Vietnam may increase the personal income tax threshold to VND9 million (USD431.44) from current a VND4 million under a draft law on the issue.
Increase in income tax threshold may result in lower state budget revenues
Minister of Finance Vuong Dinh Hue, on behalf of the government, delivered the draft law on personal income tax to the National Assembly on October 26.
According to the proposal, taxpayers may be allowed to deduct VND3.6 million for each dependent they have to take care of, a rise on the current rate of VND1.6 million. Dependents are those who earn less than VND500,000 a month.
When goods prices increase by 20%, the government would propose the NA’s Standing Committee to adjust the tax, the regulation said.
The government said if the document is approved, the number of taxpayers would decrease from a current 3.87 million or 4.4% of the population to just one million people. The figure is relatively modest compared to the number of people of working age.
Moreover, the regulation would result in a decrease in state budget revenues by VND5.2 trillion (USD249.28) in 2013 and VND13.35 trillion (USD640 million).
Concerning tax collection, there have been different viewpoints on income from securities.
Most members of the NA’s Finance and Budget Committee said that the government should levy taxes on incomes derived from securities investment. Meanwhile, some others proposed an exemption in order to encourage the activity and foster the market’s development.
Some members of the committee said that the current tax table was too easy on people with high incomes. They proposed adjusting the current seven tax bands to five, at 5%, 10%, 15%, 25% and 35% rates.
Most opinions agreed with the government’s proposed timetable of July 1, 2013. However, others suggested applying it from January 1, 2014, which is expected to help increase state budget revenues by over VND6 trillion (USD287.63 million).
Some others recommended applying the new tax rate from January 1, 2013 but this would result in a decrease of around VND6 trillion in the state budget, compared to the application from July 1, 2013.
