The Ministry of Finance (MOF) has recently made two options on revision of the Personal Income Tax (PIT) Law.
|A reporter from Saigon Marketing newspaper raises questions about the draft Law revising five tax laws __Photo: Pham Hau/VNA
For both options, the MOF proposes reducing the number of tax grades to five from the current seven and keeping unchanged the levels of family circumstance-based deductions for taxpayers. The difference between the two options lays in the tax rate at each grade.
Specifically, under the first option, the tax rate of 5 percent would apply to monthly taxable income amount of up to VND 10 million. The taxable income amount of between above VND 10 million and VND 30 million, between above VND 30 million and VND 50 million, between above VND 50 million and VND 80 million, and above VND 80 million would be subject to the tax rates of 15 percent, 25 percent, 30 percent, and 35 percent, respectively.
With this option, according to the MOF’s calculations, persons who currently pay PIT at grade 2 or higher will benefit. For example, a person with a monthly taxable income of VND 10 million would receive a reduction of VND 250,000 per month while those earning VND 30 million can save VND 850,000.
As per the second option, the tax rates of 5 percent and 10 percent would be imposed on the monthly taxable income amount of up to VND 5 million and between above VND 5 million and VND 10 million, respectively. Meanwhile, the taxable income amount of between above VND 10 million and VND 40 million, between above VND 40 million and VND 80 million, and above VND 80 million would be subject to the tax rates of 20 percent, 30 percent, and 35 percent, respectively.
According to economist Bui Quang Tin, the first option is better because it would be less painful for low-income taxpayers.
“Under the second option, those with a monthly taxable income of VND 10-40 million would pay PIT at the rate of 20 percent. The current law levies a tax at just 15 percent on people with a monthly taxable income of VND 10-18 million. Against the backdrop that a large percentage of employees in Vietnam are paid at this level, the second option would create a heavier burden on more people,” Tin was quoted by the VnExpress online as saying.-