This view was given by Finance Minister Ho Duc Phoc when talking to the press on the sidelines of the National Assembly on the afternoon of November 2, to explain the National Assembly delegate's opinion that Vietnam's personal income tax is decades behind the world .
According to Mr. Phuc, the current deduction for taxpayers is more than 2.4 times the average income per capita (much higher than the common level that countries around the world are applying from 0.5 to 1 times).
Current regulations state that the family deduction for personal income tax calculation is 11 million VND/month for taxpayers and 4.4 million VND/month for dependents, while the average salary is 4.6 million VND.
Finance Minister Ho Duc Phoc talks to the press on the sidelines of the National Assembly (Photo: Minh Chau).
"The family deduction level compared to the average salary is high, but compared to the urban living standards of the people, the current tax calculation and family deduction level is low," according to the Minister of Finance.
Expressing his opinion on the income level of 12 million VND/month in urban areas, the Minister of Finance frankly stated that this is not enough to live on.
He said the Ministry of Finance has proposed to include the Personal Income Tax Law in the program of amendment. However, this bill has not been added to the law-making program in the coming time, so the Ministry of Finance will first amend the following laws: Value Added Tax, Corporate Income Tax, Special Consumption Tax and the revised Tax Code.
Sharing more about the direction of amending the Personal Income Tax Law, Mr. Phuc said that next year, salary reform will be implemented from July 1, 2024. On that basis, the original income will be calculated, the average salary increase each year will be 7-8% to serve as the basis for calculating the average income.
Regarding average income, the Minister of Finance emphasized that this will be the basis for classifying subjects according to income levels, regions and increasing family deductions to suit reality.
According to him, personal income tax revenue accounts for only a small proportion of total budget revenue, and is "insignificant" compared to corporate income tax.
Earlier, discussing the State budget that morning, Standing Member of the Finance and Budget Committee Tran Van Lam expressed his opinion that regulations in calculating Personal Income Tax such as starting point of taxable income, family deductions, taxable levels... are not updated according to fluctuations in minimum wage, prices and inflation. "There is content that is decades out of date. This is a major problem," Mr. Lam emphasized.
The current personal income tax includes 7 progressive rates with tax rates from 5% to 35%, applied from 2007 to present.
One of the most frequently mentioned shortcomings is the family deduction level. Currently, the family deduction level is 15.4 million (including 11 million personal deduction and 4.4 million dependent deduction), maintained since July 2020.
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