Hanoi Lawyer - No income tax relief this year
Income tax payers in Viet Nam would receive no tax breaks this year as the current Personal Income Tax Law won't be adjusted until next year, said Cao Ngoc Xuyen, deputy chairman of the National Assembly's Financial and Budgetary Committee, during an interview with Tuoi Tre (Youth) newspaper.
There is information saying the Personal Income Tax Law will be amended this year and a number of deputies have supported the plan?
I know there exists such information but the NA's Financial and Budgetary Committee along with the Ministry of Finance, worked together to find out the answer. The ministry hoped to complete the amended law to submit to the NA for approval by the end of next year (at the 4th session of the 13th National Assembly).
Some local newspapers were informed that the Ministry of Finance would exempt bachelors with monthly incomes of less than VND5 million (US$238), tax payers with one dependant earning less than VND6.6 million ($314) a month, and tax payers with two dependants earning no more than VND8.2 million ($390) per month, from paying personal income tax. Is it true?
As far as I know the Ministry of Finance has already submitted the proposal to the Government for consideration at the end of March this year. The Government discussed the proposal but did not come to a conclusion. For this reason, the proposal has not yet been submitted to the NA's Financial and Budgetary Committee.
Should amendments to the Personal Income Tax Law be timely as to promote the strength of people, especially in the face of a difficult economy and high inflation rates?
Personal Income Tax Law is different from Income Tax laws applied on high income earners. It is under the spirit that people with certain income rates, must all pay tax to the State. By the time the law came into effect in 2009 when the average income remained low, at less than VND2 million ($95), the Ministry of Finance proposed the taxable income threshold at VND4 million ($194). Besides this, the ministry also regulated deductions for each dependent.
Since 2009 till now the consumer price index has increased, adversely impacting on the lives of not only masses of people, but also personal income tax payers.
In my opinion, the current taxable income threshold is not too irrational. The Ministry of Finance already calculated to have more and more tax payers. Taxable income thresholds will not be maintained for good as a matter of course, but it should be applied over a period of time.
Do you agree that it is necessary to increase the current taxable income threshold after some time?
The Ministry of Finance reported the existing Personal Income Tax Law had exposed some shortcomings. We agreed that amendments and supplements to the law will be presented to the National Assembly for consideration and approval by the end of next year.
I also realise that the current taxable income threshold will no longer be appropriate in coming years. The National Assembly will decide if it is necessary to raise taxes and how much it should be increased. But I think it is essential to maintain the rate within the next five years rather than to change it after every fluctuation in a short time.
Many experts suggest not to base taxable income thresholds at VND4 million ($194) or VND5 million ($240) per person per month to levy personal income tax. Instead, calculations must be about ten times the basic salary, or about VND8.3 million ($395) per capita per month?
Few countries have applied personal income tax based on basic salary. They usually regulate certain income rates that people must pay personal income tax on. I think the calculation of taxable income threshold must be based on different parameters, including average income per capita as an important factor
There is an opinion that the calculation of deductions on each dependant must be varied between the lowland and mountain areas?
Market prices in Ha Noi and HCM City are much higher than those in other localities. However, the calculation of personal income tax also has a purpose of lessening widening gaps between the rich and the poor.
There is a proposal that the NA should only approve a framework regulation on personal income tax and then the Government should regulate it in detail to make it more flexible?
It is in the people's interests when it comes to tax law. The Constitution, meanwhile, regulates that the NA will decide everything which influences the people's interests. It is the role of the Government to instruct people to declare tax procedures and pay tax. The NA, meanwhile, must regulate other specific regulations.
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