According to the draft revised Personal Income Tax Law, medical and educational expenses will be deducted before calculating taxes - Photo: QUANG DINH
In addition to the family deduction level (GTGC), the progressive tax schedule is an important factor in regulating the personal income tax (PIT) payable, so how to amend it is something that taxpayers and experts are very interested in.
Extend tax brackets but not much
In the draft law, the Ministry of Finance proposed to amend the progressive tax schedule with 2 options, both with 5 levels instead of 7 levels as currently, and at the same time widen the gap between levels. According to the Ministry of Finance , narrowing the number of tax levels will simplify tax management and collection, facilitate tax declaration and tax reform trends in the world.
The current progressive tax schedule consists of 7 levels, the gap between taxable incomes between levels is too large, leading to a rapid increase in tax regulation at the following tax levels. For example, taxable income above 10 million VND falls into level 2 with a tax rate of 15%. If taxable income is above 18 million VND, it falls into level 4 with a tax rate of 20%, above 32 million VND, it falls into level 5 with a tax rate of 25%...
With option 1 as proposed in the draft law, the regulation level at the first 3 levels is more relaxed, but the regulation level for those with taxable income of over 50 million VND is almost unchanged. Option 2 reduces tax more for taxable income over 50 million VND.
The Ministry of Finance also proposed that the Government regulate the level of GTGC to ensure flexibility and proactive adjustment to suit the reality of life and the requirements of socio-economic development. In particular, the Ministry of Finance proposed to deduct from income before calculating tax the expenses for health care, education and training of the taxpayer and of the taxpayer's parents, spouse, and children who are dependents...
Speaking to Tuoi Tre, a member of the drafting board of the draft Law on Personal Income Tax replacement said that depending on the socio-economic conditions and tax policy orientation of each country, the taxable income and corresponding tax rates are determined. In most countries, the number of tax brackets ranges from 5 to 13, notably Singapore has the highest number of tax brackets at 13.
Reducing the number of tax brackets and raising the VAT rate will help taxpayers reduce the amount of tax payable. For example, individuals with a taxable income of VND10 million/month will receive a reduction of VND250,000/month. With a taxable income of VND30 million/month, the reduction will be VND850,000/month...
"Taxable income is understood as income after deductions such as VAT for the taxpayer himself, for dependents (if any), insurance... An important content that the Ministry of Finance proposed is to deduct medical and educational expenses before calculating tax", a representative of the Ministry of Finance informed.
Source: Ministry of Finance - Data: Le Thanh - Graphics: TAN DAT
Vietnam is in the group of high tax countries.
Commenting on Vietnam's progressive tax rate and taxable income, Ms. Vu Thu Ha - Deputy General Director, Tax Advisory Services, Deloitte Vietnam - said that Vietnam is in the group of countries with high personal income tax rates compared to the Southeast Asian region.
Specifically, Vietnam's maximum tax rate is 35%, equivalent to Thailand and the Philippines. Meanwhile, Singapore's highest tax rate is 24%, Malaysia and Myanmar are 30%.
Meanwhile, the taxable income at each tax bracket is quite low compared to the region, maintained for more than 15 years. With the roadmap for the draft Law on Personal Income Tax to be issued and applied in 2026 (after 17 years of applying the Law on Personal Income Tax, calculated from 2007), combined with the increase in income from wages and salaries of individuals and consumer price indexes, it can be seen that the taxable income level is outdated, providing little support for the workforce.
"The tax schedule needs to be redesigned to reasonably adjust the difference between tax thresholds and tax rates to ensure fairness. This will help limit the situation of "stepping up" - when income only increases slightly but taxpayers are moved to a higher tax bracket with a large difference in tax rates - causing inequity between people with similar income levels," said Ms. Ha.
According to Ms. Ha, reducing tax brackets will significantly reduce the tax burden for taxpayers at lower levels, especially those at the first three levels - which are mainly individuals with incomes just enough to meet basic living needs.
According to lawyer Tran Xoa - director of Minh Dang Quang Law Firm, the 35% tax rate - the highest rate - should be abolished to encourage taxpayers with high technical qualifications and good management capacity to work hard and produce and do business to earn more income. At the same time, the progressive tax rate should be improved in a more "open" direction, there should be only 4 rates: 5 - 10 - 20 - 30%.
At the same time, the remaining levels should be extended, specifically: apply a 5% tax rate to taxable income up to 20 million VND, a 10% tax rate to taxable income from 20 to 40 million VND, a 20% tax rate to taxable income from 40 to 80 million VND. The 30% rate applies to taxable income over 80 million VND.
"This adjustment is to be compatible with countries in the region, reduce obligations for taxpayers, encourage taxpayers to work creatively with high income, get rich legitimately, and at the same time attract foreign experts with high qualifications and skills to work in Vietnam," said Mr. Xoa.
Don't let it become outdated as soon as it is applied.
Since the application of the Personal Income Tax Law, the personal income tax rate has been increased twice, but the personal income tax revenue has continuously increased over the years. Therefore, according to Mr. Xoa, the personal income tax rate for taxpayers should be increased to 18-20 million VND/month because 15.5 million VND/month is still too low.
"This adjustment is for the future, not for the past period, so it is necessary to raise the GTGC level to avoid the situation where the application becomes outdated," Mr. Xoa suggested. Also according to Mr. Xoa, in recent years, enterprises have enjoyed many incentive policies such as exemption and reduction of corporate income tax, preferential tax rates, tax payment extension, and most recently, according to Resolution 198, newly established small and medium-sized enterprises are exempted from corporate income tax for the first three years.
Authorities are also proposing to apply a preferential tax rate of 15% to enterprises with total annual revenue of no more than VND3 billion and a tax rate of 17% to enterprises with total annual revenue from over VND3 billion to no more than VND50 billion... "Therefore, there needs to be a policy to encourage salaried workers to help them overcome difficulties in the current period," said Mr. Xoa.
While prices of many essential foods are increasing, family deductions are being slowly adjusted - Photo: TTD
* Delegate NGUYEN QUANG HUAN (HCMC):
Apply the new taxable starting point immediately
The GTGC level has been maintained since 2020, while many essential goods and services have increased sharply in price over the past 5 years, some even increasing faster than income. In addition, the average income of people over the past 5 years has also increased. From July 1, 2024, the basic salary has been adjusted to increase by 30% and the regional minimum wage has also increased over the years.
In recent times, many National Assembly deputies and voters have voiced their request to soon adjust the GTGC level to suit the reality. Therefore, the early adjustment of the GTGC level is an urgent requirement and needs to be implemented immediately.
However, compared to reality, the adjustment of this GTGC level has been slower and has not met the requirements. In addition, the Ministry of Finance has proposed two options and proposed to apply the GTGC level from the 2026 tax period, which is not appropriate. Because if submitted to the National Assembly Standing Committee for approval, it will still take several months before the 2025 personal income tax settlement period.
Therefore, it should be applied from the 2025 tax period instead of waiting until the 2026 tax period. Doing so will cause taxpayers to have to wait longer. The Ministry of Finance is seeking comments on the draft Law on Personal Income Tax, which proposes assigning the Government to prescribe the VAT rate in accordance with the socio-economic situation in each period.
This proposal is completely suitable, ensuring flexibility and proactive adjustment to suit the reality and requirements of the country's socio-economic development in each period.
Another content, the Ministry of Finance proposed to reduce the number of levels in the personal income tax table from 7 levels to 5 levels and widen the income range at each level, starting from taxable income of 10 million VND/month with a tax rate of 5%.
Compared to the current law, the starting level is higher but still low, not meeting the practical life, especially with the income level of people, life in big cities. Therefore, in my opinion, we need to continue researching to raise the starting level appropriately, at the same time consider expanding the income range at each level to a higher level.
* Delegate HOANG VAN CUONG (Hanoi):
Add actual expenses to deduct tax
In principle, personal income tax is not only a tool to generate revenue for the budget but also a way for the State to regulate income in a fair direction.
In which, those who have more pay more, those who have less pay less. But to be fair, we must first calculate correctly. Meanwhile, the standard of living between localities, especially in large cities and urban areas compared to other regions, is very different.
House rent, medical expenses, education, other living expenses... in big cities are many times higher than in rural areas or mountainous provinces.
However, it is unreasonable that the level of GTGC for people in big cities and people in mountainous areas is still the same. Therefore, it is necessary to rely on the regional minimum wage which is adjusted annually to determine the level of GTGC.
It is possible to take 4 times the regional minimum wage as a deduction for the taxpayer himself and 2 times for each dependent... Thus, workers in areas with high living costs will receive more income tax deductions.
If applied, the tax policy will be closer to real life, reducing unnecessary burdens on people. In addition, the draft law that is being consulted by the Ministry of Finance has proposed to reduce the tax rate from 7 levels to 5 levels and widen the gap between levels, which is appropriate.
But further research is needed to ensure consistency, more clearly demonstrating the principle that higher income earners should pay higher taxes.
Along with that, we should add actual expenses that are deductible when calculating taxes, such as education, medical, insurance, home loan interest, etc. These are expenses directly related to social security and people's quality of life.
Allowing deductions would both reduce the tax burden and encourage spending on education and healthcare - areas that the State is also prioritizing. In addition, we should not wait for the price index (CPI) to increase by 20% before adjusting the VAT rate.
In reality, the CPI is calculated on average for 752 items, while workers mainly spend on a few dozen essential items. Therefore, this calculation method is prone to delay and even become outdated.
Instead, a periodic mechanism should be established - for example, a review every two years - to adjust the deduction levels, ensuring that tax policies always keep up with real life. At the same time, the Government should be given the right to make adjustments to ensure flexibility, suitability with the conditions and socio-economic development of each period.
Source: https://tuoitre.vn/sua-thue-thu-nhap-ca-nhan-phai-tinh-duong-dai-20250723094105757.htm
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