The Personal Income Tax (PIT) Law was issued with the aim of regulating income, ensuring social equity, encouraging labor and contributing to the state budget. However, in the process of implementation, up to the present stage, the system of regulations has begun to reveal some shortcomings that create financial pressure on workers, affecting other goals. This is a content discussed at the Workshop on the PIT Law, ensuring equity, promoting growth organized by Lao Dong Newspaper on the afternoon of March 14 in Hanoi.
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| Personal income tax is not only a tool for income regulation, but also an important source of revenue for the state budget. |
Exposing many limitations at once
Speaking at the opening of the workshop, Deputy Editor-in-Chief of Labor Newspaper Nguyen Duc Thanh said that personal income tax is not only a tool to regulate income and contribute to redistributing wealth, but also an important source of revenue for the state budget to invest in development, ensure social security, national defense, etc.
Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance, National Economics University said that personal income tax is one of the 9 types of taxes in Vietnam today. In 2024, this tax will contribute more than 198 trillion VND (accounting for about 10%) to the total state budget revenue. The increasing proportion of tax revenue to total revenue has contributed to regulating income and creating fairness.
However, during the application process, along with changes in the socio-economic situation, personal income tax has revealed limitations that need to be revised and supplemented, aiming to ensure social equity, increase budget revenue and adapt to changes in the economy with a double-digit growth strategy from 2026.
According to current regulations, if the income from a certain source does not exceed 2 million VND/time, the paying unit does not need to deduct 10% tax. However, currently, many paying units declare fully, while others do not declare this income in their tax settlement records, forcing individuals to declare it themselves, even though the income is only 500 thousand to less than 2 million VND. If individuals do not declare their own tax settlement, they will be fined just for this small amount of income.
Although after many upgrades, the Etax system has met the basic requirements, it has not really ensured fairness and resolved the shortcomings. This reality is happening to many individuals, even though they do not want to evade taxes, they are still classified as non-compliant with taxes and are fined.
The regulations in the document are like that, but the actual declaration is different, creating unnecessary tax administrative pressure on workers with multiple sources of income.
Not only that, Associate Professor Dr. Le Xuan Truong - Head of the Department of Taxation and Customs, Academy of Finance said that the regulations on family deductions are not really flexible, not reflecting the reality of life. The current family deduction level is quite high compared to GDP per capita, but when compared to other countries in the region, Vietnam is still subject to higher tax regulations. The evidence is that from 2020 to 2024, total personal income tax revenue increased by 72%, while per capita income increased by only 30.2%. This leads to the situation where the amount of tax payable is increasingly higher compared to the actual income of the people.
Analyzing the shortcomings in tax calculation, Ms. Nguyen Thi Cuc - President of the Vietnam Tax Consulting Association pointed out that: The gap between tax brackets is too narrow, causing people with high incomes to be taxed more strongly, not creating incentives to encourage highly qualified workers. At the same time, it is necessary to study tax reduction for some specific industries to attract quality human resources.
"In addition, the policy of determining dependents is also facing many problems. According to current law, dependents with an income of over 1 million VND/month will not be deducted. This is unreasonable when the standard of living is increasing and the cost of living is getting higher and higher," said Ms. Nguyen Thi Cuc.
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| Overview of the Workshop |
Towards common sense and practicality
Faced with the above shortcomings, experts have proposed a number of solutions for personal income tax reform. According to Associate Professor, Dr. Le Xuan Truong, it is necessary to increase the family deduction level. This level should be adjusted according to the economic growth rate, ensuring a basic living standard for workers.
"The family deduction level can be raised to 1.5 times the GDP per capita, helping workers have higher real income," said Associate Professor, Dr. Le Xuan Truong.
With over 50 years of experience in the tax field, tax expert Nguyen Thi Cuc believes that the 35% tax rate should be abolished and the tax brackets should be widened to reduce tax pressure and create more fairness among income groups. Currently, the highest tax rate is up to 35%, creating a huge financial burden for high-income earners.
At the same time, the regulations on dependents should be reviewed, because determining dependents based only on an income of VND 1 million/month is unreasonable. There needs to be a more flexible policy to ensure fairness in tax calculation.
In addition to adjusting tax rates and family deductions, it is also important to make tax administration transparent and modern. Collecting personal income tax monthly but settling it at the end of the year also causes many problems. It is necessary to study more reasonable collection methods so as not to cause disadvantages to workers.
From an expert perspective, Associate Professor Dr. Phan Huu Nghi recommends that the current trend of personal income tax reform in countries focuses on the main goals: first, reducing the tax burden on workers, who live mainly on salaries, wages, and remuneration; second, enhancing tax equity, especially creating vertical equity; third, expanding the tax base to adapt to changes in the digital economy and globalization.
Therefore, improving tax declaration methods, applying technology to synchronize income data and building a transparent tax refund system are necessary solutions to ensure fairness in personal income tax, helping to increase budget collection efficiency without creating unnecessary burdens on workers.
Source: https://thoibaonganhang.vn/chinh-sach-thue-phai-dam-bao-cong-bang-khuyen-khich-lao-dong-161416.html
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