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Unnecessary to reconsider PIT threshold
Nguyen Hoang Anh, Deputy Chairman of the National Assembly Economics Committee, said that if the inflation rate remains overly high, it will be necessary to reconsider the personal income taxation threshold, now at VND4mil/month. However, he said that it is now not the right time to make a change.
How do you think the PIT policy will affect the lives of labourers?
In small- and medium-size enterprises, the number of people who have monthly incomes of VND5-6mil to be subject to PIT proves to be very small. With their current incomes, PIT payers will have to pay VND100-200,000 a month on average, not worth mentioning, while the majority of labourers are not subject to the tax.
Experts believe that it is necessary to amend the currently applied tax threshold of VND4mil as incomes prove to be low in the context of high inflation, while PIT aims to impose tax on high-income earners. What is your opinion about that?
The law compilers, when drafting the law, understood that inflation might be higher in accordance with economic development. However, no one could imagine that inflation would be much higher than the forecast.
In principle, a re-consideration of the taxation threshold can be done in the context of sharp price increases. However, I don’t think that now is the right time for this.
Why not?
We should not seek perfection in all issues, especially in the current period, when there are not many tax payers. Only high-income earners now have to pay PIT.
Article 30 of the High Income Tax Ordinance stipulates that if the inflation rate far exceeds 20%, the taxation threshold will be reconsidered. What about the PIT Law that will go into effect on January 1, 2009?
When the PIT Law becomes effective, the currently applied ordinance will be abrogated. Even if the tax law does not stipulate this, the National Assembly will consider this.
However, I still have to repeat that in the current conditions, maintaining the taxation threshold at VND4mil a month will not cause big impacts; those who have the incomes of VND4mil/month and higher can withstand the price storm.
If the threshold for taxation remains unchanged, how much will the state collect from PIT?
Some VND10tril a year. In fact, this sum proves to be modest if compared to the total state collection. However, this source of income has been playing an important role in helping increase social welfare funds.
VNN
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