According to a source from the finance ministry on February 13, the personal income tax ordinance will not be converted into a law on personal income tax by the end of this year as asked by the National Assembly Standing Committee.
One reason for the above decision, according to a finance ministry official is that if the ordinance were converted to a law, the total number of taxpayers and the amount of taxable income would substantially increase.
Apart from salaries, allowances, bonuses and other irregular income such as inheritances and securities investments will be counted as taxable income and the previous distinction between regular and irregular income will no longer exist. It is expected that several million more people would have to pay income tax if changes to the tax laws are made.
The finance ministry instead is now asking the government to recommend to the NA Standing Committee to adjust the current ordinance on personal income tax with the new proposed changes. At the end of last year, the NA Standing Committee did not agree to adjust this ordinance but said a complete new law on income tax be drafted to issue in 2004.
Commenting on proposed changes to the income ordinance, deputy head of the General Department of Taxation under the finance ministry Nguyen Thi Cuc said that the minimum taxable income threshold would be raised from the current three million dong a month to five million dong—on million dong higher than previously proposed. And the maximum income tax rate would be adjusted in a more equitable way, said Cuc. The maximum tax rate would be reduced to 40% for persons who earn more than 25 million dong a month, down from the current from 50% imposed on incomes of 15 million dong a month or more. In addition, the finance ministry will ask the NA Standing Committee to abolish the supplementary income tax of 25% which is levied on the balance of incomes still higher than 15 million dong after regular income tax had already been levied.
Tax on incomes earned from the transfer of property that was earlier proposed to be set at the corporate income tax rate of 28% applicable to all should instead be applied on two tiers: commercial dealing should incur a tax rate of 28% and a lesser—but as yet undefined rate—for non-commercial or private property dealings, said Cuc.
[Intellasia legal news]