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Finance Ministry proposes personal income tax changes
  • | Vneconomy, dtinews.vn | April 23, 2011 10:13 AM

>> Finance Ministry seeks to raise personal income tax threshold

>> NA official: No resolution on personal tax exemption

The Ministry of Finance is seeking the Government’s approval for personal income tax (PIT) exemptions for certain groups.

Finance Ministry proposes personal income tax changes (Illustration photo)

According to an official from the ministry’s General Department of Taxation, the exemption is proposed for single people who earn VND5 million (USD239,234) per month and people with 1-2 dependents whose income is VND6.5 million per month (USD311).

The ministry has also proposed PIT exemption for dividend incomes and reduction for the current PIT of 0.1% for securities investment, he added, explaining that this will help securities companies cover their big losses.

The Ministry of Finance said that the recommended PIT exemption will not affect state revenues. Around 200,000-250,000 people would be eligible for an exemption.

Dr. Le Thanh Ha, Vice Director of the University of Labour and Social Affairs, said that, while waiting on the National Assembly to amend the Law on Personal Income Tax, the Government should grant extensions for those whose incomes are VND5 million per month or less.

This is the group hardest-hit by increasing prices. “A person whose income is below VND5 million per month is taxed a maximum of VND50,000 (USD2.39) per month. An exemption for this group would show Government support,” Ha added.

Dr. Cao Si Kiem, a member of the Advisory Council of the National Monetary and Finance Policy, said that the extensions should go a bit further, and be given to individuals earning less than VND6 million a month, with no dependents, and to those who earn below VND10 million with dependents.

He noted that a deduction of VND1.6 million (USD76.55) for each dependant would be too low in the context of soaring prices.

In a recent meeting with the Ministry of Finance, the Ho Chi Minh City People’s Committee proposed raising personal income tax threshold from the current of VND4 million, as well as deductions for dependents, which are now at 1.6 million.

The city’s proposal also included a 20%-30% reduction in tax on stocks for “business households” who join the price stabilisation programme, as well as relief to households that rent out rooms from now until the end of the year.

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