According to Article 216 of the 2015 Penal Code, revised in 2017, an employer who is obliged to pay social insurance, health insurance and unemployment insurance premiums for employees will be examined for penal liability if it/he/she commits a deceitful act or employs another trick to evade paying or insufficiently pay premiums according to regulations for six months or more with an evaded premium amount or a number of affected employees execeeding the law-prescribed threshold or although has been administratively sanctioned for this act. Article 2.10 of Resolution 05/2019/NQ-HDTP, of the Judicial Council of the Supreme People’s Court guiding the implementation of the Penal Code’s provisions on social insurance-related crimes, defines the act of evading payment of insurance premiums mentioned in Article 216 of the Penal Code as employers’ committing a deceitful act or employing another trick in order to not pay or fully pay insurance premiums for employees.   

In 2023, 26 cases were brought to prosecution. Of  these, 15 have been prosecuted, yielding 8 legally binding verdicts. Individuals and organisations implicated are required to pay over VNĐ 2.69 billion to the social security office, with VNĐ 2.38 billion already recovered.

Illustrative image (internet)

VSS proposes functional agencies to amend regulations on sanctioning of violations related to insurance premiums payment evasion with a view to ensuring consistency between the administrative law and the criminal law in handling these violations.

It is neccesary to firmly deploy stricter penalties

Weighing on penalties for enterprises evading social insurance participation for their employees, a lawyer of Hừng Đông Law Company Limited, said that the Law on Social Insurance prohibits evasion or late payment of compulsory social insurance and unemployment insurance participation. Enterprises vilolate the Law shall face the sanctions under regulation, including possible administrative fines.

These fines are set at 12% to 15% of the total mandatory contribution amount at the time of the violation report, with a maximum cap of VNĐ 75,000,000 for employers.

If a company fails to cover social insurance and unemployment insurance for all its workers, the fine can range from 18 % to 20 % of the total contributions.

Additionally, enterprises evading social insurance payment could face criminal liability, fines and up to seven years of imprisonment.

Application of advanced Information and Communication Technology

This strategy is based primarily on the strategic use of Information and Communication Technology (ICT). Such technologies are indispensable to automatically detect potential fraud, atypical profiles and risk scenarios. The application of ICT to prevent and/or detect possible irregularities is covered in the ISSA Guidelines on Information and Communication Technology, notably section B4 on Data Analytics. Recent ISSA webinars elaborated on the use of data analytics to address fraud.

Good pratices in foreign countries

Good practices in this area highlight the importance of specialized software, such as that developed by Argentina's Federal Administration of Public Resources (AFIP) and Uruguay's Social Insurance Bank (Banco de Previsión Social – BPS). In Argentina, an IT tool known as the "System of Social Security Obligations Calculation – Inspection Certificate Module" (Sistema de Cálculo de Obligaciones de la Seguridad Social – Módulo de Actas de Inspección, SiCOSS) facilitates the collection and distribution of funds arising from a tax inspection recovery service (Federal Administration of Public Resources, 2016). For several years now, this application has helped to speed up and streamline the process of calculating and recovering outstanding social security contributions. BPS Uruguay has developed the "Integrated Solution for the Selection of Cases to Monitor" (Solución Integral de Selección de Casos a Fiscalizar – SISCA), which identifies contributors who should be subject to inspections based on the use of modelling and predictive analytics techniques (Social Insurance Bank, 2016).

Illustrative image (internet)

Advanced Information Systems and Big Data initiatives also enable the implementation of effective measures against EEF. As shared in a webinar on analytics application against EEF, the Social Security Information and Technology Enterprise – DATAPREV (Empresa de Tecnologia e Informações da Previdência Social – DATAPREV) of Brazil developed a Big Data system connected with decision-support tools, which can detect potential fraudulent attempts to obtain unemployment benefits. Similarly, the Mexican Social Security Institute (Instituto Mexicano del Seguro Social – IMSS) is developing an institutional Big Data system that uses analytics technologies to monitor a range of possible fraudulent cases including non-compliance. In addition, the IMSS established information systems to facilitate the coverage of domestic workers and minimize the risk of employer evasion.

In Argentina, the Employee Pension Fund of the Entre Rios Province implemented a contributions control system covering personal and employer contributions (SICA) (Federal Social Insurance Council, 2020a). Increasing intra-institutional exchanges make common databases ever-more efficient. Moreover, the development of a single online channel for social security declaration and contributions to replace the multiplicity of channels through which companies traditionally shared data with the authorities, helps prevent inconsistencies, overpayments and duplication. Many of the practices of ISSA members from the Americas are presented in the ISSA Guidelines on Contribution Collection and Compliance. Furthermore, AFIP and the National Social Security Administration (ANSES) in Argentina are using ICT to develop an integrated national regoster of EEF cases and individuals who have committed social security fraud. This raises public awareness of their existence and enables the automatic application of sanctions to companies committing fraud, e.g., banning them from bidding for public contracts.