Tiếng Việt
中文 (中国)
Recently, the General Department of Taxation has explained why there is no proposal to reduce personal income tax for employees.
Vietnam’s economic situation in the first half of 2021
In the first 6 months of this year, the national PIT collected by the tax sector was estimated at VND 73,027 billion, equaling 67.7% of the estimate, equaling 112.8% over the same period. The General Department of Taxation has explained that despite the implementation of Resolution No. 954/UBTVQH14 dated June 2, 2020, on adjusting the personal income tax deduction level, effective from July 1, 2020, and applied from the tax period in 2020, reducing PIT collection from salaries and wages (only about 97% over the same period), the country’s economy is still in a rough state.
On the other hand, the stock market and real estate being active in the last months of 2020 and early 2021 has contributed to an increase in PIT collection from securities transfers (2.91 times), from the personal capital investment (up 78.2%), and real estate transfer (up 68.8%), contributing to the highest progress in PIT collection in the first 6 months of 2021. With VND 73,207 billion, tax PIT is becoming the main tax contributing to the budget. This level is currently the highest since the PIT law went into effect (increasing year by year, the highest level in the first 6 months of 2020 is just over VND 63,700 billion).
No reduction on personal income tax
On August 12, the General Department of Taxation explained more clearly about the issue that the employees feel like they are not supported, their income is reduced but they are still taxed and a tax reduction plan is not proposed.
According to the media’s reflection, in the draft Resolution on several budget collection solutions to support businesses and people affected by the Covid-19 epidemic, the Ministry of Finance has “abandoned” employees because there is no proposal to reduce personal income tax (PIT) for them.
According to the General Department of Taxation, according to the provisions of law, the income used as a basis for PIT calculation is the income received by the employee after calculating family deductions, compulsory insurance contributions, and charity and humanitarian as prescribed.
With this current regulation, employees earning less than 11 million VND/month will not have to pay PIT, for higher incomes, deductions will be calculated according to regulations and a progressive tax schedule will be applied.
According to the General Department of Taxation, when proposing solutions to support employees who have income from wages and salaries to remove difficulties during the Covid-19 pandemic, the Ministry of Finance found that if applying the reduction of PIT from money salary and wages in the last 6 months of 2021, the beneficiaries will mainly fall into the high-income group.
This is not in line with the goal of supporting businesses and people affected by the Covid-19 pandemic. Because the tax amount from the group of high-income individuals accounts for 87% of the total income from PIT on salaries and wages. Therefore, to support the right subjects, ministries and branches have proposed to issue Resolution No. 954/2020 dated June 2, 2020, on the adjustment to increase or decrease the amount of support depends on the circumstances.
Accordingly, the deduction for the employees increased from 9 million VND to 11 million VND/month, the deduction for dependents increased from 3.6 million VND to 4.4 million VND/month. This new regulation has had the effect of reducing taxable income to about 6 million employees, reducing state budget revenue to VND 10,800 billion.
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