Changing personal income tax rates does not greatly affect budget revenue results.

(Baonghean) -Starting from July 1, 2013, the Personal Income Tax (PIT) Law officially took effect. Instead of the old level of 4 million VND, according to the new law, employees with income over 9 million VND are subject to tax. This will have an impact on the budget collection situation in the area.

On this occasion, Nghe An Newspaper reporter had an interview with Mr. Nguyen Hong Hai - Deputy Director of Nghe An Tax Department about this issue.

Reporter: From July 1, 2013, how will the income subject to Personal Income Tax (PIT) and the PIT family deduction change, sir? And how will that impact the budget collection situation in the area?

Mr. Nguyen Hong Hai:In Article 1, the Law on Personal Income Tax 2012 amends Clause 1, Article 19, the Law on Personal Income Tax 2007: From July 1, 2003, personal income tax has changed. Increase the family deduction for taxpayers from the deduction of 4 million VND/month (48 million VND/year) to the deduction of 9 million VND/month (108 million VND/year); Increase the deduction for each dependent from the deduction of 1.6 million VND/month to the deduction of 3.6 million VND/month.

Raising the family deduction level will reduce the state budget revenue, narrow the number of taxpayers, and change some of the original objectives of the promulgation of the Law on Revenue Sources. However, the revised Law on Personal Income Tax aims to ensure fairness, encourage and attract experts and skilled workers with high incomes to work in Vietnam; facilitate taxpayers and contribute to promoting administrative reform, modernizing tax management; and be consistent with the taxable income level in the region and internationally.

In 2011, personal income tax in the province reached 189.7 billion VND. In 2012, it increased to 238 billion VND and in the first 6 months of 2013, it collected 117.5 billion VND. Although personal income tax has increased every year, in the total budget revenue of Nghe An in recent years, reaching over 5,000 billion VND, the personal income tax is not large, so in general, it does not affect the budget revenue results in the province much.

PV: Also from July 1, 2013, some procedures on tax payment according to the revised Law on Tax Administration will take effect. What are the specifics of this issue, sir?

Mr. Nguyen Hong Hai:Tax Administration Law No. 21/2012/QH13 amends and supplements a number of articles of Tax Administration Law No. 78/2006/QH11 and takes effect from July 1, 2013, adding a number of provisions to improve the effectiveness and efficiency of tax administration to suit the reality and relevant legal documents, to prevent budget loss and reduce tax arrears, including 9 specific contents as follows:

Storm protection bracket production at Dinh Nhan Company Limited - Vinh City. Photo: CL

First: Change the order of payment of tax and fines to increase the efficiency of tax debt collection and facilitate the implementation of domestic tax accounting. Accordingly, the order of payment is stipulated as follows: tax debt; tax arrears; late payment; tax arising; fine.

Second: Supplementing the tax payment extension for cases where enterprises must relocate their business premises at the request of competent State agencies and enterprises with tax debts due to unpaid capital for basic construction investment as recorded in the State budget estimate.

Third: Supplementing the provision on gradual tax payment for cases where taxpayers are unable to pay the full tax amount at once: allowing taxpayers to gradually pay tax debts within a certain period of time (with late payment fees of 0.05%/day equivalent to 1.5%/month, 18%/year). The gradual tax payment is made on the basis of the taxpayer's commitment and the credit institution's guarantee to reduce cases of tax enforcement and support taxpayers, especially in cases where taxpayers have large tax debts (due to being fined from 1 to 3 times the tax) and have short-term financial difficulties.

4. Cancellation of tax and fine debts for debts that are unlikely to be recovered after all enforcement measures have been applied and debts that have been overdue for 10 years;

5. Supplementing measures to enforce tax administrative decisions: withdrawing money from the subject's account at the State Treasury, commercial banks, other credit institutions and freezing the account; deducting a portion of salary or income; stopping customs procedures for exported and imported goods; notifying that invoices are no longer valid for exploitation; seizing and auctioning seized assets; collecting other assets of the subject of enforcement that are held by organizations or individuals; revoking business registration certificates, enterprise registration certificates, establishment licenses or practice licenses;

6. Supplementing sanctions for violations of tax laws: increasing the penalty for late tax payment at a progressive rate of 0.05%/day calculated on the amount of late tax for the number of days of late payment not exceeding 90 days, 0.07%/day calculated on the amount of late tax for the number of days of late payment exceeding 90 days and increasing the penalty for false declaration, leading to a shortage of tax payable or an increase in the amount of tax refunded from 10% to 20%.

7th: The statute of limitations for handling tax law violations is stipulated to apply a 10-year tax collection period (previously stipulated as 5 years) from the date of inspection and discovery to comply with the regulations on document storage in the Law on Accounting.

8. Tax inspection at the taxpayer's headquarters is based on risk assessment criteria; according to the subject, the annual plan approved by the head of the superior tax authority and the inspection at the taxpayer's headquarters is no more than once a year. This regulation helps the tax sector control the purpose of the inspection and avoids abuse and causing trouble for businesses.

9th: Amend the contents on tax management to synchronize with other laws such as: amend the contents on tax declaration and payment deadlines and tax inspection work to synchronize with land laws, the Law on Non-agricultural Land Use Tax and the Law on Inspection.

PV: Thank you!

Chau Lan (performed)