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Vietnam: Personal income taxes amid tough times
According to https://www.numbeo.com, the monthly living expenses of a Vietnamese person in October 2022 was VND10.8 million and of a four-member family VND38.5 million.
Meanwhile, the total family circumstance deductions for taxation calculation of a four-member family (husband, wife and two children) is only VND30.8 million a month.
Many expense items, including life insurance premiums, health insurance, healthcare service and education are paid by workers themselves and are not items for family circumstance deductions before calculating personal income tax (PIT).
Under current laws, people with an income of over VND1 million a month are not listed as dependents. But an older person who receives a pension of VND3 million a month does not have enough to cover daily basic needs and has to receive support from children, who cannot receive family circumstance deductions.
Under the PIT Law which took effect in 2013, the taxation threshold has been adjusted once, from VND9 million to VND11 million a month, applied to the taxable period of 2020.
The law stipulates that when the CPI fluctuates by more than 20 percent, the government will submit to the National Assembly Standing Committee a plan to adjust the family circumstance deduction, based on price fluctuations.
The PIT Law which has been applied for nine years has shown a lot of problems, especially regulations about the taxation threshold and CPI.
For example, the CPI increased by nearly 10 percent in November 2022, and many kinds of essential goods and services have seen increases exceeding the increases in workers’ incomes.
The CPI list now comprises 752 goods. However, laborers use dozens of essential goods such as meat, fish, vegetables, rice, clothes, petrol, electricity, water, milk, tuition and healthcare services. The other goods don’t have an impact or have relations to their daily lives.
Therefore, it will be unreasonable if they have to wait for the general index to increase by more than 20 percent to ask for the increase in family circumstance deductions.
It will be too late to wait for the 20 percent price fluctuation and won’t truly reflect the burden that price escalations placed on laborers’ shoulders.
Budget revenue from PIT has been increasing steadily. According to the General Department of Taxation (GDT), in the first 11 months of 2022, it was VDN152.123 trillion, 129 percent up over the estimates and 130 percent over the same period last year.
Revenue from wages increased by 19.6 percent, and real estate transfers 80.7 percent, which was the highest ever in the past decade.
What people expect is a change in the family circumstance deductions. Because of the Covid-19 pandemic, people have had to tighten their belts, but they will have to wait three more years, according to the Ministry of Finance’s plan.
Tran Thuy
Source: https://vietnamnet.vn/en/personal-income-taxes-amid-tough-times-2090338.html