Expected reduction of personal income tax for people with income from salaries and wages

The draft Law on Personal Income Tax (amended) has just been completed by the Ministry of Finance and sent to the Ministry of Justice for review.

The draft proposes 7 groups of revised contents and 3 new groups of additional contents. In particular, the progressive tax schedule (for income from salaries and wages) is amended to reduce the number of tax rates from the current 7 to 5. The Ministry of Finance proposes 2 options for calculating new personal income tax.

Specifically, both options have the same first two steps: step 1 (with the first 10 million VND of taxable income, the taxpayer is subject to a tax rate of 5%) and step 2 (with the next 20 million VND of income from 10 to 30 million VND), the tax rate is 15%.

The difference starts from the third step. In option 1, the steps are quite close to each other; in which step 3 (from 30 - 50 million VND), the tax rate is 20%. Step 4 (from 50 - 80 million VND), the tax rate is 30% and step 5 (over 80 million VND), the tax rate is 35%.

Option 2 has more extended steps. Specifically, step 3 (from 30 - 60 million VND), the tax rate is 25%; step 4 (from 60 - 100 million VND), the tax rate is 30%. Step 5, also the highest step (over 100 million VND), the tax rate is 35%.

Thus, in general, people with income from salaries and wages will have their personal income tax reduced compared to present, but option 2 is more beneficial for taxpayers with taxable income from 30 million VND/month or more.

The Ministry of Finance believes that reducing the number of tax brackets is aimed at simplifying the tax schedule, making it easier for taxpayers to implement. At the same time, adjusting the income gap in higher tax brackets will ensure more reasonable regulation for high-income earners, in line with international practice.

The draft also expands the tax base for new types of income, thereby adding income from agency, brokerage, business cooperation with organizations, and especially income from e-commerce and digital platform business.

Adding a new group of taxable income, including previously unregulated income such as income from transferring the Vietnamese national internet domain name ".vn"; income from transferring digital assets (virtual assets, encrypted assets); income from transferring auctioned car license plates... At the same time, the scope of income from inheritance and gifts is also expanded, not only limited to securities, capital, real estate and assets that must be registered as at present, but will be expanded to "some other assets as prescribed by the Government " to cover all types of inheritance and gifts of great value that many countries have applied tax collection.

On the other hand, the draft proposes to study and adjust the family deduction level for taxpayers and dependents to better suit the new context. The specific level will be considered and decided by the National Assembly Standing Committee in the coming time to suit the socio-economic situation. The draft also proposes to raise the taxable income threshold from VND10 million to VND20 million for income from winnings, inheritances, gifts, copyrights, and franchises.

MR. PHUONG

Source: https://www.sggp.org.vn/du-kien-giam-thue-thu-nhap-ca-nhan-cho-nguoi-co-thu-nhap-tu-tien-luong-tien-cong-post811484.html