Proposal to reduce personal income tax to 5 levels: Adjust tax rates to reduce burden

The Ministry of Finance has just reported to the Government on the reception and explanation of the National Assembly deputies' opinions on the draft Law on Personal Income Tax (amended). The most notable point is the proposal to narrow the progressive tax table from 7 to 5 levels, adjusting the tax rate so that taxpayers at all levels will have their obligations reduced compared to the current level.

The Ministry of Finance has reviewed and proposed strong adjustments to the progressive tax schedule, reducing the number of tax rates from 7 to 5. Photo: Minh Phuong

Based on comments, the Ministry of Finance has reviewed and proposed to strongly adjust the progressive tax schedule, reducing the number of tax rates from 7 to 5, while widening the gap between the levels; readjusting 2 tax rates so that all individuals currently working at the tax levels will receive a reduction compared to the current tax schedule, while overcoming the sudden increase between the levels.

Specifically, the 15% tax rate at level 2 is reduced to 10%, and the 25% rate at level 3 is reduced to 20%.

According to the proposal, level 1 applies a tax rate of 5% for taxable income up to 10 million VND/month, to reduce the burden on the group of workers with common income. Level 2 applies a tax rate of 10% for income over 10 to 30 million VND/month, down from the current rate of 15%. Level 3 applies a tax rate of 20% for income over 30 to 60 million VND/month, lower than the current rate of 25%. Level 4 applies a rate of 30% for income over 60 to 100 million VND/month and level 5 applies the highest rate of 35% for income over 100 million VND/month, the highest rate in the tax table.

The Ministry of Finance said that with this plan, all taxpayers at the current levels will have their tax obligations reduced. The new tax schedule also overcomes sudden increases at some levels, helping to make the tax structure more reasonable.

Regarding the highest tax rate of 35% at level 5, the Ministry of Finance considers this proposal reasonable, because it is an average tax rate, not too high nor too low compared to other countries in the world as well as in the ASEAN region (some countries in the region such as Thailand, Indonesia, and the Philippines are also regulating the tax rate at the highest tax level of 35%; China is 45%). In addition, if the 35% rate is adjusted down to 30%, it will be considered a tax reduction policy for the rich.

Regarding the family deduction level, the Draft Law submitted to the National Assembly does not stipulate a specific family deduction level but assigns the Government to prescribe it in accordance with the socio-economic situation in each period. Incorporating comments and contributions, to ensure the National Assembly's authority to prescribe the basic tax content as prescribed by the Constitution, on the basis of the National Assembly Standing Committee's issuance of Resolution No. 110/2025/UBTVQH15 adjusting the family deduction level applicable from 2026, the Ministry of Finance revises the draft Law in the direction of including the family deduction level in the Law; assigns the Government to submit to the National Assembly Standing Committee to adjust this family deduction level based on fluctuations in prices and income in accordance with the socio-economic situation in each period.

Some other contents were also accepted and adjusted. The regulation on “other income as prescribed by the Government” was removed because it was not clearly defined. In case a new type of income arises that needs to be taxed, the Ministry of Finance will submit a report to the Government to report to the National Assembly for consideration and supplementation according to its authority.

Many regulations related to taxable income, tax exemptions and dependents continue to be improved according to the opinions of National Assembly deputies. Some notable adjustments include: amending regulations on income from transferring auctioned license plates; clarifying regulations on overtime wages, night work and wages paid for non-vacation days; adding tax exemption for local government bond interest.

People's Newspaper

Source: https://baodongnai.com.vn/kinh-te/202511/de-xuat-thue-thu-nhap-ca-nhan-con-5-bac-dieu-chinh-thue-suat-theo-huong-giam-ganh-nang-82f06bf/