The Ministry of Public Security suggests introducing a provision exempting from tax all salaries, wages and similar payments sourced from the State budget.— Photo vietnamplus.vn

HÀ NỘI — The Ministry of Public Security has proposed exempting salaries and wages funded by the State budget from personal income tax.

The recommendation was made in its feedback on the draft amendment to the Law on Personal Income Tax.

The ministry said according to the 2025 State Budget Law, tax revenues, including personal income tax, are State budget revenues.

The ministry argued that paying salaries and wages from the State budget and then taxing those very same payments before returning them to the State budget creates unnecessary procedures and staffing requirements for tax collection.

In response, the Ministry of Finance maintained that the Law on Personal Income Tax applies uniformly to all individuals whose income reaches the taxable threshold.

Granting tax exemptions on State-funded salaries and wages would be inappropriate and risk provoking public reaction, the ministry said.

“All individuals must be taxed equally when their taxable income is the same, regardless of whether they work in the public or private sector. Family circumstance-based deductions are also applied on the same principle,” the ministry added.

As for revenue collection, the Ministry of Finance reported that personal income tax revenues in the first six months of the year amounted to over VNĐ125 trillion ($4.74 billion), equivalent to 70 per cent of the annual target.

Revenues from this tax have been rising rapidly, increasing year on year, in 2024, personal income tax accounted for more than 9.3 per cent of total State budget revenues, compared with just 5.3 per cent in 2011.

Under the legislative agenda, the amended Law on Personal Income Tax  is scheduled to be submitted to the National Assembly for consideration and approval at its October plenary session.

Shortcomings such as deductions for dependants and the progressive tax bracket system are expected to be revised.

Additionally, the Ministry of Public Security also proposed tax exemptions for overtime pay, night-shift allowances, redundancy payments and hardship allowances.

These forms of income, it argued, are intended as incentives or compensation for workers, and taxing them would undermine their purpose.

Imposing tax, the ministry added, could disadvantage workers, especially manual labourers, those on night shifts or doing overtime.

The ministry also suggested clarifying criteria for identifying non-registrable assets subject to inheritance or gift tax to ensure transparency and prevent arbitrary application.

It also recommended including digital assets such as cryptocurrencies and virtual assets within taxable income to keep pace with modern financial developments.

Responding to the points, the Ministry of Finance said the existing Law on Personal Income Tax already contains relevant provisions, and the amended law will continue to uphold them.— VNS