Personal income tax and the 'bold' proposal of the Ministry of Public Security

Commenting on the draft amendment to the Law on Personal Income Tax (PIT), the Ministry of Public Security proposed not to tax income paid from the state budget because it would be like "spending and then collecting", creating procedures and tax collection personnel.

The Ministry of Public Security proposes to exempt personal income tax on wages and salaries paid from the state budget - Photo: Contributor

This is a "bold" and groundbreaking proposal, which of course must be debated, but that is what the process of building the new Personal Income Tax Law requires. Up to now, through public opinion, the draft law has not been full of breakthrough elements.

Comments from the Ministry of Public Security and the press show that public opinion is very interested in the new Personal Income Tax Law. Because it not only concerns tens of millions of people and their families but is also a "runway" for the country to take off with the goal of double-digit growth in the next 20 years.

At that time, it is necessary to encourage creativity and encourage getting rich. A Personal Income Tax Law that follows the beaten path, is not creative, and lacks breakthroughs will make the "runway" bumpy.

There are breakthroughs that have not been accepted yet, such as regional family deductions, tax on profits instead of "lump sum" tax on real estate, progressive tax on real estate surfers, and regulation because taxes are still high when Vietnam's personal income tax is among the highest in Southeast Asia...

Resolution No. 191 of the Government dated June 26, 2025 requires the Ministry of Finance to consider regional characteristics when developing new family deduction levels.

This request is widely agreed because the cost in Ho Chi Minh City and Hanoi is much higher than in remote areas but has the same family deduction level.

However, the Ministry of Finance "after careful research, this is an option that is difficult to implement in terms of organization and administrative management".

Similarly, the initial draft proposed two ways to calculate personal income tax on real estate: "fixed" 2% and collected on the difference between input and output. But then the difference calculation method was "withdrawn", considered as nothing new, as it has been applied for a long time.

The 2% "contract" collection method is easy for the tax industry but creates the absurdity that even if there is a loss, taxes must be paid.

Withdrawing this collection method, the Ministry of Finance has contradicted itself when it always requires businesses to calculate correctly and fully the input and output costs, but now they have enough "input - output, reasonable and valid invoices" but... "contract".

It should be recalled that nearly 20 years ago, the Ministry of Finance included these two tax calculation methods in the 2007 Personal Income Tax Law, effective in 2009. Then, in 2014, it submitted to the National Assembly to remove the difference tax calculation method from the law.

Is it true that after nearly 20 years, even though data digitization has made great strides, cost management is now very tight, and people voluntarily declare correctly and fully, this fair and reasonable tax calculation method still cannot be applied?

Even the new tax rate cannot be called a breakthrough and suitable for the country's path to becoming rich when it imposes too high a regulation on people with high incomes, considered talented, hard-working, and creative.

Personal income tax affects people's purchasing power, quality of life and economic growth. If income is not abundant, taxes are too high, people do not have enough to spend, which will certainly affect one of the three pillars of economic growth: export, investment and consumption.

There have been many breakthrough contributions according to the new vision - the period of the country's rise - to build the new draft Law on Personal Income Tax, so it is necessary to absorb breakthroughs, to escape the rut to avoid promulgating and then having to... amend.

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Source: https://tuoitre.vn/thue-thu-nhap-ca-nhan-va-de-xuat-tao-bao-cua-bo-cong-an-20250920091549946.htm