The Ministry of Finance is proposing to develop a draft Law on Personal Income Tax (replacement). The draft is being sent to agencies, organizations and individuals at home and abroad for research and comments.
Law Personal income tax (TNCN) The current Law was passed by the 12th National Assembly at the 2nd session on November 21, 2007. During the implementation process, to promptly resolve arising problems, in accordance with socio-economic conditions, the National Assembly issued Law No. 26/2012/QH13 amending and supplementing a number of articles of the Law on Personal Income Tax, effective from July 1, 2013, and Law No. 71/2014/QH13 amending and supplementing a number of articles of the Laws on Tax (including the Law on Personal Income Tax), effective from January 1, 2015.
On June 2, 2020, the Standing Committee of the National Assembly passed Resolution No. 954/2020/UBTVQH14 on adjusting the family deduction level of personal income tax and applying it from the 2020 tax period.
According to the impact assessment of the policy in the proposal build Law on Personal Income Tax, the Ministry of Finance said, through the implementation process, the Law on Personal Income Tax has entered life, positively impacted many socio-economic aspects of the country and achieved the goals set out when the Law was promulgated.
However, in the process of socio-economic development and international economic integration, along with the rapid changes of the world economy and politics in general and the Vietnamese economy in particular, there have been some limitations and shortcomings that need to be studied, reviewed and amended to suit the reality.
After many years of practical application, the current domestic and international context is changing a lot, Vietnam's international integration process is getting deeper and deeper, the development of the domestic economy is getting bigger and bigger, affecting all economic, life and social fields.
In addition, with the development of the economy and increased international integration, personal income is increasingly diverse and complex, new business forms are constantly emerging, creating many sources of income for individuals that current regulations do not fully cover, such as forms of e-commerce transactions, investment, and business in industries based on digital platforms; new business models create new sources of income such as income from providing software products and services; digital information content products and services on entertainment, video games, digital movies, digital photos, digital music, digital advertising, etc.
Therefore, the Law on Personal Income Tax needs to be replaced to continue institutionalizing the viewpoints, guidelines and policies of the Party and the State; in line with the goal of reforming personal income tax, building a synchronous tax system; overcoming difficulties and limitations of the current personal income tax policy; and at the same time in line with the context of integration and economic development trends of countries around the world.
Article 3 of the Law on Personal Income Tax generally stipulates that taxable income includes 10 types of income: Income from business; income from salaries and wages; income from capital investment; income from capital transfer; income from real estate transfer; income from winning prizes; income from royalties; income from franchising; income from inheritance; income from receiving gifts. The Law on Personal Income Tax assigns the Government to detail and guide the implementation of this Article.
The content of the specific regulations on types of income subject to personal income tax as above is basically consistent with reality. However, up to now, new forms of business activities have generated a number of other types of personal income in addition to the types of taxable income prescribed above and often other types of income with specific characteristics such as income from transfer, liquidation of assets, property rights such as internet domain names, SIM cards - phone numbers,...
Income from the transfer of assets and property rights is similar in nature to some irregular income (current income) currently subject to tax, such as income from royalties, income from franchising, etc.
“Resolution No. 07-NQ/TW dated November 18, 2016 of the Politburo and recent Party documents as well as Resolution No. 23/2021/QH15 of the National Assembly have set out the policy of promoting measures to exploit revenue potential, prevent revenue loss, reduce tax arrears, and expand the tax base.
Accordingly, it is necessary to study the amendment and supplementation of regulations on taxable income to be more comprehensive in the direction of adding other income groups (and assigning the Government to specify details) or specifying other revenues to ensure fairness among individuals with income, ensuring compliance with the principles of personal income tax and international practices," the document of the Ministry of Finance stated.
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