NA discusses amendment to Law on Personal Income Tax

The 11th session of the Standing Committee of the National Assembly began on Wednesday, September 12, with the main topic being a higher threshold for personal income tax proposed by the government, with conflicting opinions being voiced by the NA Standing Committee and the Finance and Budget Committee.

After the opening of the session by Chairman Nguyen Sinh Hung, the NA Standing Committee heard the Justice Committee Chairman Nguyen Van Hien present the revised report on amendments and supplements on the Law on Personal Income Tax. 

The Government report on the bill of amending and supplementing a number of articles of the Law on Personal Income Tax was presented by Deputy Minister of Finance Vu Thi Mai at the session of the Standing Committee of the National Assembly afternoon of September 12.

In August, the government gave the go-ahead for the proposal to amend the personal income tax law developed by the Ministry of Finance, which aims at increasing the personal income tax threshold to VND9 million a month, from the current VND4 million.

Taxpayers will be allowed to deduct VND3.6 million for each dependent they have to take care of, while the current rate is VND1.6 million. Dependents are those who earn less than VND500,000 a month.

Many members of the Standing Committee expressed their agreement to the plan, while those from the Finance and Budget Committee said the threshold should be only VND7 million, and the deduction for dependents should be VND2.8 million.

The meeting thus witnessed a heated discussion over the issue.

“I highly support the view of the government and disagree with the Finance and Budget Committee,” said NA Deputy Chairman Huynh Ngoc Son.

In response, chairman of the Finance and Budget Committee Phung Quoc Hien also said their proposal was intended ‘for the public’.

“When calculating the tax threshold, we should take into account all issues, including the state budget collection,” he told attendees.

With the average monthly wage of a university graduate working for a state company currently standing at only VND2.8 million, it is impossible for the dependent deduction rate to be VND3.6 million, he said.

Judiciary Committee Chairman Nguyen Van Hien expressed his idea, saying, “We should not worry about the fact that the state budget collection will lose a huge amount of money due to the increased personal tax threshold.

There are many other ways to save the budget. Better fight against corruption, for instance, will help save hundreds of trillions of dong every year,” he added.

Meanwhile, NA Chairman Nguyen Sinh Hung said the VND9 million threshold suggested by the government, is in conformity with the current economic context.

“The NA Standing Committee will convene for another session to reach the final agreement and report to the NA about the issue,” he said.

The 11th session of the Standing Committee of the National Assembly begins on Wednesday, September 12.

NA deputy Chairman Uong Chu Luu also demanded that if the proposal is approved by the NA in the October meeting, it should take effect on January 1 to encourage taxpayers, rather than from July, as earlier suggested by the finance ministry.

Concluding the discussion, Vice Chairwoman of the National Assembly Nguyen Thi Kim Ngan required that the Finance and Budget Committee receive comments of the National Assembly Standing Committee soon to examine all proposals.

She requested the Finance and Budget Committee to review and rewrite and submit report for adopting in the next session of the National Assembly.

Based on the opinions of the National Assembly Vice Chairman Uong Chu Luu and National Assembly Chairman Nguyen Sinh Hung, Ms. Nguyen Thi Kim Ngan asked the Ministry of Finance to calculate more plans to apply the new regulations from January 1, 2013.
 
The Draft Law on Personal Income Tax will be submitted at the National Assembly’s next session. If passed, the law is expected to come into effect on July 1, 2013.

Source SGGP, Translated by Dan

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