Proposal to increase taxable revenue threshold for business individuals
The Law on Personal Income Tax (PIT) is in the process of being amended with many notable proposals from ministries, branches and localities. One of the issues that has received many comments is the adjustment of the taxable revenue threshold for business individuals.
Currently, individuals with a revenue of over 100 million VND/year must pay personal income tax. However, many localities such as Quang Nam, Khanh Hoa, Ha Tinh, Bac Giang, Tra Vinh, Hue, Da Nang have proposed raising this level to 200 million VND/year to ensure consistency with the new Law on Value Added Tax (VAT).
According to the document synthesizing opinions of the Ministry of Finance, many provinces and cities have made specific recommendations on adjusting the taxable revenue threshold to suit the actual situation.
The People's Committees of Quang Nam, Khanh Hoa, Ha Tinh, Bac Giang, Tra Vinh, Hue, and Da Nang provinces all simultaneously proposed to amend the content at Point 1, Article 3 of the draft Law on personal income tax in the direction of: "Income from business specified in this Clause does not include income of business individuals with a revenue of VND 100 million/year or less" to "Income from business specified in this Clause does not include income of business individuals with a revenue of VND 200 million/year or less".
The reason given by localities is to synchronize with the new Law on VAT passed by the National Assembly. Accordingly, the new Law on VAT stipulates that the revenue of households and individuals doing business under VND 200 million/year is not subject to tax. Keeping the personal income tax tax threshold at 100 million VND/year will cause inconsistency between the two tax laws and create an unreasonable tax burden for small business individuals.
The People's Committee of Tra Vinh province believes that in the current economic context, business operation costs have increased due to inflation, raw material prices and labor costs have all tended to escalate. If the tax rate is not adjusted appropriately, small business households may suffer and have difficulty maintaining operations.
The People's Committee of Bac Giang province emphasized that the current taxable revenue level is outdated compared to the economic development rate, especially in urban areas. Raising the tax rate to VND200 million/year not only helps reduce tax pressure for business people but also violates the policy of promoting individual economic development.
Proposal to assess budget impact
The Ministry of Public Security has also commented on this issue. This agency believes that if the taxable revenue is increased to 200 million VND/year, it is necessary to clearly assess the impact on state budget revenue.
According to the Ministry of Public Security, there needs to be a specific assessment of the number of business households that will no longer be subject to tax and the level of decrease in budget revenue. The Ministry of Public Security also noted the possibility that some individuals may take advantage of this regulation to evade taxes by dividing their revenue among many business households. Therefore, the Ministry proposes to have more effective tax management measures to avoid budget losses.
Carefully review to avoid creating legal loopholes
The Ministry of Justice also agreed with the proposal to adjust the tax rate, but emphasized that it is necessary to ensure consistency with current legal regulations. The ministry believes that without a suitable control mechanism, some business households may circumvent the law to avoid paying taxes, making it difficult for state agencies to manage taxes. Therefore, the Ministry of Justice recommends that the Ministry of Finance carefully review to avoid creating legal loopholes.
The Ministry of Finance, as the drafting agency, said that this is the stage of developing the outline, focusing on clarifying the problems and shortcomings that need to be revised. Whether to increase the taxable revenue threshold to 200 million VND/year or not is still in the process of studying and will be submitted to competent authorities for consideration when the draft Law on personal income tax is included in the National Assembly's Law and Ordinance Development Program.
The Ministry of Finance also affirmed that it will continue to listen to opinions from ministries, branches and localities to ensure tax regulations are consistent with economic reality, balancing the interests of taxpayers and budget revenue.
