Experts call on raising the threshold for PIT taxation

VietNamNet Bridge – Experts believe that amending the Personal Income Tax (PIT) law is urgent because it has become “out of date”. While consumer goods’ prices have been increasing sharply, the threshold for taxation remains very low at 4 million dong.

 

With the current regulation, the people with the monthly income of four million dong or less do not have to pay PIT, while the tax is only imposed on the excess income. However, analysts agree that four million dong would not be big enough for one person to cover his basic needs, and that it would be unreasonable to impose tax on people who do not have high income.

However, Pham Duy Khuong, Deputy General Director of the General Department of Taxation (GDT) said that the PIT law is still valid and the taxation body has to obey the law, i.e. that it has to impose tax on people with the monthly income higher than four million dong. to amend the PIT Law, the National Assembly’s Steering Committee has to discuss the issue and put the law amendment into the 2011 National Assembly’s law building programme.

Khuong said that when compiling the current PIT law, GDT believed that it was not necessary to fix the taxation threshold, and it would be better to set up the threshold based on the basic salaries announced by the Government. GDT suggested that the taxation threshold should be at 10 times higher than the basic salaries. If so, the taxation threshold would increase accordingly with the basic salary increases.

Lawyer Tran Xoa from Minh Dang Quang Law firm agreed, saying that if the proposal is approved, the National Assembly will not have to amend laws regularly. Meanwhile, the taxation thresholds will be updated regularly, thus preventing losses to tax payers

The lawyer also said that the gaps between the tax rates are now too narrow, and that it is necessary to widen them in order to ease the burden on tax payers.

According to Dr Tran Du Lich, National Assembly’s Deputy, Member of the National Advisory Council for Monetary Policies, also said that it is necessary to adjust the taxation threshold, because the consumer price index (CPI) has been increasing too sharply.

Lich said that in other countries, PIT is only imposed after the state gives the deductions big enough to tax payers to ensure normal lives for them. However, how much would be remains a controversial issue in Vietnam.

Opinions still vary about how to tax PIT on high income earners. Some people believe that in the first period when PIT law is applied, only low tax rates should be imposed. Meanwhile, others argue that low tax rates will not be able to bring money to the state budget.

Lich stressed that the amendment of the law can be carried out soon, because this is considered an urgent matter,

Meanwhile, the Ministry of Finance has not made any official announcement relating to the adjustment of the taxation threshold. Tuoi tre newspaper quoted Deputy Minister of Finance Do Hoang Anh Tuan as saying on January 6 that the ministry had not thought of raising the threshold from 4 million dong to 6 million dong as some local newspapers reported.

C. V

 
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