ECONOMYBANKING & FINANCE

Proposal to increase personal income tax basing on salaries and wages

Updated at Saturday, 06 Jan 2018, 14:23
The Hanoitimes - Vietnam`s Ministry of Finace put it in the latest proposal on tax amendment.
According to the proposal on adjusting six kinds of tax before reporting to the Prime Minister for consideration and submission to the National Assembly in 2018, Ministry of Finance proposes to amend and supplement the Law on Personal Income Tax with two tax calculation options basing on wages and salaries.
Specifically, under option 1, Ministry of Finance proposed to reduce the number of tax rates to 5 levels instead of the current 7 levels.
However, the tax rate in level 2 shall be increased from 10% to 15% while level 3 is from 20% to 25% and level 4 from 28% to 30%.
Option 1
Option 1
With this plan, according to calculations of Ministry of Finance, budget revenue will decrease by VND 1.300 billion. Accordingly, individuals who are currently paying taxes at level 2 or above will benefit.
Specifically, individuals with a taxable income of VND 10 million / month will receive a reduction of VND 250,000 / month while those with VND 30 million / month can save VND 850,000 / month.
Under Option 2, the tax level shall be reduced to 5. Level 3 to 6 reduce to only two level, so those in this level will have to pay more taxes.
Option 2
Option 2

Accordingly, a taxable income of VND15 million / month will have to pay an additional amount of VND 250,000 / month. Individuals with a taxable income of VND 30 million / month will pay VND 400,000 / month more while those with VND 50 million a month shall pay VND 500,000 a month more, and VND 80 million / month will pay VND 650,000 a month more.
Total budget revenue is estimated to increase by VND 500 billion.
Under this proposal, Ministry of Finance has remained the proposed value added tax to 12% instead of 10%.
Current tax brackets
Current tax brackets

The objective of increasing taxes is to offset the budget due to declining revenues when Vietnam sharply cuts import and export taxes under the commitments made by FTA.
Cam Anh