National Assembly approves tax exemption

Delegates at the National Assembly Standing Committee Tuesday unanimously approved the extension of a personal income tax exemption by a month.

The approval means Vietnam’s wage and salary earners will pay no personal income tax for the first six months of this year.

is continuing about whether the government should start collecting the tax in July. Some delegates to the three-day National Assembly session are arguing for a further extension of the tax exemption, while others support a tax discount or a return to the full tax rate.

Phung Quoc Hien, chairman of the National Assembly’s Department for Finance and Budget, said the tax exemption for the first six months this year would make life easier for those affected by the global economic crisis.

The decision to grant a six-month personal income tax exemption will cost the government VND6.8 trillion (US$382.7 million) this year, accounting for nearly 45 percent of the government’s forecast VND14.5 trillion ($816 million) budget deficit for 2009.

The cost of the exemption was one of the main reasons some delegates opposed a further extension. Lawmakers said an extension of the tax break would leave the budget in an even worse state and create possible financial problems for the government in years to come.

National Assembly Deputy Chairman Nguyen Duc Kien recommended the government conduct a further study into the impact of the tax exemption, with the results to be presented to the National Assembly later in the year.

Finance Minister Vu Van Ninh called for the National Assembly to also endorse a tax exemption from July this year to the end of 2010 on the income people earn from shares, copyright payments and franchises.

According to the government, the tax exemption will stimulate spending to help cushion Vietnam’s economy from the global slowdown. In April the government reduced its forecast economic growth this year to 5 percent from an earlier forecast of 6.5 percent.

The National Assembly Standing Committee is due to convene its 20th session on May 12 to review the implementation of socioeconomic development tasks, the 2008 and 2008 state budgets and the government’s final accounts for 2007.

The lawmakers are also scheduled to discuss the presence of illegal unskilled foreign workers in Vietnam and environmental pollution.

V.V.Thanh

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