The shoe factory has been operating in Vietnam for 27 years. If the minimum wage is raised every year, the shoe factory may have to end its local production line in six years. Amid the epidemic, this is the first time in two years that Vietnam has raised the minimum wage to US$200 per month.
The cost of living in Vietnam is rising. In order to help low-wage workers, the local government announced that it will raise the minimum wage by 6%.
As early as June 12, Vietnam had officially promulgated a new decree to increase the minimum wage and hourly minimum wage standards for workers.
On the same day, Vietnamese Prime Minister Pham Minh Zheng communicated with thousands of workers across the country through online and offline means. During this period, he officially announced that the national minimum wage would be raised from July 1, and there was a warm applause at the scene.
This is the first time that Vietnam has raised the minimum wage standard after the outbreak of the new crown epidemic. Many parties have been engaged in a long-term game before this.
Wages are rising so fast that this 16,000-person shoe factory may have to leave Vietnam
Recently, according to media reports:
The Taiwanese company has several shoe factories in Vietnam, employing 16,000 workers and manufacturing shoes for the world’s top shoe brands. After the minimum wage was raised, employee costs increased by one percentage point, resulting in an increase in employee expenses, accounting for about 20% of total production costs.
Lin Minfang, deputy general manager of Yongan Shoemei Co., Ltd., said:
“We still have a distance, which is a safe distance, because 25% is what you can’t quote, which is the death cross, so we have about 4% left.”
The shoe factory has been operating in Vietnam for 27 years. If the minimum wage is raised every year, the shoe factory may have to end its local production lines in six years. Amid the epidemic, this is the first time in two years that Vietnam has raised the minimum wage to US$200 per month.
Dr. Du Qiongzhi said:
“The problem with the minimum wage increase is that it is adjusted in the middle of the year. So for many companies that export through the global supply chain, they have already signed orders with customers, but they don’t know that the minimum wage will be adjusted in the middle of the year. ”
Factories began to be inspected for taxes
Vietnam’s labor and land costs continue to rise
Chen Jiacheng, a practicing accountant in the Vietnam region of KPMG Anhou Jianye Overseas Business Development Center, said that due to the continued increase in foreign investment after the epidemic, labor and land costs in Vietnam have also increased. The impact of the epidemic and the conflict between Ukraine and Russia have also pushed up international freight rates and raw material prices.
Many Taiwanese businessmen have reported that the recent shortage of workers is no longer as serious as it was at the beginning of the year. The main reason is that many large or low-priced products can no longer bear the rising shipping costs. Therefore, many American brands have quietly transferred orders to South American Suppliers.
However, as foreign investment continues to increase, Vietnam is bound to start a war for people again, which will once again push up Vietnam’s salary costs. This will gradually expose the tax risks of many Taiwanese factory employees who only receive part of their salary in Vietnam.
Chen Jiacheng said that recently, when many Taiwanese businessmen in Vietnam faced tax bureau inspections, they were required to pay back taxes because the salaries of foreign employees were lower than the market rate. The inspections lasted for three years, and the fines and fines were not small.
He said that personal income in Vietnam is subject to global income tax. As long as you live in Vietnam for more than 183 days, you are a Vietnamese tax resident, and the company has withholding and reporting obligations.
According to the current tax collection practices in Vietnam, if the salary declared by the company for its employees is not consistent with the market conditions, the tax bureau can calculate the salary according to the market conditions of the employee’s position and require the company to pay back personal income tax. At the same time, because the underreported individual Salary is not paid by the company and cannot be classified as a business expense.
In addition, for the salary expenses paid by Taiwanese companies to expatriate employees, the tax bureau will also argue that the salary expenses have nothing to do with the operations of the Taiwanese company and cannot report salary expenses, or that the Taiwanese company should calculate the labor income of the Vietnamese company and require the Taiwanese company to compensate Tax. It was originally a well-intentioned arrangement for employees, but it resulted in companies and individuals in both places being exposed to tax risks, resulting in the unfavorable situation of double taxation.
As foreign capital continues to increase investment, the wages of middle- and high-level talents in Vietnam have gradually caught up with Taiwan, and the salary levels of some positions have even surpassed Taiwan.
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