Nurture revenue for long-term gain

So, after receiving opinions from many parties, the Ministry of Finance has temporarily withdrawn the proposal to impose a 20% personal income tax on real estate transfer profits, continuing to apply the current rate of 2% of the transaction value. This is a necessary adjustment by the ministry, because as many opinions have analyzed, this needs a suitable roadmap, ensuring synchronization with other policies on land, housing, databases, etc.

If we hastily impose taxes without synchronizing the above factors, it will be very difficult to implement and will easily lead to negative consequences. This adjustment is also a good sign for the community of experts, businesses, organizations and individuals who contributed to the law.

Currently, in the country's common effort to perfect the institution, the financial sector is devoting all its efforts to two draft laws of great significance in the tax field. These are the draft Law on Personal Income Tax (replacement) and the draft Law on Tax Administration (replacement), expected to be submitted to the National Assembly at the October session this year. The "replacement" law means replacing the old with the new, completely renewing, different from "amendment" and "supplementation" which only edit old provisions. However, in reality, when publicly soliciting comments, many people believe that the draft law still does not fully reflect the spirit of "replacement", in line with the development of the economy .

Specifically, after 17 years, the regulations on the progressive tax schedule - the most concerned content in the Personal Income Tax Law - seem to have only changed slightly: Only 2 tax brackets have been reduced, while the remaining taxable income levels remain almost the same. Meanwhile, 17 years is a very long period of time, "things change": prices escalate, prices slide (according to experts' calculations, 2.15 times), but taxable income changes insignificantly, which is unreasonable.

To make it easier to understand, in 2009, after deducting for themselves and their dependents, if a person had 10 million VND/month left, they would have to pay 9 million VND/year in personal income tax, but with the new proposal, they would have to pay 6 million VND/year. This tax reduction does not really mean much to the taxpayers themselves. For the highest tax rate of 35%, high-income countries often set this taxable income very high, targeting the top few percent of people with the highest income in society. However, with current regulations in Vietnam, taxable income of only 80 million VND/person/month is subject to this exorbitant tax rate.

The same goes for the family deduction. From a deduction of 11 million VND/month for the taxpayer himself and 4.4 million VND/month for a dependent, the Ministry of Finance is currently proposing to raise the deduction to 13.3 million VND or 15.5 million VND, corresponding to a deduction for dependents of 5.3 or 6.2 million VND/person/month. This proposed level is considered a breakthrough by the Ministry, but in fact, in big cities like Hanoi or Ho Chi Minh City with expensive living standards, this deduction level is not commensurate.

In general, many provisions in the above draft law, although explained as “progressive”, are still not in line with the reality of life. That is, there needs to be a thorough calculation solution to reduce family circumstances by region, because the cost of living in Hanoi or Ho Chi Minh City must be very different from that in provinces with much lower incomes. The same goes for family circumstance deductions, it is necessary to increase the deduction for dependents, not only have economic experts pointed out but reality has also proven that spending on a dependent is sometimes more expensive than spending on the taxpayer himself.

The regulations on dependents also need to be reconsidered, when the regulation requires that the person has no income, or the average monthly income is not more than 1 million VND, it is not convincing. Because a disabled person, receiving benefits or income of only 1-2 million VND/month, is not considered a dependent to reduce family circumstances for the taxpayer, which is not satisfactory.

The same goes for high-income earners. This can be considered the “elite class” of the country, and this group accounts for a relatively small proportion. It needs to be reviewed appropriately to avoid creating a tax burden, affecting the attraction of experts and highly skilled workers from outside to work in Vietnam.

In general, the draft laws have unreasonable points that have been commented on and the financial sector has initially accepted the amendments, which is a very welcome demonstration of openness. Public opinion expects the tax sector to continue to amend the appropriate comments in the spirit of tax reform, that is, aiming to nurture production and consumption, reduce the burden on taxpayers, so that the budget revenue is stable and serves long-term growth.

PLUM FLOWER

Source: https://www.sggp.org.vn/duong-nguon-thu-de-thu-lau-dai-post808077.html