16:39: Conclusion of the workshop, Associate Professor. Dr. Bui Duc Tho - Party Committee Secretary, Chairman of the Council of the National Economics University - shared:
Today's workshop recorded many valuable presentations, reflecting multi-dimensional perspectives from experts, scientists, businesses, as well as reporters and press agencies. These opinions not only help synthesize practical approaches but also reflect the voice of the people in the process of perfecting policies.
The Organizing Committee will synthesize all opinions and proposals at the workshop, research and send them to competent authorities, in order to contribute to building a more reasonable tax policy, ensuring fairness between the State, businesses and people. The consultation of international experience needs to be carried out on the basis of being consistent with Vietnamese practice, ensuring the rights of businesses and people in a transparent and effective tax system. Policy-making agencies have also listened to and accepted opinions from many sides. The most important goal is to build a fair tax policy system that harmonizes the interests of the State, businesses and people. The consultation of international experience needs to be carried out on the basis of being consistent with Vietnamese practice, ensuring the rights of businesses and people in a transparent and effective tax system.
16:10: The reporter asked about how to unify the number of family deduction increases, and the workshop proposed for which level, Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance, National Economics University said:
Currently, individual business households with a revenue of less than VND 100 million/year are exempt from tax. From January 1, 2026, this threshold will be raised to VND 200 million/year, meaning that business households with revenue below this level will not have to pay VAT and personal income tax.
When the income range of workers is determined, most people with average incomes will not be subject to tax. The goal of tax reform is to reduce the burden on employees, helping to regulate income more appropriately. However, due to the significant income gap between regions, applying a fixed family deduction level by region may not be reasonable.
In principle, the average overall cost is an important factor in determining the tax rate. However, the ultimate goal of the tax system is still to target people with high incomes, ensuring fairness in tax obligations, without creating more pressure on the group of workers with average and low incomes.
16:05: Need to study adjusting the highest tax rate reduction
Associate Professor, Dr. Le Xuan Truong - Head of the Tax Department, Academy of Finance:
Due to the changes in the socio-economic situation in recent times, this year we need to adjust the family deduction to increase to suit the conditions and living standards. The current tax payment schedule is too tight, regulating unreasonably between people with different incomes, especially for people with average incomes. It is necessary to adjust the gap between levels and study the adjustment to reduce the highest tax rate accordingly. Reducing the highest tax rate can attract high-quality human resources.
Ms. Nguyen Thi Cuc - President of the Tax Consulting Association:
The current tax system is complex at many levels but creates fairness. However, the total current PIT tax rate is much higher than corporate income. Corporate income tax is currently 20% and also has many incentives. I think we need to redesign the tax table, reduce the highest tax rate by 35%. Extend the gap by step to ensure the most fair level of personal income regulation.
16:00: Ms. Nguyen Thi Cuc - President of the Tax Consulting Association - said:
Because personal income tax is related to family deductions, if the CPI increases by 20%, it must be adjusted. Looking at the family deduction, if it increases to 20 million, it will only benefit those with an income of less than 20 million VND/month, people with a high income will still be the same.
After family deduction, from 10 - 18 million VND to pay 15%, 18 - 32 million VND to pay 20%... Thus, how should we do to reduce the step gap? In the Law on personal income tax, it is necessary to conduct a comprehensive study, the family deduction level is a part, the market share tax structure is extremely important. Accordingly, it is necessary to study the Comprehensive Law on personal income tax, not to cut it into sections or only amend each level of family deduction.
15:58: Taxing second homes - creating social justice, reducing risks for the economy, Dr. Nguyen Tri Hieu - Director of the Institute for Research and Development of the Global Financial and Real Estate Market - said:
US citizens are subject to tax on first homes. The tax authority will use the value when buying real estate to tax. Each year, the tax authority may return to check the taxable value on that basis. However, that is a local tax, not a state or federal tax. That tax rate will be about 1-3%/real estate value. The first house, if used for living, still has to pay tax. However, the interest paid to banks when borrowing real estate is deducted from the non-taxable income. For all secondary real estates, they are subject to normal tax, without incentives.
In Vietnam, the first real estate tax can be considered because we are encouraging people to settle down and make a living. However, a second home should be taxed because those with a second home are often high-income people. Taxation will create social justice. At the same time, it will avoid speculation. Many Vietnamese tycoons buy real estate to "hoard goods" waiting for prices to increase before selling. Taxing second real estate is reasonable to ensure fairness for society as well as increase tax revenue for the country, minimizing risks for the economy.
1.53: Associate Professor, Dr. Phan Huu Nghi: First of all, I think that in the first year of issuing personal income tax, the goal is to target high-income people. As I have just explained, what is the high income level? For example, the average income per capita in the economy is 4,600 USD. If everyone reaches this level, it means absolute justice. However, in reality, social distribution has never been like that.
High is not about going above the per capita income threshold, but high here must go beyond the general level that everyone has. So what is the common level that everyone has? About 8,500-10,000 USD, which is double; converted to about 20 million VND.
With the current 11 million, people are saying it is not good, for a year it is 132 million VND/year, converted to USD is 50,000 USD. So, is it clear now that our 11 million is above the average income per capita of 4,600 USD? From there, we can see where the income is "fashionable". I propose an income level if there are detailed statistics on the income range. Of course, we must rely on CPI, average income per capita, minimum wage, regional salary, regional salary... Why have we set the levels of 11 million, 18 million or 20 million, 25 million, then we have eliminated all taxable subjects, only keeping high-income subjects. Therefore, our point of view is where there is an income statistic, from which to draw the line.
1.53: Discussing inheritance, gift and real estate taxes, Associate Professor, Dr. Le Xuan Truong - Head of the Tax Department, Academy of Finance said that tax should be exempted for inheritance and gift transactions between parents, spouses and children. However, it is possible to consider narrowing the scope of inheritance and asset tax by setting a taxable threshold suitable to socio-economic conditions. This threshold can be 5 billion, 10 billion or higher to ensure fairness, especially for large inheritances from high-income individuals left for the next generation.
For real estate, according to international practice, the first registration tax (one-time collection) or annual tax can be applied. For example, in the UK, when registering for a second real estate, the owner must pay an additional 30% tax. These are international experiences that can be cited in the process of building inheritance and asset tax policies in Vietnam.
Dr. Nguyen Tri Hieu also added an example of tax policy in the US, where real estate tax is assessed annually based on the market value of assets. If the real estate value increases, the tax rate will also be adjusted according to the annual assessment. This is a flexible mechanism, accurately reflecting the actual value of assets over time.
15:50: Responding to a discussion question, Ms. Dinh Thi Thuy - Vice Chairwoman of the Board of Directors of MISA Joint Stock Company said:
MISA technology will help declare and settle personal income tax transparently, accurately and effectively:
- For workers: Simplify paperwork and minimize the risk of errors in tax declaration.
transparently monitor taxable income, taxable income, tax deductions from monthly salaries and wages due to data connection between tax authorities and enterprises.
- For businesses
Saving time and costs: Automating tax declaration, tax calculation and salary processes helps businesses perform work quickly and accurately.
Minimize errors: Tax declaration and tax settlement are synchronized directly with employees' salary information and paid taxes directly to tax authorities, minimizing errors and risks of being fined for false declaration or late tax payment.
Providing quick and accurate tax deduction documents to employees, helping them to settle taxes at the end of the year without any difficulties.
However, the current problem, according to Ms. Dinh Thi Thuy, is: For individuals who are free, are state agencies required to declare personal income tax transparently and publicly, or not for them to declare freely?
For business organizations, are they determined to include information technology and AI in the declaration and settlement of personal income tax, to increase productivity?
15:35: Answer the discussion question: In the context of public opinion recently discussing the issue of taxing assets, specifically as "heritage tax" and "the second real estate tax" (or in other words, taxing those who own many properties), from the perspective of the Tax Consulting Association, Ms. Nguyen Thi Cuc - President of the Tax Consulting Association - said:
Property tax has been discussed, but not limited to secondary real estate or housing. I do not agree with the tax on second homes, because the area and value of each person's home are different. Instead, property tax should be designed as a separate tax policy, applied not only to real estate but also to valuable assets such as houses, ships, and air tickets. However, it is necessary to eliminate depreciated assets according to regulations on fixed assets. Property tax can be calculated as a ratio on revenue instead of being measured at the value of the property. Regarding savings deposits, in my opinion, tax should not be applied at the present time. The development of a new tax code on property tax is necessary to ensure compliance with the reality and goals of regulating the economy.
15:10: Dr. Nguyen Tri Hieu - Director of the Institute for Research and Development of Global Financial and Real Estate Markets
Recently, the proposal to tax bank deposit interest has become a controversial topic among experts and public opinion. There are many supportive views that this policy will help increase budget revenue and ensure tax fairness between different income groups. On the contrary, many opinions are concerned that taxing deposit interest can reduce people's savings motivation, negatively affecting the banking system and the macro economy.
This paper will focus on analyzing the legal and economic basis for taxing deposit interest, assessing the impact of this policy on the financial system and people's savings behavior, and expanding discussions on real estate tax, bond tax and securities in the context of Vietnam. On that basis, propose appropriate solutions to ensure that if applied, tax policies will not disrupt the financial market, while still achieving the goal of increasing budget revenue in a sustainable and fair manner.
Legal and economic basis of deposit interest tax policy
In addition to international law and practice, in Vietnam, bank deposit interest is currently not subject to personal income tax. This is regulated under the Law on Personal Income Tax, in which income from deposit interest at banks and credit institutions is exempted from tax to encourage savings, ensure capital for the banking system, thereby indirectly promoting investment and economic growth.
However, taxing deposit interest is not a strange policy in the world. In many countries such as the US, UK, and Japan, deposit interest is considered a form of passive income and subject to tax at the personal income level. For example, in the US, income from bank deposit interest is included in total taxable income and must be declared when paying personal income tax. US banks also implement a policy of Withholding tax, which is to deduct tax directly from interest before paying to customers, helping to control taxes more closely.
Currently, according to the US Tax Law, interest/savings deposit accounts for interest from 10-37%, applied progressively at 7 levels with interest rates from under 11,925 USD and over 626,350 USD.
However, the application of deposit interest rates in Vietnam needs to be considered in the current legal context. According to the provisions of the Law on the State Bank of Vietnam, the banking system still plays a key role in providing capital for the economy, because the financial market has not developed strong enough to completely replace the role of bank credit. This means that deposits from residents are still an important source of capital to help banks maintain liquidity and provide credit to businesses and households.
Changing tax policies will require synchronization with the financial system and national monetary policy. If deposit interest rates are taxed without reasonable adjustments in liquidity management, the banking system may be under great pressure to mobilize capital, forced to increase interest rates, leading to higher credit costs for businesses and people.
Economic factors and savings behavior:
In economics, real interest rates play an important role in personal savings decisions. When bank deposit interest brings attractive profits, people tend to maintain and increase savings, thereby contributing to stabilizing capital for the financial system. However, if deposit interest is taxed, net profit after tax will decrease, affecting the attractiveness of the banking savings channel.
The savings theory shows that taxes can affect financial behavior in two directions. On the one hand, the alternative effect occurs when real profits are reduced, causing people to prioritize consumption or seek other forms of investment instead of continuing to accumulate assets in banks. On the other hand, the income effect causes some people, especially high-income groups, to increase savings to compensate for lost income due to taxes.
The impact of deposit interest rates depends on the economic structure and financial habits of each country. In countries with developed financial systems such as the US, Germany or Japan, people have many investment options and are supported by social security policies, so deposit interest rates do not significantly affect savings decisions. Meanwhile, in Vietnam, where bank deposits are still an important asset accumulation channel to prevent risks, taxation can change individuals' financial strategies and lead to capital flow shift in the economy.
Tax policy design needs to take into account the socio-economic characteristics of Vietnam, avoiding creating a big shock to people's savings habits. At the same time, there should be supplementary mechanisms to ensure fairness in the tax system, limit the accumulation of passive assets without disrupting the financial system.
The impact of taxing deposit interest on the financial system
The current Vietnamese banking system still plays a core role in providing credit to the economy, because the market has not developed strong enough to completely replace the role of banks. Deposits from residents are an important source of mobilization to help banks maintain liquidity and provide credit to businesses and individuals. If deposit interest tax is applied, this could create significant consequences for the banking system, including:
- Decreased liquidity of the banking system. When taxing deposit interest, people can find ways to withdraw money from banks to find alternative investment channels or store assets in unofficial forms. This causes the cash flow in banks to shrink, reducing the ability to provide credit to the economy, especially in the context of Vietnam still relying heavily on bank credit capital instead of other mobilization sources such as bonds or capital markets.
- Banks may have to increase deposit interest rates: When deposit sources decrease sharply, commercial banks will have to increase deposit interest rates to attract capital flows. This leads to increased borrowing costs, forcing businesses to pay higher interest rates to access capital, thereby reducing the incentive to expand production and business. This could slow down economic growth and negatively affect the labor market.
- Increased pressure on foreign exchange rates and capital flows: When bank deposit profits are reduced due to taxes, a part of investors may shift cash flow abroad to seek markets with more attractive yields or less tax risks. This can increase the phenomenon of "diversity" or foreign currency bleeding, directly affecting the exchange rate. If capital flows are withdrawn from the domestic banking system en masse, the State Bank may be forced to intervene to stabilize the exchange rate, thereby increasing pressure on national foreign exchange reserves.
Changes in people's financial behavior In addition to affecting the banking system, applying deposit interest rates can also have a significant impact on people's financial behavior, leading to changes in the way they allocate assets and use capital. Some possible trends include:
- Transfer capital flow to other investment channels: When actual interest rates from deposits are reduced due to taxes, people can look to other investment channels to optimize profits, such as:
- Gold and foreign currency: These are traditional investment channels in Vietnam, especially attractive during periods of high economic policy instability. If deposit interest rates are implemented without proper regulatory measures, it can increase speculation on gold and foreign currency, negatively affecting exchange rate stability and inflation.
- Real estate: A significant number of investors can withdraw deposits and switch to real estate investment with the expectation of higher profits. This can make the real estate market more vibrant in the short term but also poses a risk of forming a real estate price bubble, especially if capital flows into the speculative segment instead of real housing development.
- Securities and bonds: For investors with a higher risk appetite, stocks and corporate bonds may become an alternative to bank deposits. However, if this capital flows into the market without control, it can increase fluctuations and risks in the stock market, especially when individual investors tend to invest according to crowd psychology.
- Changes in savings habits: Vietnam is one of the countries with a high savings rate because people have the habit of accumulating assets to ensure personal financial safety. However, when deposit interest is taxed, the attractiveness of savings deposits may decrease, changing people's financial habits. Instead of depositing money in banks to enjoy stable interest rates, many individuals may choose to keep cash or invest in informal assets, reducing the ability of the financial system to control cash flow.
In short, taxing deposit interest can shift capital flows from banks to other investment channels, increasing speculative risks, affecting the liquidity of the financial system and causing instability for the macro economy. If this policy is not carefully designed, Vietnam may face many consequences, from exchange rate pressure, fluctuations in the financial market, to the risk of asset bubbles and declining resource allocation efficiency in the economy.
Regarding real estate, bond and securities taxes: issues raised
Real estate tax
In Vietnam, real estate tax is currently only limited to revenues such as non-agricultural land use tax, personal income tax from real estate transfers, and registration fees. Meanwhile, developed countries such as the US, Canada, Japan or South Korea all apply annual property tax on real estate value, to ensure fairness in asset distribution and create sustainable revenue for the state budget.
The failure to effectively apply real estate tax in Vietnam has led to some notable consequences:
The situation of real estate speculation and hoarding increases: When not under tax pressure, many individuals and organizations tend to invest in real estate to hold for a long time instead of exploiting or putting it into transactions. This contributes to a decline in the housing supply that truly serves real housing needs, causing real estate prices to increase.
The state budget is missing an important source of income: When real estate is not subject to regular property tax, the state loses a stable, long-term source of income, while having to rely heavily on corporate income tax and value added tax (VAT). This has caused the tax system to not be effective in regulating the economy.
Real estate tax is considered an effective tool to control speculation, create a stable source of revenue for the budget and direct capital flow to economic activities instead of hoarding assets. However, the implementation requires careful consideration to ensure compliance with market reality and socio-economic conditions at each time. Property tax not only requires fairness in the tax system, but also requires a reasonable roadmap to avoid creating unwanted impacts, especially in the context of the market needing stability.
Bond and securities tax
The capital market, including bonds and stocks, is becoming an important capital mobilization channel in Vietnam, helping to reduce dependence on the banking system. However, tax policies for this market are still not really clear and synchronous, especially in the context of Vietnam gradually perfecting the legal framework on securities and corporate bonds.
Currently, income from corporate bonds in Vietnam is not directly taxed to individual investors, but is only subject to personal income tax when conducting transactions on the secondary market. Meanwhile, in many countries such as the US, income from government bonds is often tax-free, while corporate bonds are subject to personal income tax but at a low level to encourage long-term investment.
Applying tax on bond interest in Vietnam may have significant impacts. First of all, it can reduce the attractiveness of corporate bonds, especially when taxes reduce the actual interest rate. This may hinder the ability of businesses to mobilize capital, especially in the context that many businesses still rely mainly on bank credit. In addition, cash flow may shift to other investment channels, reducing the liquidity of the bond market and increasing capital costs for businesses.
To maintain the development of the bond market under the tax, Vietnam may consider applying preferential tax rates for long-term bonds to encourage stable and sustainable investment flows, instead of focusing on speculative short-term investments. At the same time, tax exemption for government bonds and some types of special bonds can be a solution to attract capital for socio-economic development projects, contributing to ensuring the competitiveness of the financial market.
The Vietnamese stock market currently applies a fixed personal income tax of 0.1% on trading value, instead of taxing on net profit like many other countries.
This can cause some problems such as investors still having to pay taxes even when trading at a loss, making the tax burden unfair. At the same time, it reduces the attractiveness of the stock market, especially in the context of Vietnam wanting to attract foreign capital into the capital market. Some countries such as Singapore and Hong Kong (China) have applied tax exemption policies for securities transactions, helping to increase liquidity and attract investment.
Based on the analysis of the impacts of taxing deposit interest rates, real estate tax, bonds and securities, the development of a suitable tax policy needs to be based on the principle of balancing the goal of increasing budget revenue and maintaining stability of the economy. Tax policies should not be applied suddenly but need a reasonable roadmap to avoid creating shocks for the financial market. Here are some important policy proposals:
In the current context, the Vietnamese banking system is still the main capital mobilization channel for the economy, while the financial market is not developed enough to replace this role. If deposit interest rates are taxed immediately, it can reduce bank liquidity, push up deposit interest rates, and put pressure on borrowing costs for businesses and people. Therefore, the tax on deposit interest should not be applied immediately, but a research and testing roadmap is needed before being officially implemented. The government can conduct an impact assessment of this policy within 3-5 years, and monitor the market reaction before making a final decision.
14:40: Associate Professor, Dr. Le Xuan Truong - Head of the Tax Department, Academy of Finance:
Household deduction is the amount deducted from personal income tax when determining taxable income based on the taxpayer's family situation. According to international practice, family deductions are often applied to income from salaries, wages; income from business of residential individuals. For countries that tax personal income on total income, the family deduction is determined when determining taxable income on total income.
The regulation on deduction arising from the perspective of personal income tax must ensure that after paying taxes, taxpayers have income to cover the living expenses of the average of society. This means, determining the deduction level so that after paying taxes to the state, taxpayers can ensure their lives at the necessary level on the social average.
Thereby, ensuring fairness in regulating people's income and ensuring the lives of taxpayers. That is, the remaining income to ensure the life of taxpayers is the family deduction plus the remaining income after tax payment of the portion exceeding the family deduction level.
For example, a single person has a monthly income of 16 million VND. After deducting 11 million VND from the family deduction, the taxable income is 5 million VND. With this income level, the personal income tax that this person must pay is 250,000 VND.
Thus, the income after tax payment of this individual is 15,750,000 VND.
The impact of family deduction is to reduce taxable income. Thereby, reducing the amount of tax payable by individuals. Depending on the individual's income, the impact of family deduction on the level of tax reduction payable by each individual is different. In the above example, according to the current progressive tax table of each part of Vietnam, due to family deduction, the individual is entitled to a tax reduction compared to the case without family deduction: (16 - 10) x 15% + (10 - 5) x 10% + 5 x 5% - 250,000 = 1,400,000 VND. If the family deduction is not granted, this individual must pay VND 1,650,000 and Thus, the remaining income after tax payment is VND 14,350,000. Due to family deductions, the remaining income after tax is 15,750,000 VND. Consider the aspect of tax fairness when determining family deductions, fairness is considered in two aspects: equitable in the horizontal direction and equitable in the vertical direction.
International practice on determining family deduction, I refer to data in countries in Southeast Asia.
For example, in Indonesia, the current taxpayer's personal deduction is 54 million rupiah, equivalent to about 3,482 USD, the deduction for dependents is 4.5 million rupiah/person, equivalent to about 290 USD. Indonesia stipulates that dependents are entitled to a deduction from including the taxpayer's spouse or husband and children. However, Indonesia limits the maximum deduction for 3 children. Thus, with Indonesia's GDP per capita in 2024 being 4,981 USD, the deduction for taxpayers is about 0.7 times the GDP per capita. If including the deduction for dependents, depending on the taxpayer's family situation, the family deduction in Indonesia is about 0.7 times to 1.1 times GDP per capita.
In Singapore, the deduction for taxpayers themselves increases with age. Accordingly, people under 55 years old will have a deduction of 4,000 SGD (about 2,962 USD), people from 55 to 59 years old will have a deduction of 10,000 SGD (about 7,407 USD), people aged 60 and over will have a deduction of 12,000 SGD (about 8,888 USD). Thus, with Singapore's GDP per capita in 2024 of about 89,372 USD, the taxpayer's own deduction is about 0.033 times to 0.099 times GDP per capita.
Or in the UK, the personal deduction for taxpayers for the tax calculation year 2024/2025 is 12,570 British pounds (about 15,838 USD). With GDP per capita in 2024 around 52,423 USD, the personal deduction in the UK is about 0.3 times GDP per capita. However, the personal deduction for UK taxpayers has a special point, when taxpayers have a taxable income in the tax calculation year exceeding 100,000 British pounds, when the income increases by 2 British pounds, the deduction is reduced by 1 British pound. This means that when taxpayers have a taxable income of £125,140 or more, the personal deduction is 0.
Thus, when calculating personal income tax, all countries allow deductions for taxpayers themselves. The level of personal deduction varies widely between countries, equivalent to about 0.03 times to approximately 1 time of GDP per capita. The family deduction (including dependents) is equivalent to about 0.1 to 2 times of GDP per capita. In developing countries, the family deduction compared to GDP per capita is often higher than in developed countries. The most common subjects of deduction for dependents are the wife/husband, children, father, mother of the taxpayer. Some countries apply additional deductions for taxpayers or dependents who are disabled. The trend of determining the annual family deduction level is expanding to be applied in some countries around the world.
Regarding the frequency of adjusting the deduction level, the trend of countries is the annual deduction level. For example, in the UK, the deduction for the 2016/2017 tax calculation year is 11,000 British pounds, the 2017/2018 tax calculation year is increased to 11,500 British pounds, the 2018/2019 tax calculation year is increased to 11,850 British pounds, the 2019/2020 tax calculation year is up to 12,500 British pounds and kept this rate unchanged for the 2020/2021 tax calculation year, the 2021/2022 tax calculation year is adjusted to 12,570 British pounds and kept unchanged for the next 3 tax calculation years until the 2024/2025 tax calculation year.
When comparing Vietnam's self-depreciation rate with GDP per capita, Vietnam's self-depreciation rate is quite average. With the desire to improve people's lives, if the family deduction level is increased, it means that the number of taxpayers will be reduced, and those who have to pay will also have to pay less tax.
However, determining whether the family deduction level is appropriate or fair does not need to consider many other related factors such as specific tax rates and thresholds in the tax table, other deductions other than family deductions, GDP at the same cost as purchasing power...
From the above analysis of the nature of family deduction, international practices and Vietnamese practice, in the coming time, when amending the Law on Personal Income Tax, it is possible to consider applying the following proposals:
Firstly, in the next 5 years, our country will still be in the group of developing countries with average income, so it is necessary to accept the determination of a relatively high family deduction level compared to GDP.
Second, due to changing economic conditions, CPI... it is necessary to consider the family deduction level to ensure the forecast level to avoid being behind.
Third, when drafting the Law, it is necessary to determine the appropriate annual family deduction level, giving the Government the authority to decide on the most appropriate annual family deduction level.
Fourth, refer to countries to supplement deductions for taxpayers with disabilities.
14:58: Ms. Dinh Thi Thuy - Vice Chairman of the Board of Directors of MISA Joint Stock Company: Applying technology to help businesses declare and settle personal income tax for employees transparently, accurately and effectively
Declaring and settling personal income tax is an indispensable part of the national tax system, playing a key role in ensuring social justice. However, for this process to become transparent, accurate and efficient, the application of technology, especially digital transformation, will be the decisive factor.
Procedures and benefits of declaring personal income tax settlement through income payment organizations
Employees working at enterprises need to provide personal information, labor contracts, and tax codes. If they do not have a master's degree, employees need to register to apply for a code. This tax code is an important factor for businesses to fulfill their tax obligations in accordance with regulations. Enterprises calculate personal income tax based on salaries, allowances, family deductions and monthly/quarter personal income tax declarations, reports and pay taxes to tax authorities.
At the end of the year, enterprises need to prepare for settlement of personal income tax for employees, review paid taxes and confirm the remaining taxes. If the employee has paid excess tax, the enterprise will carry out tax refund procedures for the employee. The tax authority receives tax settlement records, inspects and handles errors, and refunds taxes if any.
Benefits of declaring personal income tax settlement through an income payment organization for taxpayers: Taxes are deducted directly from income, helping employees not need to calculate and pay taxes themselves, leading to easy errors and taking a lot of time.
Organize income payments: Increase transparency in salary, tax and welfare management for workers
Tax authorities: Increase tax collection efficiency, reduce budget losses, reduce personal tax settlement records that need to be processed.
Inadequacies in declaring and settling personal income tax
For workers who do not understand the specific regulations and documents when doing tax procedures. Especially unstable workers, freelance workers, unskilled workers and workers without support from businesses.
Being heavily dependent on businesses when making tax settlements: Enterprises issuing deduction certificates are late, enterprises settling taxes are late. example: When making tax settlements, workers spend time collecting tax deduction documents at companies with income. There are many companies that provide tax deduction documents late, so employees cannot complete tax settlements on time, lose the right to tax refund, and may be subject to administrative fines.
For businesses that have difficulty synthesizing information: it takes time to check and synthesize valid tax codes for employees (such as MST matching or incorrect information). Calculating personal income tax, wages, and allowances can lead to errors, especially during peak times such as the end of the year or during monthly tax reports.
This puts great pressure on accountants, forcing them to work overtime to promptly declare taxes.
MISA's digital transformation solution in declaring personal income tax settlement through income payment organizations
With the constant change of tax regulations and high requirements for transparency, accuracy, and efficiency in declaring and settling personal income tax, MISA has developed a comprehensive digital transformation solution through MISA AMIS. This solution helps businesses and income payment organizations not only fulfill their tax obligations but also ensure transparency in each step of the declaration process.
Integrating the human resources, accounting and personal income tax system: synchronizing and integrating data from human resources records, tax calculation, salary calculation for employees to tax registration and declaration, creating a seamless and accurate process.
Direct connection with tax authorities: directly connect with the electronic tax portal, helping to update and check tax data in a timely manner, while paying taxes online quickly, minimizing errors and processing time.
Applying AI technology: MISA applies artificial intelligence (AI) to answer tax questions for employees in the enterprise, such as how to calculate taxes, regulate family deductions, tax rates and tax procedures.
Benefits of applying MISA technology in declaring and settling personal income tax
For workers, it will simplify paperwork and minimize the risk of errors in tax declaration. transparently monitor taxable income, taxable income, tax deductions from monthly salaries and wages due to data connection between tax authorities and enterprises.
For businesses, it will save time and costs, automate tax declaration processes, calculate taxes and salaries to help businesses perform work quickly and accurately.
Reducing errors, tax declaration and settlement work is synchronized directly with employees' salary information and paying taxes directly to tax authorities, minimizing errors and risks of being fined for false declaration or late tax payment. Providing quick and accurate tax deduction documents to employees, helping them to settle taxes at the end of the year without any difficulties.
We recommend speeding up the implementation of personal identification numbers to replace MST according to the policy, helping to reduce administrative procedures. Strengthening the connection of information and data sharing between tax authorities, businesses and employees: helping data to be updated continuously, transparently and accurately. Implement the policy of connecting with the Tax Authority, sending personal income tax deduction documents directly to the tax authority to help taxpayers track and check the personal income tax paid in a timely and quick manner. Deploy AI technology to support tax procedures and answer questions about taxes.
14:20: Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance, National Economics University: The Law on personal income tax was passed by the National Assembly in 2007 and accepted in 2009, however, during the implementation process, inadequacies were revealed and adjusted to suit the practical life and fluctuations of the economy. Among the important amendments, it can be mentioned:
2012: The National Assembly issued Law No. 26/2012/QH13 amending and supplementing a number of articles of the Law on personal income tax and applying it from 1/7/2015. This is the first important adjustment since the Law on personal income tax took effect. According to Circular 111/2013/TT-BTC, the family deduction is adjusted from 4 million VND/month to 9 million VND/month for individuals and from 1.6 million VND/month to 3.6 million VND/month for dependents. This adjustment is made to more accurately reflect people's living standards as well as the impact of inflation in the previous period.
2020: The National Assembly continues to adjust the family deduction to 11 million VND/month for individuals and 4.4 million VND/month for each dependent according to Resolution 954/2020/UBTVQH 14. The increase in the family deduction this time comes in the context that after 7 years of application, this year was negatively affected by the COVID-19 pandemic, people's real income decreased, and inflation continued to increase.
Thus, the roadmap for adjusting personal income tax has undergone changes to ensure compliance with real life and socio-economic situation.
Along with the development of the economy, total revenue from personal income tax in Vietnam tends to increase strongly in the period of 2020 - 2024. According to statistics, in just 4 years, total personal income tax revenue has increased by about 80%, almost double. This raises many questions about the reasonableness of current tax policies, especially the relationship between the rate of increase in tax revenue and the rate of increase in per capita income.
Total revenue from personal income tax tends to increase faster than per capita income (except for 2023), faster than the GDP growth rate. This raises the question of the level of harmony of current tax policies, whether the optimal tax collection rate according to Laffer curve theory is at what percentage of income is appropriate?
Personal income tax and per capita income in the period of 2020 - 2024 show that tax collection rates increase significantly faster than the growth rate of per capita income.
Total revenue from personal income tax in the period of 2020 - 2024 increased by 72%, from 115 trillion VND to 198 trillion VND. Average income per capita in the same period increased by 30.2%, from 3548 USD/year to 4622 USD/year. Average annual inflation ranges from 0.81% - 4.16%, with the highest in 2023 (4.16%) and the lowest in 2021 (0.81%).
When considering inflation factors, the actual increase in per capita income may be lower than the nominative figure. In the period of 2020 - 2024, total accumulated inflation will be about 12.58% if compared to the base period of 2020, the increase is about 28%. This means that although the average income per capita has increased by 30%, actual purchasing power may not increase accordingly. If the impact of inflation is eliminated, real income growth will be lower than nominative growth, leading to workers actually having less money to spend after paying taxes.
Meanwhile, total personal income tax revenue has increased over the years, even in the context of high inflation. This could create financial pressure for taxpayers, especially those with average incomes.
In general, in the period of 2020 - 2024, the rate of increasing personal income tax is not only faster than per capita income but also does not accurately reflect the change in real income. This requires reviewing the family deduction level as well as the progressive tax payment to ensure a fairer tax policy, in line with the economic reality and living standards of workers.
Currently, personal income tax in Vietnam is collected according to regulations for 10 different income groups. In which, the group that brings the largest revenue mainly comes from wages, wages - that is, income from labor. In addition, a large part comes from the business activities of individual households. This is the most important source of income, contributing a large part to the total budget revenue from personal income tax.
After that, the next income groups brought in a significant source of income, including income from stock trading and real estate transfers.
This is important when mentioning tax adjustments. If we want to adjust personal income tax policies towards increasing revenue, we need to consider the impact on key income groups. Similar to the state budget revenue structure, when the State wants to increase revenue, it needs to pay attention to the structure of tax revenue sources with large contributions such as VAT, corporate income tax, personal income tax, and special consumption tax, the first target is not small enterprises but large enterprises in key economic centers such as Hanoi or Ho Chi Minh City. The same goes for the personal income tax policy - if there is an adjustment, it is necessary to first consider the impact on the income group with a high contribution rate, instead of applying it to all subjects without considering the level of impact.
When talking about changing personal income tax policies, the issue that the community is currently paying special attention to is the family deduction level and how to cover all revenue sources. The family deduction level is a hot topic and needs to be considered for adjustment to be reasonable, suitable for the economic and living situation of the people. In addition, how to cover all income sources, especially from income groups with large contributions, is also a hot topic of discussion today.
Tax management is covered by two main contents: policy management (tax management documents) and collection management. On the principle of tax management in general and personal income tax in particular: First, personal income tax is a direct tax, meaning that it is necessary to ensure fairness (vertical fairness) in the tax collection process, avoiding unfair tax among taxpayers. Second, in the current context, the important principle is financial transparency. To do so, it is necessary to manage cash flow and control the destination of revenue. On that side, the principle of policy application must be unified, management work needs to be focused.
Currently, Vietnam is applying the method of collecting personal income tax by deducting it from the source. This method has both advantages and disadvantages. However, in essence, personal income tax is a direct tax, meaning that the tax must be collected directly from the taxpayer, and that person must also supervise the tax payment process himself. However, the current source of deduction method is still suitable for the conditions and reality of Vietnam.
Income from current salaries and wages plays a leading role in total revenue from personal income tax (PIT). However, current regulations in the way of declaring and calculating taxes on income from many different sources are causing unfairness among taxpayers.
According to current regulations, if an individual has income from many different sources, this total income will be calculated to determine the tax payable. But there is one disadvantage: when income from additional sources does not exceed VND 120 million/year, only the paying unit must make a 10% deduction before payment, and at the same time, employees can authorize the paying unit to pay the main income to settle taxes on their behalf.
This leads to unfairness in the tax system. If an individual with a basic income was subject to a tax rate of 30%, then income from other sources should have been taxed accordingly. However, with current regulations, additional incomes under VND 120 million/year are only deducted by 10%, significantly lower than the actual tax rate that taxpayers should have paid.
Meanwhile, a person with only one source of income but within a high tax framework still has to pay a full tax rate. This creates unfairness among people with the same income but from different sources.
In addition, another problem lies in the regulation on other income such as wages. According to current regulations, if the income from a certain source does not exceed VND2 million/time, the paying unit does not need to deduct 10% of the tax. Currently, many units have fully declared the income but some units have not declared this income in their tax settlement records. This pushes individuals to self-declare, even though their income is only 500 thousand to less than 2 million. If the individual does not declare the tax payment himself, he/she will be fined for this small amount of income. Although the Etax chute system has met basic requirements many times, it has not really ensured fairness and resolved problems. This reality is happening to many individuals who do not want to evade rent but are still classified as non-compliant with taxes and are fined. The provisions in the document are like that but in reality, declaration of goods on the other hand creates unnecessary tax administrative pressure for employees with many sources of income.
Income from real estate transfers is currently one of the important sources of income in the personal income tax (PIT) system. However, the method of calculating tax for this type of income still has many limitations.
Currently, personal income tax on income from real estate transfers is applied in two ways:
2% tax on transaction value: The seller must pay a tax of 2% of the total real estate value stated on the transfer contract, regardless of profit or loss.
Tax 20% on the difference between purchase price and selling price: This method requires clear declaration of purchase price and selling price to calculate tax on actual profit.
Although the 2% option on transaction value is simple and easy to collect, it creates a big loophole in selling price declaration. The seller often declares the transfer price lower than the actual price to reduce the tax payable. This not only causes a loss of revenue for the State budget but also causes a lack of transparency in the real estate market.
On the contrary, the 20% tax plan on the difference between buying and selling prices has an advantage because it accurately reflects actual income. However, this method is difficult to determine the correct purchase price, especially for real estate transactions that took place many years ago, when there was no transparent buying and selling price management mechanism as at present.
To ensure fairness and limit tax evasion, it is advisable to apply a method of taxing 20% on the difference between purchase and sale prices similar to corporate income tax.
Currently, tax authorities and the Ministry of Natural Resources and Environment have full information on purchase and sale prices to calculate taxes. Therefore, transfer price control can be completely done by comparing with actual data. When buyers accept to declare low prices to avoid taxes, at the time of reselling, they will have difficulty recording that the purchase price is lower than the market price, which can lead to higher taxes to be paid in the reselling transaction later, when buyers do not agree to buy and sell at 2 prices (ie declare low prices).
The 20% tax rate on the difference between buying and selling prices also needs to be accompanied by strict sanctions for the act of declaring incorrect prices. At that time, real estate transactions will become more transparent, limiting the situation of "double prices" (real prices and declared prices), while helping the State collect taxes more fairly. The market is pushed up in price by brokers, buying and selling will be minimized.
One of the important impacts of applying a 20% tax on actual profits is to help limit the situation of pushing up real estate prices. If the policy of taxing value added tax is strictly applied, real estate companies will also have to calculate more carefully when deciding on selling prices, thereby helping the market operate more transparently and substantially.
Regarding inheritance and gift tax, currently, income from inheritance in the family (including spouses, parents, children) is exempt from tax. However, according to international practice, most countries apply taxes on inheritance to ensure fairness and avoid budget losses. Meanwhile, Vietnam does not have a Law on Property Tax.
The current trend of countries is to separate tax management for the super-rich. Our country has a large corporate tax department, so it is also necessary to study the management and transfer of assets of the super-rich with personal income tax. Because this group accounts for a small number but accounts for the majority of assets in society and assets of high value.
To adjust in accordance with international practice, it is possible to consider applying a tax rate of 15% - 20% for large inherited assets, similar to the tax rate applied in some developed countries. There should be a value threshold to exempt tax or apply low tax rates to assets of small value, not large to avoid affecting households not in the high-income group but with inherited assets to donate.
In addition, some countries apply tax incentives for heirs who have directly cared for and raised their parents or relatives for many years. If Vietnam applies this policy, heirs can be reduced to a tax rate of 5% - 10%, or completely exempted from tax in some special cases such as the elderly, the disabled, etc.
Expanding the tax base and taxpayers for income from inheritance and gifts not only helps ensure fairness in the tax system, but also limits tax evasion and accumulation of assets by all means for the next generation, while increasing revenue for the budget and ensuring transparency in asset declaration.
Tax deduction is an important issue in the personal income tax (PIT) system, because it directly affects the number of taxpayers and the amount of tax payable. Currently, when considering taxable income, it is necessary to consider the necessary costs to generate income, including daily living expenses (travel, food, labor reproduction) and past expenses such as tuition, training expenses... to have work and income today. However, the current tax system may not fully reflect these factors, leading to unfair taxation for employees.
One of the major controversies at present is the family deduction level. Currently, this deduction is applied consistently nationwide, regardless of the difference in living expenses between provinces and cities. This leads to the problem when the cost of living in Hanoi or Ho Chi Minh City is significantly higher than other provinces, but people here still only enjoy the same deduction. However, dividing the family deduction by area can cause complications in management and implementation. While the principle of tax management is to apply unified policies. So how much is the deduction determined? What is the basis for determination?
An important issue is the need for data on the income spectrum of workers. According to current estimates, the income group of 18 - 23 million VND/month (8400$ - 10,500$/year) is the largest proportion of the workforce. When developing a tax policy, it is necessary to determine which income level is considered high to start applying tax. If the high income threshold is determined incorrectly, it can lead to the fact that middle-income workers, accounting for the majority of workers, also have to pay high tax rates, causing great financial pressure. If there are statistics on the income of workers, tax should be taxed at the level of income with the highest concentration of people. (also known as: MET income)
Therefore, the high taxable income should be considered to be adjusted from 20 - 25 million VND/month to accurately reflect the income situation and avoid taxing the middle-class income group heavily, creating stability over time in addition to focusing on managing the super-rich group.
Adjust the tax deduction based on economic reality: Started applying the Law on personal income tax from 2009 with a deduction of 4 million VND, it was later adjusted to 11 million VND. However, with the situation of increasing living costs and living expenses, the question is whether this level is still reasonable or not? The determination of the deduction level should be based on factors such as: CPI (Consumption Price Index) to reflect inflation; average income per capita to match the general standard of living; minimum wage to ensure that workers have enough to cover living expenses.
If these indicators have increased significantly, the family deduction level also needs to be adjusted accordingly, instead of staying the same for a long time without any changes in accordance with reality. The main thing for the next time is to also consider stability for a period of time after that.
Reform the progressive tax table to ensure fairness: The current progressive tax rate applies from 5% to 35% for 7 different tax levels, but the tax levels are too dense and the range between levels is too narrow, causing tax rates and taxes to increase even if income only increases slightly. This leads to the situation where people with average incomes increasing are also quickly pushed into the group of high taxable people, creating great financial pressure and reducing labor motivation. A reasonable reform option is to adjust the gap between levels.
extending the gap between tax levels according to a reasonable coefficient (e.g. coefficient 2) will help the tax system become stable, with high openness, creating motivation to increase income, avoiding the situation where middle-income workers still have to pay unreasonably high tax rates. At the same time, the number of tax levels can be reduced from 7 to 5, helping to simplify the tax calculation system while still ensuring a reasonable source of revenue for the State budget. This not only creates more fairness among income groups but also encourages workers to increase their income without worrying about being overcharged.
Instead of the starting tax rate from 5% with an income of VND 5 million, it can be reset as follows: with the extension coefficient = 2 • Level 1: Income from 0 - 10 million VND: 5% • Level 2: Income from 10 - 30 million VND: 10%.
• Level 3: Income from 30 - 70 million VND: 15%.
• Level 4: Income from 70 - 150 million VND: 20%.
• Level 5: Income over 150 million VND: 25%
The maximum tax rate should be 25% for Vietnam, when the average income is not high, the economy needs to accumulate and invest, corporate income tax is at 20%, creating motivation for workers... Later, when income reaches a high income level, we can increase the tax rate.
Regarding the tax rate for winning a lottery promotion, direct tax should be ensured in a fair manner. In addition to the progressive tax rate table, not all income sources apply the progressive tax rate table. The income from winning a lottery promotion with a value that can be up to many billions (even 100 billion VND) but also paid with only a 10% tax rate is not satisfactory. A principle to create vertical fairness with many different sources of income to ensure vertical fairness is: Any source of income that is as essential as wages, the majority of people living on this source of income need to be adjusted to a moderate income level. Income sources are not essential, or the "heavenly" thing needs to be regulated because the income level must be higher than the tax rate for income sources such as wages. The income from the lowest salary of 5% is 35%. So what is the appropriate tax rate?
The saying The copper divide into three, the house divides into two means talking about how to divide valuable assets, big and small, the way to divide the assets of the sky. Therefore, when a prize with a large value is won, the highest tax can be imposed up to 50%. However, to encourage and harmonize in the context of low average income, the state can increase taxes on lottery prizes with a large value up to 35% (ie about 1/3 of the value). If the value is below 12 billion (Viettlot's first prize level), the tax rate can be 15%; the bonus level from 12 to 50 billion VND is 25%; the tax rate is over 50 billion VND is 35%.
Regarding tax declaration, currently personal income tax is mainly collected by the method of deduction at source, meaning that the enterprise or the paying unit will deduct a part of the employee's income to pay tax on behalf of the employee. However, for people with many different sources of income, the current system still has shortcomings when data is not synchronized between sources of income, leading to a situation where taxpayers may be required to settle taxes themselves or have their taxes collected, even though they have previously deducted taxes at source. The Etax software as mentioned above has improved but not really as expected.
One of the important improvement proposals is:
When income-paying units submit quarterly declarations, they need to update quarterly personal income and the amount of temporary tax paid through the electronic system, data is floating on E-tax. Instead of waiting until the end of the year to settle taxes, workers can monitor updated income declarations from different sources every quarter.
At the end of the year, in the first 3 months of the following year, the software system will automatically synthesize, calculate taxes and notify the amount to be paid. Sending a notice to taxpayers: Do you agree with the tax amount on the tax calculation software or not? Agree, automatically submit. If there are errors, taxpayers can adjust the authentication of tax authorities through the software. Submitting additional or withdrawal tax payments is done automatically via the app.
For example, if an individual has income from teaching, consulting, investing in securities, real estate, the software will synthesize all these revenue sources in each period, helping to calculate the tax payable accurately. Sending the notification, if the taxpayer agrees, the system will automatically deduct and pay taxes without having to carry out manual procedures, helping to minimize errors, avoiding the case of being collected or fined for data differences.
One of the problems that makes it difficult for people to comply with taxes is the lack of synchronization between income sources. For example, when an individual has income from many places but each place implements different tax deductions (income over 2 million is deductible, under 2 million is not deductible), the declaration of total income may be incorrect.
To solve this problem, it is necessary to build a modern tax management system based on Big Data technology and connect directly with income payment institutions. At that time, all income will be automatically updated into the tax system, helping taxpayers to control their tax obligations in real time.
The application of technology not only helps simplify the tax declaration process, but also helps reduce administrative burdens for both tax authorities and people, while enhancing tax compliance.
Completing the tax declaration system to improve compliance: Currently, many people do not intentionally violate tax regulations but are fined due to complicated and unsynchronized declaration processes, due to different ways of paying different taxes, such as authorization to declare with a 10% deduction or self-declaration of taxes. In some cases, they have paid taxes but because their income has not been fully updated, they are still required to self-declare, causing a waste of time and creating a feeling of injustice.
To improve compliance, there needs to be an automatic tax refund mechanism if people have paid in excess. Instead of having to carry out complicated tax refund procedures, the system can automatically determine the excess tax and return it directly to the taxpayer's account with just a simple operation. This not only helps people easily fulfill their tax obligations but also creates trust in the tax system.
In short, improving tax declaration methods, applying technology to synchronize income data and building a transparent tax refund system are necessary solutions to ensure fairness in personal income tax, helping to increase budget collection efficiency without creating unnecessary burdens for workers.
14:05: Speaking at the opening of the workshop, Deputy Editor-in-Chief of Lao Dong Newspaper Nguyen Duc Thanh expressed his gratitude to the distinguished guests and delegates attending the Workshop " individual Income Tax Law - Ensuring fairness, promoting growth" organized by Lao Dong Newspaper and the National Economics University today. The Deputy Editor-in-Chief of Lao Dong Newspaper said that amending the Law on Personal Income Tax is of great significance when the Vietnamese economy is developing strongly, requiring the personal income tax policy to be consistent with each socio-economic stage.
personal income tax is not only a tool for income regulation, contributing to the redistribution of wealth but also an important source of revenue of the state budget for investment in development, ensuring social security and national defense. In the current context, personal income tax reform needs to aim at a fair and effective goal, reducing the burden on people and businesses, while creating momentum for growth.
The tax system reform strategy for the period 2021-2030, approved by the Prime Minister in Decision No. 508/QD-TTg dated April 23, 2022, has set out the requirement to build a synchronous, transparent tax system in line with international practices. Tax reform is not only about adjusting policies but also has to be synchronized with management reform, simplifying administrative procedures, applying information technology to reduce compliance costs for people and businesses.
In particular, the amendment of the Law on personal income tax will need to consider many factors such as: Household deduction level suitable for the socio-economic situation; taxable income threshold from business; progressive tax rate and gap between tax levels; tax incentive policy for high-quality human resources; tax adjustment for newly arising income sources.
It is expected that these amendments will be submitted to the National Assembly for consideration in the period of 2025-2026.
At today's workshop, we will discuss the necessity of amending the Law on personal income tax, proposals to tax assets such as real estate, inheritance, as well as international experience in tax reform and its application in Vietnam. With the participation of financial experts, representatives of management agencies, businesses, banks and the press, the workshop is an opportunity for multi-dimensional exchanges, contributing scientific and practical opinions to perfect tax policies.
Lao Dong Newspaper is committed to fully absorbing the proposals at the workshop to reflect in a timely manner, contributing to building a fair tax policy that harmonizes the interests of the State, businesses and people.
