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Income tax too high, too ridiculous: Taxpayers
Vietnamese taxpayers are complaining the current personal income tax is too high compared to rising inflation, citing unreasonable tax on stipends and too low a deduction for dependents.
According to the current law, a taxable monthly income threshold begins at VND4 million (US$205) and tax is calculated progressively scaling up to 35 percent.
Taxpayers are allowed to deduct VND1.6 million ($82) for each dependent who cannot earn more than VND500,000 ($25.6) per month.
But taxpayers say the law is outdated, being approved in late 2007 and taking effect as from January 2009 when the country’s per capita income was VND1.5 ($76.9) million per month.
Vietnam’s Consumer Price Index (CPI) rose by 12.63 percent in 2007 and climbed by 22.33 percent in 2008 before slowing to 6.88 percent in 2009. The index rise reached 11.75 percent in 2010.
Considering such inflation, T., a staff at a PR company in Ho Chi Minh City’s Binh Thanh District said a person could not live on VND4 million a month.
“We normally spend two million on rents, food, electricity and water bills, transportation, phone costs, and others. How can we live with the other two million?”
H., an office worker at a company in Phu Nhuan District, who has just received a pay raise said the added money was not enough.
Besides, the VND500,000 monthly income under which an earner is eligible to be listed as a dependent - thus enjoying deduction - is too low, taxpayers complain.
“My mother gets a pension of less than VND1 million ($51.3) each month and this is not enough for her daily life. But she is not considered a dependent, as she ‘earns’ more than VND500,000 per month,” N., a deputy manager of a company in District 1, grumbled.
The VND1.6-million deduction per dependent is even not enough to buy baby milk, Hien, a mother in Phu Nhuan District, moaned.
Too unreasonable
Stipends for petrol, meals and telephone fees are even included in the taxable income.
Since the amount would cover business expenses only, they should not be considered “personal’ and thus should never be included in the Personal Income Tax, many wrote to Tuoi Tre.
T., another office worker in Phu Nhuan said she had to pay tax on fuel allowances that her company gives her each month for transportation.
It is so absurd to tax fuel fees since they are used for business purposes only, P.V.N., a marketing staff at a paper company told Tuoi Tre.
“If we are to pay tax on our fuel costs, who then will pay for our vehicles’ depreciation?”
Threshold to be raised to VND6 million ($307.7)?
Meanwhile, the Ministry of Finance recently said it was considering either raising the taxable income threshold to VND6 million or narrowing the taxable brackets.
The deduction for each dependant may also be raised from the current VND1.6 million to about VND2.4 million ($123), or three times the minimum salary.
This revision is among some amendments the ministry is drafting to submit to the National Assembly soon.
Experts’ voices
* Prices are currently soaring so the taxable income threshold should be raised accordingly, lawyer Tran Cam Chuong suggests.
* The Personal Income Tax Law establishes seven tax levels and Tran Xoa, Director of the Minh Dang Quang Law Company, believes that those brackets are too narrow.
If a man receives a monthly salary of VND10 million ($512.8), he will have to pay VND350,000 ($17.9) in tax per month if he has no dependants.
“It is relatively high.”
* Vietnam’s tax policy is so rigid, according to Nguyen Hoang Hai, General Secretary of the Vietnam Association of Financial Investors.
Because prices are rising, purchasing power lowers and hence, tax should be adjusted commensurately, he said. |
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