Vietnam to raise taxable personal income threshold from July
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|Vietnam’s new taxable personal income threshold to take effect from July. (Photo: Vietnamnet)|
Vietnam’s lawmakers have approved a proposal to increase the minimum taxable income threshold by 22 percent to VND11 million ($479) starting July 1, according to VnExpress.
This means that a person with an income of less than VND11 million per month will not have to pay personal income tax. The current threshold is VND9 million ($392).
The threshold will increase by VND4.4 million ($192) for each dependent a person claims, also up 22 percent from now.
This means a person with a monthly income of VND15 million ($653) with one dependent will no longer have to pay personal income tax, compared to a tax of VND120,000 ($5.2) now.
A person making VND20 million ($870) a month with two dependents will pay VND10,000 (44 cents) instead of VND190,000 ($8.3) now.
An individual with income of less than VND20 million (US$863.44) and one dependent would have to pay tax of VND230,000 (US$9.93), 48% less than the amount paid currently, while those with higher income would be subjected to a 7% reduction in tax amount.
|The new threshold will exempt an addition of one million people from personal income tax obligations (Photo: Nhan Dan)|
The new threshold will exempt an addition of one million people from personal income tax obligations, the government had estimated earlier.
Additionally, the family circumstance-based deduction for each dependent of a taxpayer will also be increased from VND3.6 million (US$155.42) per month to VND4.4 million (US$189.96).
Under the existing legislation, a reduction based on family circumstances means a sum of money deductible from pre-tax income.
Those having paid income tax based on the previous standard deduction would be refunded by the end of this year.
|The ministry expected a higher disposable income as a result of the adjustment would encourage household consumption and spur economic growth (Photo: VnExplorer)|
In 2019, over 6.88 million people paid personal income tax of a combined VND79.2 trillion (US$3.41 billion). The figure would be reduced to VND68.92 trillion (US$2.97 billion), down 13% year-on-year, the Ministry of Finance has estimated.
The ministry expected a higher disposable income as a result of the adjustment would encourage household consumption and spur economic growth, reported by Vietnamnet.
But experts had also expressed opposition to the increase, saying it was too small compared to the fast-growing economic growth the country has recorded in recent years.
Nguyen Khac Quoc Bao, head of the finance department at the HCMC University of Economics, suggested a 55 percent increase to VND14 million ($609) so that more people will be exempt from tax duties.
The ministry estimates that revenue from income tax would fall 13 percent to VND68.92 trillion ($2.96 billion) with the new threshold.
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