Deputies’ doubts put the skids under PIT

Deputies claim the thresholds are unsuitable for city slickers

National Assembly deputies said many draft law provisions had no basis and lacked consistency. Deputies’ attacks focused on the taxable income threshold of VND4 million ($250) and the situational exemption of VND1.6 million ($100) which would affect most people.
According to the draft law, those with monthly incomes of VND4 million or higher would be required to pay personal income tax (PIT). It also set out that taxpayers would enjoy situational exemptions of VND1.6 million for each of a person’s dependents.
Many deputies said the thresholds were only suitable for people living in the countryside, but were too low for those living in cities where subsistence expenses were much higher.
Deputy Dao Nhieu Linh from Ho Chi Minh City said that a person with an average standard of living in the city needed to pay at least VND6 million ($375) monthly for expenses and at least VND3 million ($187.5) for each dependent.
“Both the taxable income threshold and the situational exemption should be much higher. If not, the law will be outdated and out of touch with reality,” said Linh.
Many National Assembly members wanted to raise the taxable income threshold for people living in cities and urban areas to VND6-8 million ($375-500), and the situational exemption for each dependent to VND2-3 million ($125-187.5).
Nguyen Thi Cuc, a member of the drafting committee and former Deputy General Director of the General Department of Taxation under the Ministry of Finance (MoF), said that National Assembly deputies had misunderstood the draft law. If the law was approved, taxpayers would pay much less than now thanks to the application of the new provisions on situational exemptions for taxpayers’ dependents. She said a person with a monthly income of VND10 million ($625) and two children would only have to pay VND140, 000 ($8.75) at a tax rate of 5 per cent instead of the VND1 million ($62.5) at present. She added that the MoF could not establish a separate income threshold and situational exemption for each region or area as it was too complicated and the MoF lacked resources.
Other deputies commented that the MoF had forgotten to allow for price dives when they calculated the two thresholds, particularly as the consumer price index (CPI) had grown rather high at 8.12 per cent in the first 10 months of this year.