Vietnam raises monthly taxable personal income threshold by 22%
With the new threshold in place, set to take effect from January 1, 2020 retrospectively, there would be more than 1 million people whose incomes are not taxable.
The Standing Committee of the National Assembly (NA) has approved the government’s proposal to raise the personal income tax threshold from VND9 million (US$389) per month to VND11 million (US$475), according to Nguyen Truong Giang, deputy chairman of the NA’s Legal Committee and deputy general secretary of the NA.
Additionally, the family circumstance-based deduction for each dependent of a taxpayer has also been increased from VND3.6 million (US$155.42) per month to VND4.4 million (US$189.96).
Under the existing legislation, a reduction based on family circumstances means a sum of money deductible from pre-tax income from businesses, salary or wage of resident taxpayers.
With the new threshold in place, set to take effect from January 1, 2020 retrospectively, incomes of more than 1 million people will no longer be taxable.
Giang told local media the decision was taken based on the fact that the consumer price index (CPI) rose more than 20% from July 2013 to the end of 2019.
Those having paid income tax based on the previous standard deduction would be refunded by the end of this year.
The NA’s Finance – Budget Committee requested the government to evaluate the impact of the Law on Personal Income Tax in the 2011 – 2020 period to further raise the tax-free threshold, given some public opinions that the VND11-million threshold remains low compared to actual living costs.
With this adjustment, an individual with income less than VND20 million (US$863.44) and one dependent would have to pay tax of VND230,000 (US$9.93), 48% less than the amount paid currently, while those with higher income would be subjected to a 7% reduction in tax amount.
In 2019, over 6.88 million people paid personal income tax of a combined VND79.2 trillion (US$3.41 billion). “The figure would be reduced to VND68.92 trillion (US$2.97 billion), down 13% year-on-year,” the Ministry of Finance estimated.
The ministry expected a higher disposable income as a result of the adjustment would encourage household consumption and spur economic growth.
G4 Ambassadors expect hope for better 2022
[Infographic]How to celebrate Tet holiday safely in the pandemic
Vietnam confident to reopen the economy: PM
Hanoi proposes full reopening to tourism from April 1
Vietnamese President appreciates Japan’s hospital project acceleration
No delay in implementing socio-economic recovery program: Deputy PM
PM asks ministries to consider reopening of cinemas nationwide
Hanoi: Hang Luoc Flower market opened
Face-to-face schooling resumption urged in the new normal