Many shortcomings of the Personal Income Tax Law.

Adjust taxes when CPI increases by 5% or more.

According to economic experts, businesses, and households in Ho Chi Minh City, the current consultation process on amending the Personal Income Tax Law is very late, as the law has many shortcomings, especially since the Consumer Price Index (CPI) has already increased by 20% before any adjustments are made. Therefore, the new law should allow the government to adjust the personal income tax threshold when the CPI increases by 5% or more. This would help the law better reflect real-life changes, as waiting for the National Assembly to amend the law would take a very long time.

The CPI has increased by 20%, but the deductions used to calculate personal income tax have not been adjusted to reflect this reality. Photo: Le Hang

Lawyer Pham Ngoc Hung, Vice President of the Ho Chi Minh City Business Association, argues that the Personal Income Tax Law has seven tax brackets, making tax calculation difficult and putting pressure on taxpayers. Furthermore, the gaps between the brackets are unreasonable, too short and narrow. Lawyer Hung suggests shortening the number of brackets to five.

According to lawyer Pham Ngoc Hung: "Every year, the State should review and calculate the inflation rate. Calculating the inflation rate based on statistics compared to the actual spending of housewives is not appropriate. This should be adjusted as soon as possible to provide people with better income, create a more vibrant market, increase purchasing power, and better support businesses in production and trade."

The taxable income must be 15 million VND/month or more.

According to Master of Law, lawyer Do Trong Hien, Director of CTB Do Gia Co., Ltd., the Personal Income Tax Law's regulations on income tax for individual business households are inappropriate. A revenue of 100 million VND/year, equivalent to 8.3 million VND/month, is required to pay taxes and fees. Meanwhile, the personal income tax threshold for employees is 11 million VND/month. Furthermore, there are no clear regulations or guidelines for tax declaration for individual business households with revenue under 100 million VND/year, causing misunderstandings for taxpayers.

Master of Law, lawyer Do Trong Hien - Director of Do Gia CTB Co., Ltd. Photo: Le Hang

Furthermore, many taxpayers argue that the regulation setting the personal income tax threshold for salaried employees at 11 million VND/month is outdated, especially compared to the cost of living in urban areas. They believe this threshold should be 15 million VND/month or higher. They also argue that the 4.4 million VND/month personal allowance is unreasonable given the actual basic expenses for dependents, particularly the cost of children's education and the care of elderly, sick, or disabled parents.

This deduction level would need to be at least 6 million VND per month to be considered appropriate. It's worth noting that the current law only allows tax deductions for dependents, insurance contributions, charitable donations, and educational expenses. Meanwhile, many legitimate and actual expenses of taxpayers are not eligible for deductions.

Lawyer Do Trong Hien stated: "There are many necessary expenses incurred by taxpayers that the Ministry of Finance does not list for tax deductions. Medical expenses, bank loans to cover living expenses, house construction and renovation... these expenses are not included for tax deductions. In my opinion, adjustments should be made to ensure that only reasonable, legitimate expenses with complete documentation, according to the Tax Law, are eligible for deductions before calculating personal income tax."

Lowering income tax to attract experts.

According to many experts working for foreign-invested enterprises in Ho Chi Minh City, the 35% personal income tax on incomes exceeding 80 million VND per month is very high and inappropriate for Vietnam. It will discourage highly skilled and specialized workers in the country from striving for high-level management positions. While work pressure should be matched by a deserving income, after deducting personal income tax, the actual difference compared to middle-level workers is minimal.

Mr. Nguyen Van Duoc, Head of the Policy Department of the Ho Chi Minh City Association of Tax Consultants and Agents, discusses with a VOV reporter his suggestions for amending and supplementing the Personal Income Tax Law. Photo: Le Hang

Mr. Nguyen Van Duoc, Head of the Policy Committee of the Ho Chi Minh City Tax Consulting and Agency Association, proposed: "This 35% tax rate will affect regional competition. Because the higher the income tax, the more likely workers will seek employment or declare taxes in places with lower tax rates. Perhaps we should reduce it from 35% to 30%. By adjusting it downwards, we can attract foreign experts to work in Vietnam, and at the same time, encourage experts working in many countries to bring their income from other countries back to Vietnam to declare taxes."

Le Hang