Vietnam - Personal income tax considered too high

The current personal income tax is too high while the exemption is inconsiderable, said an evaluation conducted by the Vietnam Tax Consultants’ Association (VTCA).

At the meeting to collect feedback on the amendment of the personal income tax law held by the Ministry of Finance yesterday, VTCA said tax collection had been consistently rising in the past four years.

It said tax collection had more than doubled from 7 trillion dong (US$336 million) in 2007 to 14.3 trillion dong two years later, despite a 6-month exemption granted during that year’s economic turbulence.

Last year the figure soared to nearly 25 trillion dong.

VTCA said the government could only collect taxes from individuals’ wages and failed to control incomes from other sources. This is unfair, it said.

Do Thi Thin, VTCA’s deputy chairwoman, said tax was supposed to be calculated on income that has excluded daily expenses.

Because businesses could have their expenses excluded from their taxable corporate income, personal income tax should be treated similarly, Thin said.

She said other countries such as Thailand, Korea and Japan had exempted 40 percent of personal income supposed to be spent on public health, education and other necessities before calculating the final taxable income.

Meanwhile in Vietnam, the current deduction of 4 million dong a month for taxpayers was too low. Thin said the reduction should be increased to 5 million dong.

VTCA also said the current tax rates of Vietnam were much higher than in other countries, and many foreign people working in Vietnam had thus demanded their Vietnamese companies to pay for their taxes.

Dr. Vuong Thi Thu Hien, head of the Tax Faculty of the Institute of Finance, also said the maximum personal income tax rate of 35 percent was too high compared with the 25 percent rate of the corporate income tax.

VTCA also said the current deduction for taxpayers based on their family circumstances should be more flexible.

For instance, if a taxpayer adopted a person with no income, that person would be considered a dependant, who would help the taxpayer enjoy a deduction of 1.6 million dong a month.

But in case the monthly income of either the parents of a taxpayer exceeded the mere 500,000 dong ($24), they would no longer be considered a dependant.

Dr. Ly Phuong Duyen from the Institute of Finance said the deduction rate should be adjusted after three years to better support taxpayers.

Tuoi Tre

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