Personal income tax Q&A, period 2, December

(Baonghean) - Question: The National Assembly has recently issued a Law amending and supplementing a number of articles of the Tax Laws. Could the Tax Department please inform us of the amended contents of personal income tax (PIT)?

Reply:On November 26, 2014, at the 8th session, the 13th National Assembly passed the Law amending and supplementing a number of articles of the Tax Laws No. 71/2014/QH13. The Law takes effect from January 1, 2015.

The content of the amendment and supplement on personal income tax is as follows:

1/ On personal income tax for business individuals.

- According to current regulations (before December 31, 2014), implemented according to the provisions of the Personal Income Tax Law No. 04/2007/QH12, the Law amending and supplementing a number of articles of the Personal Income Tax Law No. 26/2012/QH13: Personal income tax of households and individuals doing business is determined based on taxable income calculated as a percentage (%) of revenue or taxable revenue determined according to the declaration minus business expenses; and business individuals are entitled to family deductions when determining taxable income and are determined according to the progressive tax table.

- From January 1, 2015, implementing the Law amending and supplementing a number of articles of the Laws on tax, business individuals pay personal income tax at a rate on revenue or in other words according to the Table of total tax rates on revenue for each field and business sector as follows:

+ Distribution and supply of goods: 0.5%;

+ Services, construction without materials: 2%. Particularly for property leasing, insurance agency, lottery agency, multi-level marketing agency: 5%;

+ Production, transportation, services associated with goods, construction with contracted materials: 1.5%;

+ Other business activities: 1%.

2/ To remove difficulties, create opportunities for Vietnamese workers who are crew members to work for international shipping lines and encourage individual ship owners to provide logistics services for fishing activities, contributing to ensuring security at sea and protecting sovereignty over seas and islands, the Law has added the following subjects exempted from personal income tax:

- Income from salaries and wages of Vietnamese crew members working for foreign shipping companies or Vietnamese shipping companies operating internationally.

- Income of individuals who are ship owners, individuals who have the right to use ships from activities of providing goods and services directly serving offshore fishing and exploitation activities and income of crew members working on ships.

3/ For income from securities transfer of individuals.

From January 1, 2015, a tax rate of 0.1% will be applied to each securities transfer price instead of the two previous tax calculation methods. No personal income tax will be finalized for income from securities transfer.

4. For income from real estate transfer of individuals

From January 1, 2015, a tax rate of 2% will be applied to each transfer price of real estate instead of the two previous tax calculation methods./.

NGHE AN TAX DEPARTMENT