Personal income tax law to be revised in 2025: legislator

The amended Personal Income Tax (PIT) Law will be considered for inclusion in the National Assembly's (NA) 2025 law building program, said Tran Van Lam, standing member of the legislature’s Finance and Budget Committee.

The inclusion of the PIT Law in the 2025 program is on schedule. The law needs to be amended as soon as possible, Lam told a press conference on Wednesday.

Previously, at a discussion on the state budget on November 2, Lam held that the regulations in the PIT Law such as the starting level of taxable income and deductible amount are outdated.

Minister of Finance Ho Duc Phoc also said family circumstance-based deduction is considered one of the shortcomings in PIT calculation, adding that the deduction levels will be increased when the law is amended.

The current PIT-deductible amount, which became effective in July 2020, is VND11 million ($447.8) for the taxpayer and VND4.4 million ($179.1) per person dependent on the taxpayer. These figures are deemed equivalent to minimum living conditions and 40% of minimum living condition requirements, respectively.

A dependent is defined as a person below working age or of a working age but with low or no income.

Personal income tax, collected from salaried workers and business individuals, is one of three pillar taxes that make important contributions to the state budget, besides corporate income tax and value added tax.

According to the Ministry of Finance, in the first nine months of this year, personal income tax revenue in Vietnam was VND7.2 trillion ($296.7 million), or 6% lower than the same period last year, and reached more than 78% of the yearly estimate.

This is the first time in the past ten years that the nine-month PIT collection has recorded negative year-on-year growth due to economic difficulties and reduced incomes.

The 2022 figure reached VND166.73 trillion ($7.11 billion), a decade high and up 27% year-on-year.

The PIT Law was passed on November 20, 2007 and took effect from the beginning of 2009. The law was amended in 2012 and 2014.

Vietnam’s current PIT is between 5% and 35% of the taxable amount. The lowest rate of 5% is for taxable income of up to VND5 million ($203.5). The highest rate of 35% is for taxable income of at least VND80 million ($3,257).