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Tax code reforms to decipher dependents

Update: May, 18/2013 - 10:16
People pay taxes at a State Treasury in District 1, HCM City. FromJuly, not ony personal income tax payers but also their dependents will be granted tax codes. It is expected to improve tax management and better implement the amended Personal Income Tax Law which takes effect in July. — VNA/VNS Photo Pham Hau

HA NOI (VNS)— People who are dependent on personal income tax payers will be given their own tax codes to avoid people lodging claims as dependents of more than one taxpayer.

The move would help tax officers verify the accuracy of tax returns and reduce tax fraud, said Nguyen Van Phung, vice head of the Tax Policy Department under the Finance Ministry.

Commenting about the new tax code at a recent workshop on the implementation of the amended Law on Personal Income tax (PIT), Phung said the move was part of work on guidelines the ministry would complete by July when the amended law would take effect.

Viet Nam introduced the Law on Personal Income Tax in 2007.

Under the amended law, as of July, the personal income tax threshold will rise from VND4 million (US$192) to VND9 million ($430).

Millions of low-earners receive tax break

About 3 million people will no longer pay personal income tax as of July thanks to major amendments in the Personal Income Tax Law, including an increased threshold and deductions for dependent people.

The changes will lead to a reduction of VND8 trillion ($381 million ) to this year's State-budget and VND14 trillion ($667 million) next year, according to estimates from the Finance Ministry.

Despite concerns over the loss of fund sources for the State budget, people, especially those with monthly incomes of less than VND10 million living in urban areas, feel happy with the new policy as their tax burden is lighter. — VNS

 

The new deduction will increase by VND3.6 million ($170) a month for each dependent person, compared to the current deduction of VND1.6 million ($75).

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.

Vice head of the General Department of Taxation's Personal Income tax Management Department Ta Thi Phuong Hoa said that about 10 million people who made claims as dependents would be granted tax codes.

"When the tax codes are granted, individuals need to secure their codes carefully," she said, warning that fraudsters could steal the code and personal information to falsify tax files and evade taxation.

Chairwoman of the Viet Nam Tax Consultation Association, Nguyen Thi Cuc said that tax codes for dependent people were necessary to avoid overlaps in claims for tax deductions.

For example, there are cases when both a father and mother claim their children as dependents. Or elderly people claim to be dependent on their sons and daughters and even their son-in-law and daughter-in-law.

Without computerised tax codes, it would be difficult to detect these violations, she said. — VNS



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