Proposal to raise tax threshold for business households to 300

Proposal to continue using 7-level tax schedule

On the afternoon of November 5, giving opinions at the Group on the Law on Personal Income Tax (amended), delegate Hoang Van Cuong ( Hanoi delegation) gave comments on amending the personal income tax table.

Instead of the current 7 levels, according to the draft, the tax schedule is adjusted down to 5 levels with the distance between levels increasing gradually to 10, 20, 30, 40 million VND. The 5 levels correspond to tax rates of 5%, 15%, 25%, 30%, 35%. The final tax rate is 35%, applied to taxable income over 100 million VND/month.

According to Mr. Cuong, the 5-level tax schedule in the draft Law is unreasonable.

"Taxable income up to 10 million VND is subject to a tax rate of 5%, but taxable income from 10 to 30 million VND "jumps" immediately to 15%. That means income of 11 million VND is also subject to a tax rate of 15%. Or taxable income from 30 million to 60 million VND will be subject to a tax rate of up to 25%.

This is unreasonable because if workers' income increases a little, taxes can increase a lot. This can cause workers to lose motivation to strive and try to increase their income," said delegate Hoang Van Cuong.

Delegate Hoang Van Cuong (Hanoi delegation)

Instead of the 5-step tax schedule, delegate Cuong proposed to keep the current 7-step tax schedule. The 7-step tax schedule has a more regular progressive tax increase. In addition, Mr. Cuong also proposed to change the taxable income.

"Taxable income 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%," Mr. Cuong proposed.

Sharing the same view, delegate Nguyen Thanh Phuong ( Can Tho delegation) also said that the 5-level tax rate is unreasonable. Specifically, an income of 10 million VND is subject to 5% tax, but if it increases to 11 million VND, it will be subject to 15%, creating a huge gap. Meanwhile, the income group from 10 to 60 million VND/month accounts for the largest proportion.

Delegate Phuong proposed to review the tax rates, possibly in the direction of 7 progressive rates, specifically as follows: Up to 10 million VND: 5%; from 10 - 30 million VND: 10%; 30 - 60 million VND: 15%; 60 - 100 million VND: 20%; 100 - 130 million VND: 25%; 130 - 160 million VND: 30%; Over 160 million VND: 35%.

"Currently, the average income per capita in our country is still low, while the 35% tax ceiling is quite high compared to many countries with higher average income. Therefore, it is necessary to recalculate to have a reasonable tax schedule, both ensuring revenue and creating motivation for workers," said delegate Nguyen Thanh Phuong.

The tax threshold of 200 million VND for individual business is unfair.

In his speech, delegate Hoang Van Cuong (Hanoi delegation) also gave his opinion on regulations on personal income tax for business individuals.

According to the draft, individuals with production and business activities with annual revenue of 200 million VND or less do not have to pay personal income tax. Personal income tax on business income of resident individuals with annual revenue from 200 million VND to 3 billion VND is determined by multiplying revenue by tax rate (from 0.5 - 5%).

According to Mr. Cuong, it is unfair to set a threshold of 200 million VND in revenue for a business household to start calculating tax. According to the Hanoi delegation, instead of basing on revenue, tax should be based on income.

Regarding this issue, delegate Tran Hoang Ngan (Ho Chi Minh City delegation) proposed that the Government consider taxing individual business households with revenue of 200 million VND or more.

"If the revenue is 200 million VND a year and the expenses are subtracted, how much income is left? Meanwhile, the deduction for personal tax is 15.5 million VND/month, which is calculated to be 186 million VND a year.

Therefore, this calculation is very low. Although it is said that it is compatible with the Law on Value Added Tax, I suggest reviewing this clause. It should be regulated that the business household's revenue must be at least 300 million or more, or even 400 million or more, to be subject to personal income tax for individual business people, to ensure compatibility with people with current income who are subject to tax for deduction", delegate Ngan suggested.

Previously, according to the audit report of the Economic - Financial Committee, regarding the regulation on the revenue level of business individuals not subject to personal income tax (from 200 million VND/year or less), according to Chairman of the Economic - Financial Committee Phan Van Mai, this tax-free revenue threshold is too low compared to business practice and does not ensure fairness when compared with the income level of salaried employees with family deductions.

Therefore, it is recommended that the drafting agency calculate and adjust the tax-free revenue level of individual business owners to be more equal and consistent with the family deduction level.

Source: https://vtv.vn/de-nghi-nang-nguong-chiu-thue-voi-ho-kinh-doanh-len-300-400-trieu-dong-100251105173533827.htm