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No change in PIT calculation: MOF
The Ministry of Finance (MOF) has confirmed that there will be no change in the calculation of personal income tax (PIT) in the ministry’s circular guiding the implementation of the PIT law.
The PIT Law, ratified by the National Assembly, stipulates the exemption of VND4mil/month per tax payer, VND1.6mil per dependent (spouse, child and relative). However, arguments have been raised recently that the exemption level is out of date in the context of skyrocketing price increases. Some people have proposed the MOF reconsider the exemption level.
Nguyen Van Phung, Deputy Director of the Tax Policies Department under MOF, has confirmed that there will be no change with the tax rates and exemption amounts.
Phung said that taxpayers have nothing to complain about as the exemption amounts prove to be suitable in Vietnam’s condition. In principle, PIT should be assessed on the first VND of income, but Vietnamese taxpayers enjoy exemption on the first VND4mil of income and the deduction of VND1.6mil/dependent.
The PIT Law stipulates that the threshold for PIT is VND4mil/month, but in many cases, PIT payers are those who have monthly incomes much higher than VND4mil/month. If a labourer has the monthly income of VND5.6mil and he has one dependent child, he will not have to pay tax because he can enjoy the deduction of VND4mil for himself and VND1.6mil for the child.
Phung said that people will prefer the PIT Law to the currently applied High Income Tax Ordinance, as a lot of people who have to pay tax under the currently applied ordinance may not have to pay tax under the PIT Law.
For example, a labourer who has the monthly income of VND6mil/month and two children, now has to pay VND100,000 in tax.
However, under the new PIT tax, the labourer will only have to pay tax if he has the monthly income of over VND7.2mil (VND4mil deduction for himself and VND 1.6mil x 2 = 3.2mil for two children).
Phung stressed that the tax exemption amounts prove to be very ‘generous’, and are rarely found elsewhere in the world. The taxable income deduction is allowed for relatives as well (grandparents, aunts, uncles), provided that these people are not able to work or invalids.
Phung has also said that some taxpayers will make use of the loopholes to evade tax (two taxpayers declare deductions for the same children). However, he said that the tax payment will be supervised by the whole of society. Every member of society has to raise his voice when he finds someone refusing to pay tax.
VNN
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