels below in the criminal code.
Article 219. Crime of evading social insurance, health insurance, and unemployment insurance contributions for employees.
1. Any person who is obligated to pay social insurance, health insurance, and unemployment insurance for employees but fails to pay or pays insufficient amounts as prescribed for 6 months or more, and falls under one of the following cases, and has already been subject to administrative penalties for this act but continues to violate the regulations, shall be fined from VND 50.000.000 to VND 200.000.000 or sentenced to non-custodial correctional labor for up to 02 years or imprisonment from 03 months to 01 year:
a) Evading insurance contributions in amounts ranging from VND 50.000.000 to less than VND 300.000.000;
b) Evading insurance contributions for 10 to fewer than 50 employees.
2. Committing an offense falling under one of the following circumstances shall be punishable by a fine of VND 200.000.000 to VND 500.000.000 or imprisonment from 06 months to 03 years:
a) Committing the crime two or more times;
b) Evading insurance contributions in amounts ranging from VND 300.000.000 to less than VND 1.000.000.000;
c) Evading insurance contributions for between 50 and fewer than 200 people;
d) Failure to pay the insurance contributions collected or deducted from employees as stipulated in point a or point b of Clause 1 of this Article.
3. Committing the crime in the following circumstances shall be punishable by a fine of VND 500.000.000 to VND 1.000.000.000 or imprisonment from 02 to 07 years:
a) Evading insurance contributions amounting to VND 1.000.000.000 or more;
b) Refusing to pay insurance premiums for 200 or more people;
c) Failure to pay the insurance contributions collected or deducted from employees as stipulated in point b or point c of Clause 2 of this Article.
4. The offenders may also be subject to a fine of between VND 180,000 and VND 200, banned from holding certain posts, practicing certain occupations or doing certain jobs from 20.000.000 years to 100.000.000 years.
5. Legal entities that commit offenses as stipulated in this Article shall be punished as follows:
a) If the offense falls under the circumstances specified in Clause 1 of this Article, the penalty shall be a fine of VND 100.000.000 to VND 500.000.000;
b) If the offense falls under the circumstances specified in Clause 2 of this Article, the penalty shall be a fine of VND 500.000.000 to VND 1.000.000.000;
c) If the offense falls under the circumstances specified in Clause 3 of this Article, the penalty shall be a fine of VND 1.000.000.000 to VND 3.000.000.000.
For any questions regarding social insurance services, labor and payroll management, please contact us. contact 0903 024 034 for advice and support!
