Greenlight for higher income tax threshold
HA NOI (VNS)— Law makers agree with the Government's proposal to increase the personal income tax threshold to VND9 million (US$429), 2.25 times higher than the current level.
Also discussed yesterday at the 11th session of the National Assembly's Standing Committee, taxpayer dependent deductions will increase from VND1.6 million ($76) to VND3.6 million ($171) from July 1, 2013.
However, if the country's consumer price index increases above 20 per cent, the Government will ask the National Assembly (NA) to adjust the dependent deduction level in accordance with price fluctuations.
This means that an individual who earns a monthly salary of less thanVND9 million ( $429) or a person with two dependents who earns less than VND16.2 million ($771) per month will enjoy tax exemption.
The proposed increase aims to amend a number of personal income tax law articles adopted by the NA since 2007 that have become outdated due to the impacts of the global economic crisis.
However, a report by the NA Finance and State Budget Committee proposes a lower personal income tax threshold of VND7 million and dependent deduction increase to VND2.8 million.
Chairman of the committee Phung Quoc Hien said that increasing the personal income tax threshold from VND4 million to VND9 million would turn the personal income tax law into a high income tax law and have a big impact on sources of the State Budget income.
However, Chairman of the NA Law Committee Nguyen Van Hien said that people's lives should be continuously improved as the majority of the public are labourers.
"Labourers need a basic income level that provides them a better daily living standard. The Government should raise the threshold to VND9 million if it doesn't impact much upon the annual budget income," said Hien.
Meanwhile, Chairman of the NA Social Affairs Committee Truong Thi Mai feels that the real income of people has decreased due to wage increases failing to compensate for the current rate of inflation.
NA Deputy Chairman Uong Chu Luu claimed that the proposed threshold and dependent deduction level were in line with the country's current socio-economic conditions, and added that people would be happier if the NA adopted a draft law for revising and amending several personal income tax articles in the coming months.
The Government estimates that the State Budget income would see reductions of around VND5.2 trillion ($247.6 million) in the last six months of 2013 and VND13.35 trillion ($635.7 million) in 2014 if the law comes into effect from the beginning of July next year. — VNS