Since June 15, Ministry of Finance has conducted surveys collecting opinions on the draft law on individual income tax. After gathering opinions from residents and National Assembly’s delegates, the draft law will be passed in session 2 of the tenth National Assembly, and is likely to take effect January 1, 2009.
Enterprise tax payment to individual income tax payment
Individual income tax collected in 2005 and 2006 was VND8,300 billion and VND10,500 billion respectively, accounting for 4.41 per cent of the total tax budget. Presently, the general Department of Tax applied the tax code to 2 mln businesses and 298,000 individuals? It isn’t really clear.
Deputy Chief of the Finance Ministry’s general Department of Tax Nguyen Thi Cuc said tax on individual businesses would sharply decrease.
Under existing tax law, household businesses pay income tax at 28 percent of total income, while people earning over VND5 million salary have to pay tax at a rate of 10 percent for VND5-10 million, so there are different taxes applied for the same income and those enjoying salary can do business, so Vietnam should adjust the current tax law. Under the draft law, tax will be regulated without taking into account an individual’s family situation and dependents, and will be paid on a progressive basis.
According to the existing law, people earning VND10 million salary a month must pay 28 percent of total income, equal to VND2.8 million a month. However, the draft law sets the rate at only 5 per cent of the total income a month. This shows Vietnam’s encouragement to production expansion.
Tax payment on shares
Under the draft law, income from loans, dividends, stakes, and share transfers is taxable. Cuc said the draft board reviewed the legal base carefully before giving guidelines on bonus shares. “There are different ideals on this draft law, some think the country should pay tax on face value, others say tax should be paid on listed shares or market price to help the government collect more money under current ordinances on high income people. Bonus shares must be considered as a special case. This law could bring loss to the government, but market prices rise and fall, so we will base the tax on face value,” Cuc said.
Share trading is capital investment and existing law has not regulated this, so we don’t have guidelines on tax payment. When the draft law is passed and takes effect, tax payments will be based on real transference price.
Q.C
Vietnamese
