The Ministry of Finance has just reported on the content of receiving and explaining the opinions of National Assembly deputies, the opinions of the Economic and Financial Committee on the draft Law on Personal Income Tax (amended).
Regarding the partial progressive tax rate, many opinions are concerned about the reasonableness of the plan to adjust the corresponding income threshold and tax rate in the tax rate.
Accordingly, the distance between levels is different, especially between levels 1, 2 and 3 is up to 10%, between levels 4 and 5 is only 5%. Therefore, people with income at level 2 and 3 will be subject to higher tax pressure than current regulations while the number of people with income subject to tax at level 2 and 3 accounts for the majority of the total number of subjects subject to personal income tax (PIT).
Some opinions suggest considering that the Tax Plan only stipulates a tax rate of 25% or 30%, while raising the taxable income threshold corresponding to each tax rate level to contribute to improving competitiveness in attracting highly qualified workers. Some opinions suggested considering the regulation of the highest tax rate of 45%, similar to China, Korea, Japan, France, Australia.
Explaining this content, the Ministry of Finance said that, accepting the opinions of delegates and the opinions of the review, the Government has revised the regulations on the Progressive Tax Schedule in the draft law as follows:
This plan has adjusted the tax rate down by 15%, 25% to 10%, 20% to unify the tax rates of the tax table.
With this new tax rate, all individuals who are paying taxes at the current levels will have their tax obligations reduced compared to the current tax rate. In addition, the new tax table has also overcome the sudden increase at some levels, ensuring the more reasonable nature of the tax table.
Regarding the tax rate in the progressive tax table of personal income tax from wages and wages for the highest tax rate of 35% at level 5, this is a reasonable proposal, because it is an average tax rate, not too high or low compared to countries in the world as well as in the ASEAN region (some countries in the region such as Thailand, Indonesia, the Philippines are also regulating the tax rate at the highest tax rate of 35%; China is 45%).
According to the Ministry of Finance, "if the rate is adjusted to 35%, it will be considered a tax reduction policy for the rich".
Evaluating the tax table according to the new proposal, Dr. Nguyen Ngoc Tu (Hanoi University of Business and Technology) said that the highest tax rate of 35% applied to income over 100 million VND/month is too high and not suitable for practice.
He analyzed that the tax rate of 35% was included in the Law on Personal Income Tax in 2007, applied to taxable income from over 80 million VND/month. At that time, 80 million VND was equivalent to about 5,000 USD, but now the conversion value has changed greatly. Although the family deduction has been adjusted to increase, the Ministry of Finance still maintains the highest tax rate and only raises the taxable income threshold from 80 million to 100 million VND/month, which is " insignificant", according to Mr. Tu. He proposed reducing the rate of level 5 to about 25-30%.
Mr. Tu said that in the case of maintaining the tax rate of 35%, the income subject to this tax rate should be increased to about 300 million VND/month to accurately reflect the current economic and income fluctuations.
Associate Professor, Dr. Le Xuan Truong - Head of the Faculty of Taxation and Customs, Academy of Finance - also said that it is necessary to continue to adjust the gap between levels, while raising the threshold of income subject to the highest tax rate to 1.5 billion VND/year to ensure reasonable progress and create motivation to attract high-quality human resources.
He 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.
