The Ministry of Finance has recently submitted several urgent measures in support of personal taxpayers to the Secretariat of the Communist Party of Vietnam’s Central Committee while new amendments to the Law on Personal Income Tax are pending. The Secretariat has agreed to personal income tax plans proposed by the Ministry of Finance.
According the first plan option, income tax exemptions are subjected to wage earners with monthly income of VND5 million downwards. The tax-free amount will be raised to VND6.6 million downwards and VND8.2 million in case taxpayers have one and two dependants, respectively. About 250,000 people will benefit from this scheme and the loss of the State Budget is forecast at VND3,000 billion.
According to the second scheme, the income tax rate of 5 percent in force will be annulled.
Besides, the Ministry of Finance has proposed exempting personal income tax on securities investment from August 1, 2011 through 2012. Income from dividends will be free from personal income tax in order to be treated equally as capital gains from savings.
With a removal of 5 percent tax rate (applied to securities investment), the loss of the State Budget is expected at VND250-300 billion.
As regards owners of house for rent, the Ministry of Finance has proposed free tax for those with annual rent revenues of less than VND20 million a year but they must pledge not to raise rentals for workers 2011.
Regarding owners of house for rent to students and workers, the ministry has suggested lump-sum tax on monthly rental gross of VND20 million or more in lieu of 20 percent at present. The State Budget is forecast to drop VND400 - 500 billion for this scheme. According to the Vietnam General Confederation of Labour, up to 4 million out of some 5.2 million workers in the country are renting houses.
The ministry has also recommended higher limit pay for meals for workers in a bid to improve their living standards. In urban cities where meals are expensive like Hanoi and Ho Chi Minh City, the ministry has set forth a minimum of VND20,000 for a person each meal.
The ministry said it is drafting a circular which will lift up the taxable current income from VND500,000 to VND1 million. This circular is expected to be issue this week.
The Ministry of Finance has proposed widening the scope of corporate tax delay to labour-intensive companies like apparel, footwear and electronics producers in 2011. In early April, the Prime Minister issued the Decision 21 to grant this favour to small and medium-sized enterprises.
To support and encourage business investments, the Government has assigned the Ministry of Finance to propose measures to break or partially reduce income tax for SMEs, labour-intensive companies in 2011 to the National Assembly for approval.
According to the Ministry of Finance’s calculations, if the National Assembly approves a 20-30 percent reduction on delayed income tax, the State Budget will lose VND2,000 - 2,500 billion.
With respect to delay in corporate income tax payment applied to SMEs and labour-intensive enterprises, the amount of tax payable in accordance with the Decision 21 will be VND7,000 billion or so.
If companies and business households providing catering services for workers in industrial parks and export processing zones pledge not to raise meal prices dating back to December 2010 and reduce the quality and quantity of meals, they will be discounted 50 percent of VAT and corporate income tax.
In addition, the ministry has proposed excluding value added tax from inter-shift meals if meals are prepared for their workers at companies’ refectories or head offices. VAT will be counted on inputs.
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