Finance Ministry proposes to reduce income tax levels from seven to five
The latest Finance Ministry proposal to reduce income tax levels from seven to five will significantly benefit those earning below VND10 million (US$450) per month.
According to the General Taxation Department, those having income of below VND10 million per month account for 70 per cent of the people paying income tax from their salary, Thi said. (source: dantri)
Pham Dinh Thi, head of the ministry’s Tax Policy Department revealed this at a press briefing on Tuesday while announcing changes proposed to the Law on Personal Income Tax.
Under the new proposal, the 5 per cent personal income tax will apply to monthly incomes below VND10 million.
According to the General Taxation Department, those having income of below VND10 million per month account for 70 per cent of the people paying income tax from their salary, Thi said.
Need for changes
Thi said that the changes were necessary to adapt to current realities.
Many people have said that seven levels for personal income tax are too many, complicating things for both taxation agencies and tax payers. There were also complaints about the small gap between tax levels that led to much higher taxes for a very small increase in income.
For instance, currently those earning VND10 to VND18 million ($450 - $800) would have to pay a tax of 15 per cent, but those from VND18 million to VND32 million ($800 - $1.400) would have to pay income tax of 20 per cent.
Under the proposed changes, those earning VND10 million to VND30 million a month have to pay 10 per cent as income tax, while incomes of VND30 million to VND50million will attract 20 per cent in income tax.
Earnings of VND50 to VND80 million per month will be taxed 28 per cent, and those making more than VND80 million a month will have to pay the maximum income tax rate of 35 per cent, which remains unchanged.
The Ministry of Finance has also proposed that the Government reduces by 50 per cent the personal income tax for those working in hi-tech areas, information technology, agriculture, hi-tech agriculture processing and other areas on the priority list for development investment.
The Ministry of Finance is also proposing changes to other tax laws such as Corporate Income Tax, Special Consumption Tax and Natural Resource Tax./.
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