90% of business households 'escape' paying taxes when the tax threshold is raised to 500 million VND

On the evening of December 2, the National Assembly Standing Committee held its 52nd session to give opinions on explaining, accepting and revising three drafts: Law on Personal Income Tax (amended); Law on Tax Administration (amended); Law on amending and supplementing a number of articles of the Law on Public Debt Management.

Deputy Minister of Finance Cao Anh Tuan.

In the report on receiving and explaining opinions of National Assembly deputies and the review opinions of the Economic and Financial Committee on the draft Law on Personal Income Tax (amended), the Government revised the content on personal income tax on business income.

Regarding the adjustment of the non-taxable revenue level, the Government proposed to adjust it from 200 million VND/year to 500 million VND/year. At the same time, 500 million VND/year is also the deductible level before paying tax according to the rate on revenue.

For example, in the case of a household or individual distributing or supplying goods with a revenue of 1 billion VND/year and unable to determine the cost, they only have to pay personal income tax on the excess over 500 million VND, at a tax rate of 0.5%. That means the tax payable is (1,000-500) x 0.5% = 2.5 million VND/year.

Applying this revenue level, as of October, out of more than 2.54 million regular business households, it is expected that about 2.3 million business households will not have to pay tax (accounting for about 90% of the total 2.54 million business households). According to the tax authority's estimate, the total tax reduction (including personal income tax and value added tax) is about 11,800 billion VND.

In addition, the Government added regulations for households and individuals doing business with revenue from over 500 million VND/year to 3 billion VND/year to apply tax calculation based on income (revenue - expenses) to ensure tax collection according to the nature of income tax and apply a tax rate of 15%, similar to the corporate income tax rate for units with revenue under 3 billion VND/year.

Accordingly, all households and individuals doing business must pay taxes based on actual income. If income is high, they must pay more tax. If income is low, they must pay less tax. If there is no income, they do not have to pay tax.

Therefore, the Government believes that the level of non-taxable revenue will not have much impact on tax-paying households and individuals. In cases where businesses cannot determine expenses, they will have to pay tax at a rate based on revenue.

Regarding the adjustment of non-taxable revenue, the draft Law assigns the Government to submit to the National Assembly Standing Committee for adjustments in accordance with tax management for business individuals.

In addition, the draft Law stipulates that individuals with real estate rental activities with annual revenue of over 500 million VND/year, only apply the method of calculating based on the ratio of revenue, accordingly, they will not have to determine expenses, not have to offset income (if there is more than 1 real estate for rent), and do not have to finalize annual taxes.

Keep the highest personal income tax rate at 35%

In the new draft Law, the Government revised the regulations on progressive tax rates in the draft law, including adjusting the two tax rates of the tax rate, reducing the 15% tax rate (at level 2) to 10% and the 25% tax rate (at level 3) to 20%.

Specifically, with this new tax schedule, all individuals currently paying taxes at all levels will have their tax obligations reduced compared to the current tax schedule.

In addition, the new tax schedule also overcomes sudden increases at some levels, ensuring more reasonableness of the tax schedule.

Regarding the tax rate in the progressive tax table of personal income tax from salaries and wages for the highest tax rate of 35% at level 5.

Progressive tax schedule proposed in the draft Law.

The Government considers this a reasonable proposal, because it is an average tax rate, neither too high nor too low compared to other countries in the world as well as in the ASEAN region.

Comment (0)