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Low earners to get tax break
People with incomes lower than VND5 million (US$232) would be exempted from personal income taxes if the National Assembly approved the Finance Ministry's proposal to adjust taxes.
Three subjects would be exempted from taxes including income earners under $232 with no dependants, those with incomes lower than VND6.6 million ($279) and have a dependant and those with incomes lower than VND8.2 million ($381) and two dependants.
Deputy Minister Do Hoang Anh Tuan said the plan would be submitted to the National Assembly this July.
The Law on Personal Income Tax which came into effect in 2009 sets a taxable income threshold at VND4 million ($186) per month and allows taxpayers to deduct VND1.6 million ($74) for each dependant.
Currently, around 250,000 people are eligible for the exemption to a maximum level of VND50,000 ($2.3) per month. The number of exempted people under the new system would account for 36 per cent of total taxpayers. Tax payments to the State budget would be reduced by VND3 trillion ($139 million).
Tuan said the proposal was under consideration as part of an effort to ease difficulties for families caused by rising prices.
Nguyen Minh Phong, Head of the Ha Noi Institute for Socio-economic Development and Research's Economic Development Department said the adjustment was vital for social welfare reasons as many people said the current tax thresholds were too low in the context of rising inflation.
"The best way to adjust the tax exemption policy is to ensure that both low income earners and the State's interests are sufficiently balanced," Phong said.
Sharing this view, Deputy Rector of the University of Labour and Society Le Thanh Ha said the Government should introduce a tax break for earners of less than $232 per month, because if the tax exemption plan wasn't introduced, the most vulnerable would be subject to the most difficulties in terms of higher prices.
Cao Si Kiem, a member of Advisory Council for National Monetary Policies said the extension should be applied to people with income lower than VND6 million ($279) without dependants.
The ministry also proposed a five per cent exemption on taxes for incomes from dividends and 0.1 per cent on transaction value of stock investments.
It said the five per cent of taxes on stock transactions was too high given the gloomy situation, adding that interest from savings were exempt from income taxes, which was unfair on stock investors.
The ministry was expected to hold a meeting among relevant agencies to complete the exemption plan by the end of this month.
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