New proposal on personal income tax

(Chinhphu.vn) - The Ministry of Finance is soliciting comments on the draft Law on Personal Income Tax (PIT) (replacement).

Ministry of Finance proposes to reduce personal income tax rate from 7 to 5 levels

The Ministry of Finance said the purpose of developing the Personal Income Tax Law (replacement) is to expand the tax base; review, amend and supplement regulations on taxpayers and taxable income; study and adjust the threshold and personal income tax rates for some types of income to ensure consistency with the nature of each type of income and the regulatory goals of personal income tax.

In addition, research on adjusting family deductions for taxpayers and dependents, amending and supplementing regulations related to a number of specific deductions to suit the new context; reducing the number of tax brackets of the progressive tax rate schedule applied to income from salaries and wages to contribute to simplifying the tax schedule.

Research and amend regulations on exemption and reduction of personal income tax to suit the requirements of the country's socio -economic development in the coming period and international practices, contributing to the implementation of the Party and State's policies on attracting high-tech human resources, achieving the goals of green growth and sustainable development; simplifying the implementation of personal income tax policies for both taxpayers and tax authorities, preventing tax evasion and avoidance; effectively overcoming shortcomings and difficulties arising from the implementation of the current Personal Income Tax Law to ensure transparency, ease of understanding and implementation of the Law.

Personal income tax rate reduced from 7 to 5 levels

According to the Ministry of Finance, Clause 2, Article 22 of the Law on Personal Income Tax stipulates that the progressive tax schedule applies to income from salaries and wages with 7 tax rates: 5%, 10%, 15%, 20%, 25%, 30% and 35%. Through the actual implementation process, there is a view that the current progressive tax schedule is unreasonable, with too many rates, the gap between rates is too narrow, easily leading to a jump in tax rates when summing income at the end of the year, increasing the amount of tax payable, the number of tax settlements while the amount of additional tax payable is not much.

Through reviewing the current tax structure and studying the trend of improving people's living standards in the coming time as well as international experience, it is possible to study to reduce the number of tax brackets of the current Tax Schedule from 7 brackets to an appropriate level; along with that, consider widening the income gap in the tax brackets, ensuring higher regulation for those with income at high tax brackets. Implementing in this direction will contribute to simplifying and reducing the number of tax brackets to facilitate tax declaration and payment by taxpayers.

The amendment of the Personal Income Tax Schedule needs to be consistent with the orientation set out in the Tax System Reform Strategy to 2030, ensuring consistency with the socio-economic context, income and living standards of the people and with international practices, especially with countries with similar conditions, while ensuring the rights of workers, encouraging the development of the labor market in the context of international integration, and ensuring revenue for the State budget.

In the draft, the Ministry of Finance proposed 02 options to amend the Tax Schedule, specifically:

Option 1

Level Tax	Taxable income/month (million VND)	Income gap in each tax bracket (million VND)	Tax rate (%)
1	Up to 10	10	5
2	Over 10 to 30	20	15
3	Over 30 to 50	20	25
4	Over 50 to 80	30	30
5	Over 80	-	35

Option 2:

Level Tax	Taxable income/month (million VND)	Income gap in each tax bracket (million VND)	Tax rate (%)
1	Up to 10	10	5
2	Over 10 to 30	20	15
3	Over 30 to 60	30	25
4	Over 60 to 100	40	30
5	Over 100	-	35

According to the Ministry of Finance, reducing the number of tax brackets will contribute to simplifying tax management and collection, facilitating tax declaration and calculation, and in line with the trend of personal income tax reform in the world . Implementing options 1 and 2 will meet the goal of reducing tax brackets and adjusting income. tax at each even number step. However, the impact of the two options is different. each other

For Option 1, individuals with taxable income currently at level 1 will not be affected (however, with the adjustment of the family deduction level, individuals with income at level 1 will all receive a tax reduction), individuals currently paying taxes from level 2 or higher will receive a tax reduction compared to the present (for example, individuals with taxable income of 10 million/month will receive a reduction of 250,000 VND/month, individuals with taxable income of 30 million/month will receive a reduction of 850,000/month, individuals with taxable income of 40 million/month will receive a reduction of 750,000 VND/month, individuals with taxable income of 80 million VND will receive a reduction of 650,000 VND/month...).

For Option 2, basically every individual with taxable income from 50 million VND/month or less will have their tax reduced equivalent to Option 1. For individuals with taxable income over 50 million VND/month, the reduction will be greater than Option 1, so the state budget revenue will be reduced more than Option 1.

The Ministry of Finance is soliciting comments on this draft on the Ministry's Electronic Information Portal.

Wisdom

Source: https://baochinhphu.vn/de-xuat-moi-ve-thue-thu-nhap-ca-nhan-102250722113850374.htm