Need to increase taxable threshold for individuals doing business to 400 million VND
On the afternoon of November 5, discussing the draft Law on Personal Income Tax (amended), delegate Hoang Van Cuong (Hanoi Delegation) gave his opinion on regulations on personal income tax for business individuals.
According to the draft, individuals with production and business activities with an annual revenue of VND 200 million or less do not have to pay personal income tax.
Personal income tax on business income of residential individuals with annual revenue from over VND 200 million to VND 3 billion is determined by employee revenue with tax rate (from 0.5 - 5%).
According to the delegate, if a business household is given a revenue threshold of 200 million VND to start calculating taxes, it is unfair. Instead of relying on revenue to calculate taxes.
Regarding this content, delegate Tran Hoang Ngan (HCMC delegation) suggested that the Government reconsider the proposal that individual business households with a revenue of VND200 million or more must pay taxes.
"If the revenue is 200 million VND/year and the expenses are deducted, how much income is left? Meanwhile, the deduction for taxable individuals is 15.5 million VND/month, calculated for a year up to 186 million VND. Therefore, such calculation is very low. Although I said that to be compatible with the Law on Value Added Tax, I suggest reviewing this clause" - Mr. Ngan said.
According to delegate Tran Hoang Ngan, it is advisable to stipulate that business households with revenue must be at least 300 million or more, or even 400 million or more, to be subject to the personal income tax rate for individual business people, in order to ensure compatible with people with current income subject to tax for deduction.
A slight increase in income may result in a huge tax increase
Instead of the current 7 levels, according to the draft, the tax rate is adjusted down to 5 levels with the gap between levels increasing by 10, 20, 30, 40 million VND. 5 levels correspond to tax rates of 5%, 15%, 25%, 30%, 35%. The final tax rate is 35% applied to taxable income over VND 100 million/month.
According to delegate Hoang Van Cuong, the 5-level tax plan as in the draft Law is unreasonable.
"The taxable income of up to 10 million VND is subject to a tax rate of 5%, and the taxable income of 10 to 30 million VND "jumps" immediately to 15%. That is, income of 11 million VND is also subject to a tax rate of 15%. Or the taxable income from 30 million to 60 million VND will be subject to a tax rate of up to 25%.
This is unreasonable because workers' income may increase a little, which can increase the tax a lot. This could cause workers to lose motivation to strive and increase their income, delegate Hoang Van Cuong analyzed.
Instead of the 5-level tax rate, delegate Cuong proposed to keep the current 7-level tax rate. The 7-level tax rate has a more regular increase in influential tax.
The delegate also proposed changing the taxable income section. The taxable income of up to 10 million VND is 5%; over 10-20 million VND is 10%; over 20-40 million VND is 15%; over 40-60 million VND is 20%; over 60-80 million VND is 25%; over 80-100 million VND is 30%; over 150 million VND is 35%.
Sharing the same view, delegate Nguyen Thanh Phuong (Can Tho Delegation) also said that the 5-level tax is unreasonable. Income of 10 million VND is subject to a tax of 5%, but just need to increase to 11 million VND, it will have to be subject to 15%, creating a huge gap. Meanwhile, the group with an income of 10 to 60 million VND/month accounts for the largest rate.
