On June 22, the Ministry of Finance published a summary of opinions on the draft Circular detailing a number of articles of the Personal Income Tax Law and the Government Decree detailing a number of articles and measures to organize and guide the implementation of the Personal Income Tax Law.
According to the draft, the average monthly income in the year from all sources of income of dependents specified in point b, clause 4, Article 10 of the Personal Income Tax Law does not exceed 3 million VND/month.
Contributing opinions on this content, the Thanh Hoa Provincial Tax Department said that the income level of 3 million VND/month is a step forward compared to the old regulation of 1 million VND/month.
However, this unit is concerned that the regulation does not have a flexible adjustment mechanism according to economic fluctuations.
According to comments, in the context of many economic changes, if only a absolute number is stipulated in the circular, it is very easy to fall into a backward state after a period of application, similar to the problems that have arisen with previous regulations.
In addition, the determination of the "total sources of income" of dependents, especially for self-employed workers or farmers, is still mainly based on the commitment of taxpayers, while tax authorities do not have sufficient tools for cross-checking.
From there, the Thanh Hoa Provincial Tax Department proposed to supplement regulations: in case the consumer price index (CPI) fluctuates by more than 20% compared to the time the circular took effect, the Ministry of Finance shall report to the Government to submit to the National Assembly Standing Committee to adjust this income level to suit the reality.
At the same time, this agency also proposed that the tax authority conduct income reconciliation of dependents through personal tax identification numbers and income payment data on the electronic database system of the Tax sector.
According to the explanation of the contributing unit, supplementing the adjustment mechanism will help avoid having to amend policies in a short time after promulgation, and at the same time protect the rights of taxpayers from the impact of inflation.
The countermeasuring mechanism also contributes to improving accuracy and limiting the situation of incorrect declarations of dependents in order to evade taxes.
Accepting and explaining this opinion, the drafting agency said that the regulation of the income level of dependents has been assigned by the National Assembly to the Minister of Finance at point b, clause 4, Article 10 of the Personal Income Tax Law.
Accordingly, the Minister of Finance will base on indicators of population living standards, average social income, price index and other related factors to stipulate income levels suitable to the socio-economic context in each period.
In the current draft circular, the income level of dependents is determined to be 3 million VND/month.
The drafting agency said that in the future, if related indicators have major fluctuations, the Minister of Finance will issue a document to implement necessary adjustments according to his authority. Therefore, the draft circular does not prescribe a regulatory mechanism as proposed.
Regarding the proposal on the information control mechanism, the drafting agency said that Clause 2, Article 3 of the draft circular has stipulated that taxpayers must be responsible for determining dependents who do not have income or have average monthly income in the year from all sources of income not exceeding the prescribed level.
Taxpayers must also declare correctly and truthfully the income of dependents. In case the tax authority detects incorrect declaration, it will be handled according to the provisions of law.
According to the drafting agency, along with the development of specialized database systems, tax authorities are increasingly facilitated in controlling personal income sources through data from income-paying agencies.
