Personal income tax regulations "forget" many high-income earners

Many industries are not controlled by income tax

During the implementation process, the Personal Income Tax (PIT) Law has revealed many shortcomings and requires adjustment. Currently, the Ministry of Finance is conducting research, reviewing and evaluating the PIT Law in general to report to the Government and the National Assembly Standing Committee for consideration of amendments and supplements to ensure conformity with Vietnam's socio-economic conditions as well as international practices and the consistency of the tax policy system.

In addition to the outdated tax rates and dependents, personal income tax also reveals many shortcomings, failing to ensure fairness for taxpayers. Dr. Nguyen Van Thuan, University of Finance and Marketing, said that the current personal income tax regulations for salaried employees are unreasonable, especially the family deduction for both the taxpayer and dependents is too low, not enough to ensure the living expenses of many families.

Meanwhile, singers, artists, YouTubers, TikTokers can easily set up private companies, thereby declaring more employees and deducting all reasonable and valid expenses, but in reality, the revenue also belongs to the individual himself. Therefore, the tax rate paid through the enterprise will be lower than the tax rate that individual employees have to pay annually.

Furthermore, businesses will have many ways to allocate costs in the most profitable way before calculating taxes, so the tax rate will be even lower. Experts say that a long-standing reality is that the Personal Income Tax Law still has many loopholes in determining the subjects and actual income of taxpayers.

Specifically, for freelance taxpayers such as brokers, singers, actors, etc., the tax authorities have not been able to control all industries leading to high incomes, while the current law regulating these subjects is not effective. In fact, some subjects with high incomes have not voluntarily declared and paid taxes in accordance with regulations, leading to losses to the state budget.

Besides, the habit of using cash of Vietnamese people has hindered the collection of personal income tax, leading to difficulty in management.

According to experts, in order to implement a harmonious and fair personal income tax policy among taxpayers, law-making authorities need to increase the penalty level to be sufficiently deterrent to those with high incomes but deliberately concealing their income. At the same time, change the tax rate according to the progressive schedule between levels to suit reality and provide simple and easy-to-understand instructions for declaring personal income tax... In particular, there should be separate regulations for those with unusually high incomes, and exploit network technology in tax management.

The tax schedule is too cumbersome.

Senior tax expert, Dr. Nguyen Ngoc Tu, acknowledged that amending the Personal Income Tax Law is necessary because many issues are no longer suitable for reality. Because the personal income tax policy is currently targeting middle-income workers, mainly salaried workers, who are strictly controlled and deducted from taxes. Many other groups such as actors, singers, models, etc. are almost completely exempt from taxes. The amount of tax collected from the group with an income of 10-15 million VND/month is insignificant compared to the amount of tax lost.

One of the current major shortcomings of the Personal Income Tax Law is that the progressive tax calculation method according to 7 levels is too cumbersome, causing confusion for people. Accordingly, the personal income tax calculation method according to the 7-level progressive table, each income level has a corresponding tax rate: (1) Income level from 5 million VND/month or less is subject to a tax rate of 5%; (2) level 5-10 million VND 10%; (3) level 10-18 million VND 15%; (4) level 18-32 million VND 20%; (5) level 32-52 million VND 25%; (6) level 52-80 million VND 30% and (7) from 80 million VND/month or more is 35%.

Experts say that the current progressive tax schedule is not really reasonable, leading to many problems. Accordingly, this tax schedule is more than other countries in the world, and at the same time, the gap between the lower levels is too narrow, easily leading to a jump in tax rates, increasing the amount of tax payable.

In addition, the current highest tax rate of 35% is quite high, reducing national and international competitiveness in attracting managers, scientists, human resources, and highly skilled workers to work in Vietnam. International experience shows that if too many taxable groups are regulated, it will complicate management and create "loopholes" for tax evasion...

According to Associate Professor Dr. Dinh Trong Thinh, senior lecturer at the Academy of Finance, the current 7-level tax schedule should be shortened because it is too dense and confusing for people. Mr. Thinh proposed that the personal income tax schedule should have 3 levels, the low level for the income group under 30 million VND/month, the medium level from 30 to 100 million VND/month and the high level from 100 million VND/month or more.

Regarding tax rates, the low level should only be taxed at 2% instead of 5% as at present, the medium level should be taxed at 10% and the high level should be taxed at 20%. At the same time, according to expert Dinh Trong Thinh, it is necessary to increase the family deduction for taxpayers from the current 11 million VND/month to a higher level, even 18-20 million VND/month, because when market prices have increased, the level of 11 million VND/month is no longer suitable. In addition, the family deduction for dependents should also be increased to 50-70%, or about 6-7.5 million VND/month.

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