Proposal to tax savings interest: The old story is "hot" again
The problem of taxing income from savings interest once again arose when the People's Committee of Can Tho City commented on the draft proposal to develop a Law on Personal Income Tax (replacement) chaired by the Ministry of Finance. Accordingly, this locality recommends only exempting personal income tax on small-scale deposits, while large-scale deposit interest rates should be included in the taxable list.
It is worth mentioning that the idea of taxing savings interest is not the first time it has appeared. Previously, in 2013 and 2017, there were some similar proposals. At that time, opinions said that if the profit reached hundreds of millions or billions of VND per year, it should be considered an investment channel such as securities, real estate, and therefore not exempt from tax.
Contrasting views
Can Tho City proposes to expand personal income tax with savings interest, only exempting small-scale savings. Meanwhile, Ninh Thuan province has proposed to continue tax exemption for deposit interest rates, government bonds and long-term investments to encourage savings and support economic development.
Currently, individuals with interest on deposits from credit institutions and foreign banks are exempt from tax. These include term deposits, non-term deposits, deposit certificates, vouchers, credit cards, etc. Meanwhile, according to current regulations, only enterprises with deposit interest must pay corporate income tax.
In the comments on the draft revised Law on Personal Income Tax, the People's Committee of Can Tho City said that it is necessary to study and expand the tax base to ensure budget revenue. Accordingly, only small-scale deposit interest rates should be exempted from tax, while large-value deposits need to be taxed as an income.
On the contrary, Ninh Thuan province proposed to keep the tax exemption policy with interest rates for savings deposits, government bonds and long-term investments. According to the province's viewpoint, maintaining tax incentives will help encourage people to deposit money in banks, ensure capital flow for the economy and create development momentum.
The Ministry of Finance said that the orientation of adjusting current tax policies is to ensure sustainable revenue sources, minimizing the integration of social policies in tax forms. However, this agency has not yet proposed a specific plan on whether to tax deposit interest or not.
Taxing income from deposit interest is not uncommon in the world. Thailand taxes bank deposit interest, China also taxes interest income, while South Korea considers interest as taxable income. However, many countries allow home loan interest deductions, considering them a special deduction when calculating personal income tax, to encourage people to own a house.
What did the Ministry of Finance say in the latest draft?
In this revised draft, the Ministry of Finance plans to add a number of deductions, such as home loan interest, to ensure fairness. However, whether or not to officially apply a tax on savings interest is still left open, because the drafting agency has not included this content in the most recent draft.
Instead, the Ministry of Finance focuses on studying the expansion of tax collection facilities in the direction of adding other incomes, such as from transferring or liquidating special assets such as phone SIM cards, internet domain names.
Tax policies always require careful assessment of their impact on society and the economy. Although expanding the tax base is considered a trend to increase revenue, the policy of taxing savings interest is still controversial, because if not thorough, it can directly affect people's savings deposit habits and capital flows mobilized in the banking system. Finding a common voice between fiscal goals and stabilizing the financial market is therefore still a challenging problem.
