Vietnam to exempt income tax for more low-income earners

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The Ministry of Finance Thursday announced a plan to raise the threshold for personal income tax to VND6 million per month from the current level of VND4 million, news website VnExpress reported.

The new threshold means those with an annual income of VND72 million (US$3,450) will not have to pay income tax.

Under the plan, expected to come into effect in 2014, taxpayers will also be allowed to set aside VND2.4 million per month for each dependent, if any, compared to the current VND1.6 million.

On the remaining taxable income after all deductions, the tax rate progressively increases, from 5 percent to 30 percent, as income increases. The current maximum tax rate is 35 percent on any taxable income portion that exceeds VND80 million.

The new changes will lead to a reduction of VND9.25 trillion ($444.5 million) in tax revenues, VnExpress reported, citing the Ministry of Finance. The report did not say how many taxpayers would benefit from the changes.

Local taxpaypers have been calling for amendments to the Personal Income Tax Law, which was approved in 2007, over the past two years as inflation stays at a high level. Consumer prices rose 16.44 percent in February from a year earlier.

Vietnam has issued nearly 15.9 million personal tax codes as of the end of 2011.

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