Vietnam - New tax income threshold to take effect in July 2013

The new threshold for the personal income tax will be increased to VND9 million (US$430) per month starting July 1, 2013, according to one of the approved amendments to the Law on Personal Income Tax.

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The National Assembly yesterday approved the amendments to raise the threshold of personal income tax from the current VND4 million to VND9 million per month and the deduction rate for family considerations from the current 1.6 million to VND3.6 million per dependant per month.

This means only those who earn more than VND9 million per month are required to pay the tax from July 1, 2013.

With the new threshold, about 2.8 million people will no longer pay the tax on their income starting next July, according to the Government’s calculation.

According to the revised Law, the deduction rate will be adjusted when the inflation rate is higher than 20 percent.

Phung Quoc Hien, chairman of the NA’s committee for Finance and Budget, said that the NA could not delay the application of the new tax threshold and the new deduction rate from January 1 to July 1 as proposed by many NA deputies and experts.

Hien explained that if the application begins on January 1, then the tax revenue will be VND6 trillion less than the figure that will be obtained if the application begins six month later.

The amount cannot be made up for by any source, since the NA has already approved the State budget estimate for 2013, he added.

The NA’s Standing Committee also said that the highest tax rate (35 percent) for people with an income of VND80 million per month should not be abolished since such an cancellation will cause a reduction of VND850 billion and VND2,200 billion ($105.6 million) in tax revenue in 2013 and 2014 respectively.

TUOITRENEWS

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