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Proposal for personal income tax exemption in 2020
Date: 5/15/2020 9:25:06 AM
In the afternoon of May 14, the National Assembly’s Finance and Budget Committee checked the Government’s draft resolution on raising the personal income tax reduction (PIT).

 Proposal for exemption of personal income tax in 2020 - Photo 1.

As planned on May 16, the Standing Committee of the National Assembly will comment on this issue.

After 7 years, the family circumstance-based reduction  is VND 2 million

According to the Government’s proposal, the family allowances for taxpayers are raised from VND 9 million / month to VND 11 million / month and dependents is VND 4.4 million instead of VND 3.6 million. with the present. The new deduction is expected to be applied always for the tax period 2020.

Regarding the basis for raising the family allowances as mentioned above, Mr. Pham Dinh Thi - Director of Tax Policy Department of the Ministry of Finance, member of the drafting committee of this draft resolution - said the 2012 Law on Personal Income Tax stipulates cases The consumer price index (CPI) fluctuates above 20% compared to the time the law takes effect or the time to adjust the latest family allowances, the Government submits to the Standing Committee of the National Assembly family circumstances. 

This regulation is consistent with the current price fluctuations, so the increase in family allowances may apply to the next tax period.

Specifically, according to the figures provided by the General Statistics Office, the consumer price index as of the end of December 2013 compared to July 1, 2013 increased by 23.2%. So the increase or decrease of family circumstances is equal to the increase of the consumer price index. The Ministry of Finance estimates that if the proposal is applied, the budget will reduce the annual revenue by about VND 10,300 billion.

The Ministry of Finance also assessed that the above increase in family allowances would help all workers with income from wages and salaries to pay taxes to benefit, which reduces the amount of tax payable compared to the present. 

According to current regulations, if an individual earns up to VND 15 million per month and has one dependent, each month must pay VND 120,000. If the new family allowances are applied, this person will not be taxed. 

If the taxpayer has an income of up to VND 20 million / month and has 2 dependents, the personal income tax amount is expected to pay only VND 10,000 per month, instead of currently having to pay the personal income tax of VND 190,000.

Proposal for exemption of personal income tax in 2020 - Photo 2.

According to the proposal, the family allowances for taxpayers and dependents will be increased compared to the present - Photo: QUANG DINH

Decreased income is  still paying taxes

Commenting on the proposed reductions of family circumstances and PIT, from the perspective of taxpayers, Ms. Minh Thao (District 2, Ho Chi Minh City) said that from February until now due to the impact of COVID-19 epidemic, The company you’re doing is in trouble. Decreased sales, less work led to a decline in salary, no bonus. But every month she is temporarily withheld PIT.

"In 2009, when the economy was in a difficult situation, we were exempt from taxes for the first 6 months of the year. And this year, the effects of the disease and the situation are even more difficult. But I have not seen any proposal from the Ministry of Finance. wage earners while many others have received support "- Ms. Minh Thao commented.

Similarly, Mr. Trung Nhan (District 7, Ho Chi Minh City) said that he was temporarily withheld tax at VND 2 million / month based on the income of 2019. 

"Last year the economy was good, there was no epidemic, and this year I had a decrease in income, more difficult than before but every month it was withheld an income. Of course, at the end of the year when summing up to finalize. maybe I will get a tax refund, but that also means that my income has been "occupied" for a year. Now we are facing a very difficult situation, "said Trung Nhan.

Therefore, according to Mr. Trung Nhan, the State should have a policy of personal income tax exemption in the first 6 months of 2020 - also the time of COVID-19 outbreak - to support wage earners. "That is also the way to nourish the revenue" - Mr. Trung Nhan proposed.

What Mr. Nhan and Ms. Thao, as well as wage workers affected by the COVID-19 epidemic, still have to "advance" the PIT is clearly shown in the tax authorities’ data. 

According to data of Ho Chi Minh City Tax Department, in just 4 months, 1,523 enterprises in the city were dissolved, an increase of 54.82% compared to the same period in 2019. Business activities were delayed due to social gap to combat COVID-19 epidemic, the total accumulated 4-month tax collection in the area was only more than 30% of the estimate, down 7.9% over the same period in 2019. 

A series of taxes has been strongly affected, such as corporate income tax revenue decreased by 11.08%, value added tax decreased by 6.27% over the same period in 2019. Registration fee collection for the first four months of the year In 2020, it will decrease by 28.11%, equivalent to VND 638 billion. This is the deepest decrease in the period of 2017 - 2020. However, personal income tax still increases by 8.96%.

Proposal for exemption of personal income tax in 2020 - Photo 3.

People and businesses do tax finalization procedures at HCMC Tax Department - Photo: QUANG DINH

Should be exempted 6 months or 1 year PIT 

In order to support workers in businesses affected by the COVID-19 epidemic, at the Government’s draft resolution on tasks and solutions to continue removing difficulties for business and production, the Ministry of Planning and Investment Proposal to delay the deadline for paying personal income tax until December  31, 2020. This tax  deferment applies to accounts payable arising from March of individuals working at  businesses affected by COVID-19 epidemic.

Talking with Tuoi Tre, Mr. Nguyen Cong Hung - Chairman of Hanoi Taxi Association - recognized this year’s difficulty is very special due to the impact of the COVID-19 pandemic. Currently, Vietnam has initially controlled this epidemic, but many businesses such as transportation, tourism, accommodation services ... cannot recover in 1-2 quarters but even 1-2 years to have can get up as usual. 

As in March, especially in April when the Government applies social isolation measures to prevent epidemics, transport enterprises have no turnover. This means that employees are struggling to alternate days off, work 1 day off 3 days, income is reduced sharply, even without.

Up to now, Mr. Hung said that the transportation business has started to return, but there are still many difficulties for businesses and workers. To support salaried workers, Mr. Hung suggested that the Government should consider PIT exemption this year. If delaying the time of tax payment, the employee will still have to pay tax by the end of the year. 

Meanwhile, the market is looking forward to policies to encourage consumer demand stimulation after recent months to temporarily close, stop working because of the epidemic. If there is money, people will consume it and the State will collect more taxes.

According to MSc Tran Minh Hiep - lecturer of Commercial Law Faculty of Ho Chi Minh City University of Law, the economic crisis of 2007 - 2008, the National Assembly issued Resolution No. 32 adjusting the overall objective, some business targets. International. Including the PIT exemption for the first 6 months of 2009 for wage earners. 

Since the beginning of the year, the COVID-19 epidemic has greatly affected individual incomes, especially salaried individuals. Meanwhile, the Government only issued Decree 41 to extend the deadline for paying taxes and land rent. Particularly for PIT, it still has to pay according to the provisions of law. 

"I think that in order to create conditions for workers to stabilize their lives, the law should stipulate the policy on personal income tax exemption for employees with at least 6 months of 2020" - Mr. Hiep proposed.

Proposal for exemption of personal income tax in 2020 - Photo 4.

Graphics: TUAN 

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