Financial centers in Ho Chi Minh City and Da Nang are expected to be established and operated this year. In the draft Resolution on the establishment and operation of financial centers, the Ministry of Planning and Investment proposed that managers, scientists, and experts with high professional qualifications in this area be exempt from personal income tax.
Other groups of subjects who also have personal income arising from management agencies or members of financial centers are also exempt from tax until the end of 2035. In the following years, the ministry proposed to reduce personal income tax by 50%.
This agency believes that exempting personal income tax is necessary to attract a force of highly qualified scientists to Vietnam, when the country needs to attract talents to the financial sector to build and operate financial centers.
However, the Ministry of Finance did not support the above proposal of the Ministry of Planning and Investment.
The current Law on Personal Income Tax does not stipulate tax incentives applicable to specific subjects. The law only stipulates tax exemption for certain types of income with the aim of ensuring social security.
Therefore, the Ministry of Finance assessed that the proposal to exempt tax for managers, scientists, and highly qualified experts working at financial centers is unreasonable and dispersed. The Ministry argues that, "not all workers working at financial centers are attractive".
According to the ministry, this regulation reduces the role of personal income tax in implementing policies on income regulation and redistribution, gradually narrowing the income gap between individuals in society.
"Preferential policies (if any) need to be selectively applied, focusing on attracting highly qualified human resources in some areas of the economy" - the Ministry of Finance commented.
In response to the above opinion, the Ministry of Planning and Investment said that it will still report to competent authorities because the tax policies proposed in the draft are based on international experience in developing financial centers. The project approved by the Politburo includes contents related to the issuance of tax incentives to attract investors and high-quality human resources for financial centers.
At the meeting on February 22 organized by the Ministry of Justice to appraise the proposal to develop a National Assembly Resolution on the establishment and operation of financial centers, a representative of the Ministry of Finance said that there must be an incentive mechanism for superior taxes and fees for financial centers.
However, the drafting agency needs to continue to coordinate with the Ministry of Finance to determine the preferential level according to the orientation of the Party and State and in accordance with regulations on personal income tax and corporate income tax.
The document of the Ministry of Planning and Investment sent to the Ministry of Justice for appraisal and the Ministry of Finance for comments was signed on February 18 - one day before the National Assembly pressed the button to approve the merger of the two Ministries of Finance and the Ministry of Planning and Investment. The two units will merge into the Ministry of Finance from March 1.
