Proposal to exempt and reduce personal income tax for some subjects

The Ministry of Finance proposed regulations on exemption and reduction of personal income tax (instructions on Clauses 2 and 3, Article 10 of Resolution No. 198/2025/QH15 on a number of special mechanisms and policies for private economic development).

The Ministry of Finance is drafting a Decree guiding the implementation of several articles of Resolution No. 198/2025/QH15 dated May 17, 2025, of the National Assembly on some special mechanisms and policies for the development of the private economy.

The Ministry of Finance has proposed exempting or reducing personal income tax for certain groups.

The Ministry of Finance stated that, according to the Personal Income Tax Law and its guiding documents, income from capital transfers includes income from the transfer of capital contributions, income from the transfer of securities, and income from capital transfers in other forms, distinguishing between income from the transfer of capital contributions to enterprises and income from the transfer of securities. Specifically: The Personal Income Tax Law (Clause 4, Article 3) stipulates: "Income from capital transfers, including: a) Income from the transfer of capital in economic organizations; b) Income from the transfer of securities; and c) Income from the transfer of capital in other forms."

According to tax regulations, personal income tax is a monthly tax. Therefore, the tax exemption or reduction period should be calculated continuously from the month in which the exempted or reduced income arises. If the income arises within a month, the tax exemption or reduction period is calculated for the full month. In practice, individuals may have multiple sources of income or receive income from salaries and wages from multiple sources during the tax period.

Clauses 2 and 3 of Article 10 of Resolution No. 198/2025/QH15 stipulate the policy of preferential personal income tax for individuals when transferring capital contributions, and for experts and scientists working at innovative start-up enterprises, research centers, innovation centers, and intermediary organizations supporting innovative start-ups.

Specifically: Exemption from personal income tax and corporate income tax on income from the transfer of shares, capital contributions, capital contribution rights, share purchase rights, and capital contribution purchase rights in innovative startup businesses. Exemption from personal income tax for a period of 2 years and a 50% reduction in tax payable for the following 4 years for income from salaries and wages received by experts and scientists from innovative startup businesses, research and development centers, innovation centers, and intermediary organizations supporting innovative startups.

Based on the provisions of the Personal Income Tax Law and its guiding documents, and to ensure consistency with corporate income tax exemptions, such as the policy on transferring income to other individuals or organizations for tax exemption purposes, and to ensure the policy is clear and transparent, the Ministry of Finance proposes the following guidance in the draft Decree:

Individuals who earn income from the transfer of shares, capital contributions, capital contribution rights, share purchase rights, or capital contribution purchase rights in innovative startup businesses are exempt from personal income tax on this income.

Income from the transfer of shares, capital contributions, capital contribution rights, share purchase rights, and capital contribution purchase rights as stipulated in this clause refers to income obtained from the transfer of part or all of the shares, capital contributions, capital contribution rights, share purchase rights, or capital contribution purchase rights in innovative start-up enterprises (including the sale of the enterprise), excluding income from the transfer of shares of public companies as regulated by the Securities Law.

In the case of selling an entire business owned by an individual through a capital transfer involving real estate, the individual must declare and pay personal income tax based on the real estate transfer activity.

Individuals who are recognized as experts or scientists by competent authorities in accordance with the Law on Science, Technology and Innovation and its guiding documents, and who receive income from salaries and wages from innovative startups, research and development centers, innovation centers, intermediary organizations supporting innovative startups, and intermediary organizations supporting innovation, are exempt from tax for a period of 2 years (24 consecutive months) and receive a 50% reduction in tax payable for the following 4 years (48 consecutive months) on this income.

The tax exemption or reduction period is calculated continuously from the month in which the tax-exempt or reduced income arises. If the income arises within a month, the tax exemption or reduction period is calculated for the full month.

In cases where an individual has both income from salaries and wages that are exempt from or reduced under these regulations, and income from other sources of salaries and wages, the amount of personal income tax exempted or reduced under these regulations shall be determined as follows:

The Ministry of Finance is currently seeking feedback on this draft on the Ministry's official website.

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Source: https://baolaocai.vn/de-xuat-mien-giam-thue-thu-nhap-ca-nhan-mot-so-doi-tuong-post879506.html