Correct understanding of tax calculation for people with income of 100 million VND/month

(Chinhphu.vn) - The revised Personal Income Tax Law Project proposes to restructure the progressive tax schedule, reducing the number of levels from 7 to 5. The plan submitted by the Government to the National Assembly widens the gap between income levels, helping to simplify and regulate income more appropriately to the actual situation.

Personal income tax is about to be revised: Reduce the number of levels, the amount of tax payable will be reduced

According to the Ministry of Finance , the Draft Law on Personal Income Tax (amended) has amended one of the basic and core contents of the Law, which is to adjust the Partial Progressive Tax Schedule.

Specifically, the draft Law on restructuring the "Partially progressive tax schedule applicable to income from salaries and wages" to simplify the tax schedule and regulate income to suit the socio-economic situation in the direction of reducing the number of tax rates from 7 to 5 and widening the gap between the levels corresponding to the tax rates of 5%, 15%, 25%, 30%, 35%. In the 2 proposed options, the majority of opinions agreed with Option 2 and the Government submitted to the National Assembly according to this option, accordingly the gap between the tax rates is widened and gradually increased to 10, 20, 30, 40 million VND; the lowest tax rate is still kept at 5% and the last tax rate is 35% applied to taxable income over 100 million VND/month. Specifically:

1	Up to 120	Up to 10	5
2	Over 120 to 360	Over 10 to 30	15
3	Above 360 ​​to 720	Over 30 to 60	25
4	Above 720 to 1,200	Over 60 to 100	30
5	Over 1,200	Over 100	35

Income of 100 million VND/month is not subject to 35% tax rate

According to the provisions of the Personal Income Tax Law, the income from salaries and wages received by individuals (excluding allowances and subsidies as prescribed) will be deducted from social insurance, health insurance, unemployment insurance (a total of 3 items is 10.5% of the monthly salary), professional liability insurance for some occupations that must participate in compulsory insurance, minus the family deduction (VND 15.5 million/person/month and VND 6.2 million/person/month for each dependent (if any) and minus charitable and humanitarian contributions as prescribed... the remaining amount is taxable income to apply to the Partial Tax Schedule.

The Ministry of Finance gives an example of an individual with an income of 100 million VND (no dependents), then the taxable income to be applied to the Tax Table is 79.062 million VND (100 million - 4,446 million (Health Insurance, Social Insurance) - 0.992 million (Unemployment Insurance)) - 15.5 million (Personal deduction). If calculated according to the Tax Table in the draft Law, the tax payable is 10 million x 5% + 20 million x 15% + 30 million x 25% + 19.062 million x 30% = 16.7186 million VND (accounting for 16.72% of the total income of the individual).

Meanwhile, if calculated according to the current Tax Table, the tax payable is = 5 million *5% + 5 million *10% + 8 million *15% + 14 million *20% + 20 million *25% + 27,062 million *30% = 17,8686 million VND (accounting for 17.87% of total personal income).

The above figures show that a person with an income of 100 million VND/month does not have to pay a tax rate of 35%. With the same family deductions and compulsory insurance, the tax rate framework in the draft law shows that the level of regulation into the State budget has decreased compared to the current level.

Mr. Minh

Source: https://baochinhphu.vn/hieu-dung-ve-cach-tinh-thue-voi-nguoi-co-thu-nhap-100-trieu-dong-thang-102251107150449674.htm