Moreover, the NA’s Standing Committee has also agreed that the starting taxable income will be VND5mil, and the deduction level VND4mil, with no tax on the interest from bank deposits and pensions paid by social insurance.

Meanwhile, opinions still vary about issues like whether to tax the income of partnership companies’ members and shareholders’ dividends.

The Minister of Finance said that the suggested deduction levels were the lowest in the world. Currently, the deduction level is equivalent to 63.5% of GDP per capita in China, while the figure is 450% in Vietnam.

The minister said that the PIT sums Vietnamese citizens would have to pay were not high. A single person will have to pay VND50,000 ($3.12) only if he has the monthly income of VND5mil ($312.5), and VND350,000 ($21.87) if he has the income of VND10mil ($625). A person with the monthly income of VND10mil who has one dependent child will have to pay VND220,000, and who has two dependent children, VND140,000.

Regarding overseas remittance (the money Viet Kieu send home to their relatives), the standing committee will propose not imposing PIT on this kind of income in order to attract foreign capital. The committee thinks that if Vietnam taxes overseas remittance, the money will not go through commercial banks any more.

The Ministry of Finance has been insisting on taxing shareholders’ dividends. Mr Ninh said that this is a kind of individual income gained from capital investment activities, and in principle, the state needs to tax all kinds of income.

However, Chairman of the General Confederation of Labour Dang Ngoc Tung said that it was necessary to differentiate between shareholders who are staffs of joint stock companies and outside shareholders. The dividends the staffs of joint stock companies get are subject to the 28% corporate income tax already, and if the staffs still have to pay PIT for the dividends, then the same income would be double taxed.

Mr Tung said that MOF should not tax the income gained from extra working hours and bonuses, because ‘no one wants to work extra hours’.

Governor of the State Bank of Vietnam Nguyen Van Giau made a comment that with the suggested tax rates, even provincial leaders will not have to pay tax.

Source: VNAgency.