The most detailed accounting of late payment of social insurance

Accounting for interest on late payment of social insurance brings practical value to businesses in effective financial management. Mastering accounting methods helps businesses optimize cash flow, ensure accuracy in financial reporting and enhance legal compliance. The following article by Long Phan will provide detailed instructions to help customers properly follow the accounting process, thereby contributing to improving corporate governance efficiency.

What is the interest rate for late payment of Social Insurance?

The interest rate for late payment of social insurance is specified in Point b, Clause 3, Article 6 of Decision 60/2015/QD-TTg. According to regulations, if the employer is late in paying social insurance (social insurance) for 30 days or more, the interest rate to be calculated for the late payment amount will be 2 times the average investment interest rate of the social insurance fund. in the previous year. Specifically, this interest rate is applied to the total amount and time of late payment.

According to Notice No. 80/TB-BHXH 2024, the average investment interest rate in 2023 is 4.36% per year, equivalent to 0.363% per month. Therefore, from January 1, 2024, the interest rate for late payment of social insurance will be applied at 8.72% per year, equivalent to 0.726% per month.

In order to avoid violating regulations on interest arising from late payment, employers need to ensure that social insurance is paid in full and on time according to the provisions of  the law. Correct implementation of this obligation not only helps protect the rights of workers but also limits unnecessary costs for businesses.

How to calculate interest on late payment of social insurance

According to Clause 1, Article 5 of Circular 20/2016/TT-BTC, calculating interest on late payment of social insurance (social insurance) for late payment of social insurance, late payment interest is determined monthly according to the following formula:

Amount of interest receivable arising in the month (n) = Accumulated late payment amount at the end of the month (n-2) x Late payment interest rate (%/month)

In the formula above:

• (n): is the month in which late payment interest is determined;
• (n-2): is the month immediately preceding 02 months of month (n);
• Late payment interest rate (%/month): calculated based on the average monthly interest rate announced by the Vietnam Social Insurance Agency at the beginning of each year. This interest rate is specifically specified in Point c, Clause 3, Article 6 of Decision 60/2015/QD-TTg.

This calculation is to encourage units to fulfill their social insurance payment obligations on time, avoiding incurring interest and penalties. At the same time, this method also protects the rights of employees by ensuring that the social insurance fund always has enough financial resources to pay social insurance benefits.

How to calculate interest on late payment of social insurance?

Interest on late payment of social insurance (social insurance) is an expense arising from the late payment of an enterprise’s social insurance obligation. However, this expense does not directly serve production, business or enterprise management activities. Therefore, businesses need to account to 811 (other expenses) to accurately record actual profits.

According to Article 4, amending and supplementing Article 6 of Circular 78/2014/TT-BTC (amended and supplemented in Clause 2, Article 6 of Circular 119/2014/TT-BTC and Article 1 of Circular 151/2014/TT -BTC), expenses due to fines for late payment of social insurance are not included in deductible expenses when determining income subject to corporate income tax (CIT). Therefore, when finalizing corporate income tax, businesses need to exclude this cost from deductible expenses to ensure correct calculation of taxable income.

When receiving the penalty decision from the social insurance agency:

The accounting entry reads as follows:

• Debit Account 811
• There is an account 3388.

When making payment of fines and interest on late payment of social insurance:

The accounting entry reads as follows:

• Debit Account 3388
• There are accounts 111, 112.

Notes when finalizing corporate income tax:

• When preparing the CIT finalization declaration, the enterprise must exclude interest and fines for late payment of social insurance from deductible expenses by recording it in item B4 on the CIT finalization declaration (Form 03/TNDN). This is to comply with regulations and avoid being adjusted by tax authorities during the tax settlement inspection process.

Consulting services and guidance on accounting for late payment interest on social insurance

Long Phan provides professional consulting services on social insurance accounting (social insurance) with the participation of a team of experienced and highly specialized experts in the fields of accounting, tax, and social insurance. We provide the most comprehensive and effective solution, helping businesses comply with regulations and optimize costs related to social insurance.

Long Phan’s services include:

• Consulting on the process of accounting for interest on late payment of social insurance.
• Support for tax declaration and finalization.
• Review accounting books related to social insurance.
• Business representatives work with the social insurance agency.
• Consulting on handling problems related to social insurance.
• Update new regulations on social insurance and taxes.

Accounting for interest on late payment of social insurance will become simple and effective with the companionship of a team of experts. Customers who need detailed consulting support on accounting for late payment interest on social insurance and related issues, please contact Long Phan via the hotline 0906735386. With dedication and professionalism, Long Phan is committed to providing the most optimal solution, helping businesses comply with regulations and save costs effectively.