Taxable income threshold too low, taxpayers say

Many taxpayers asked for an increase in the taxable income threshold and complaint that lots of businesses continuously reported losses to dodge taxes, according to an online exchange session between officials of the Ho Chi Minh City Tax Department and readers of Sai Gon Giai Phong Newspaper.

A woman is asking for guidelines on income taxes at the HCMC Tax Department. Many taxpayer complain the taxable income threshold and dependent deduction are too low (Photo:Kim Ngan)

Nguyen Phuong Anh of District 8 said “I think the taxable income threshold of VND4 million (US$200) per month was inappropriate”.

“A common family’s monthly expenses usually include tuition of VND1.5 million ($75) per month and living costs of VND4 million at least. Thus, has the HCMC Tax Department proposed to raise the threshold?” others asked.

Nguyen Trong Hanh, deputy director of the department, replied that the department has already submitted a proposal to raise both taxable income threshold and dependent deduction to higher levels.

There were also many questions about how to calculate the amount of tax payable. “I sold a house, with a net profit of VND20 million. Can I get the tax rate of 25 percent on the profit,” a reader with the email address of asked.

Tran Thi Le Nga, head of the propaganda and taxpayer support division of the HCMC Tax Department, said “taxable incomes are the difference between the original and selling prices, plus relevant costs, according to the Circular No. 84/2008/TT-BTC. And the tax rate is 25 percent on the incomes”.

“Do I need to submit the purchase contract?” the reader asked. “The prices written in purchase contract do not meet the requirement of the tax rate of 25 percent. You need to submit other certificates, which can prove the original and selling prices,” Nga answered.

The reader with the email address of asked whether her extra incomes including business travel expenses, mobile phone payment, lunch expenses that her company pays for are taxable.

“Yes, they are. However, if your lunch expense is less than VND550,000 ($27.5) per month, it will not be counted as taxable income,” said Do Quoc Tuan, deputy head of the propaganda and taxpayer support division.  

Concerned on consecutive losses
Many readers were concerned on the fact that 40-50 percent of the total number of local businesses kept reporting consecutive losses, triggering questions about whether they attempted to dodge the tax.

“Too many businesses reported negative earning results to evade taxes and this issue has been lasted for tens of years. Is it because the tax department has never known or intentionally pretended you had not?” Nguyen An Minh of Ho Chi Minh City asked.

Hanh of the HCMC Tax Department said “the department is set up solutions to curb the issues. Those businesses, which suffered actual losses due to fire or natural disasters, will achieve the support of the department. We will strictly punish those, which tried to evade taxes”.

Other readers were also discontented with the fact that many shops hesitate to issue value-added-tax (VAT) invoice.

“The Decree No. 51/CP regulates businesses have to issue VAT invoice for purchase worth VND200,000 or more. However, many businesses intentionally shun the regulation as relevant units do not supervise closely. Is it true that the tax department was irresponsible for the supervisory task?” asked Pham Duc Phuc.

Nga of the HCMC Tax Department said “Businesses trading goods have a legal obligation to issue VAT invoice. Those who do not comply with the regulation will be strictly punished.”

By Han Ni – Translated by Ngoc Son

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