The draft Law on Personal Income Tax (PIT) 2025 is being developed and consulted, in which option 2 of the Ministry of Finance proposes a family deduction of VND 15.5 million/month for taxpayers and VND 6.2 million/month for dependents, and at the same time narrowing the tax rate from 7 levels to 5 levels with the highest tax rate of 35% for income from VND 100 million/month.
Many experts believe that this option is not enough to reduce the tax burden, and even a part of taxpayers are at risk of having to pay a significantly higher tax rate than the initial law design stage.
The tax burden may increase sharply by 30 - 50% compared to the old level
According to Associate Professor, Dr. Nguyen Van Hieu (University of Economics, Vietnam National University, Hanoi), over the past 20 years, the personal income tax policy has mainly focused on adjusting the family deduction level without significant adjustments to the tax rate table, including the starting tax rate for one-time income. This leads to a situation where a part of those working for salary can "jump the tax rate" even though their actual income does not increase.
He emphasized: "The tax burden on income from wages and wages increases due to jumping ranks, while actual income remains unchanged".
Associate Professor, Dr. Nguyen Van Hieu has calculated above the same adjusted income level as the price drop, applying a family deduction of 15.5 million VND/month and a 5-level tax rate according to option 2. The results show that although the tax burden has decreased compared to the actual level in 2025, it is still much higher than the original design in 2007.
Accordingly, the average tax rate in the income group of 150 million VND/year and 250 million VND/year increased by about 20% and 25% respectively compared to the beginning. Only the group with an income of 70 million VND/year recorded a slight decrease due to the household deduction increasing faster than the price drop rate.
He said that the tax burden under the new draft is still about 3050% higher than in 2007, due to the tax table being almost unchanged or not adjusted significantly. Thus, the average tax rate on income is still high, showing that tax pressure on employees has not been relieved.
Proposal to strongly adjust tax rates, lower the highest tax rate to 25%
Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance (National Economics University) said that streamlining the tax table to 5 levels is reasonable, in line with international practices. However, the current proposed structure is unreasonable when eliminating two levels of 10% and 20% but still maintaining the highest rate of 35%.
According to him, this creates a huge tax slope between medium and high tax levels, not ensuring the principle of progress and reducing labor motivation.
He proposed to pay the tax as follows: level 1: 010 million VND/month - 5%; level 2: 1030 million VND/month - 10%; level 3: 3070 million VND/month - 15%; level 4: 70150 million VND/month - 20%; level 5: Over 150 million VND/month - 25%.
According to Mr. Nghi's analysis, average income is increasing rapidly, causing many people to fall into a higher tax rate even though real income does not accurately reflect their standard of living. "Income increases by 30%, but if the range is not extended and the tax rate is adjusted accordingly, workers will suffer the loss. In the long term, this affects the mentality of dedication and transparency in tax declaration, he warned.
It is necessary to continue to adjust the gap between tax levels to be broader
Associate Professor, Dr. Le Xuan Truong - Head of the Faculty of Taxation and Customs ( Academy of Finance) commented that the number of current tax rates is too high (7 levels) and too dense in the middle-income group or higher, causing the regulatory rate to increase rapidly, unreasonable to the goal of social justice.
He noted that the tax rate was issued in 2007 and applied from 2009 to present has not been amended, while GDP per capita has increased 3.8 times (from 1,226 USD in 2009 to 4,717 USD in 2024). Thus, the space for adjustment is very clear.
Both options of the draft reduce the tax rate to 5, keeping the same at 5% and 35%. Option 2 raises the taxable income threshold at the highest tax rate from VND 960 million/year to VND 1.2 billion/year.
However, according to Associate Professor, Dr. Le Xuan Truong, it is necessary to continue to adjust the gap between levels, while raising the highest taxable income threshold to 1.5 billion VND/year - equivalent to 8/10 times GDP per capita according to international practices - to ensure reasonable progress and create motivation to attract high-quality human resources.
He also proposed reducing the highest tax rate from 35% to 30%, with the goal of both ensuring income regulation and increasing competitiveness, attracting experts to work in Vietnam.
