Vietnam to Issue Law on Personal Income Tax in 2008

Vietnam to Issue Law on Personal Income Tax in 2008

Vietnam’s General Department of Tax (GDT) has announced it would submit the Personal Income Tax Law for the National Assembly’s approval in 2008, which is expected to create a stable source for the country’s state budget, reducing dependence on value-added and import-export taxes.

The Law will replace the prevailing Ordinance on High Income Earners.

Some experts urged the government to quickly compile the law for issuing before 2007. However, incomes of local residents are still low. Therefore, according to the GDP, the Personal Income Tax Law will be brought out from 2008-10.

“We must have enough time to prepare for the forthcoming law,” said GDT general director Nguyen Van Ninh.

The law will be not only the higher legal document but also include many reforms in tax collection management and structure of tax collection to help Vietnam keep up with the world and further integrate into the global economy, he said.

The most highlighted change in the law (compared with the current ordinance) is the taxable subjects. According to law compilers, subjects of the law will be wider including those having normal incomes and all business households. Of course, the tax rates will be lower.

According to Mr. Ninh, subjects of the new law will be tens of million, not around 1 million as currently.

However, Mr. Ninh also mentioned difficulties that GDT is facing, including measures to control income of local residents and household businesses.

In 2005, the National Assembly assigned the GDT to collect VND4.1 trillion (US$261.1 million) from taxes on high income earners, accounting for less than 2.5 per cent of the country’s total state budget revenues. The figure is expected to be tens times higher after 2010.

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