All salaries and wages for the month of June will be subject to taxation if they are paid in July, when the Personal Income Tax Law takes effect, tax authorities said Tuesday.
"The law will be imposed from July on incomes from salary and other wages, trading, inheritance and lottery winnings," said Nguyen Dinh Tan, chief of Ho Chi Minh City Tax Department, in an online public conference organized by Thanh Nien Tuesday on application of the new law.
He said the tax exemption, which was applied to all taxpayers for the first half this year, will be extended to this year end for capital investments and transfers, including that of securities, copyrights and franchises.
Tran Thi Le Nga, head of the department's propaganda section, said all taxpayers from whom income tax had been collected before July 1 will be refunded.
The Personal Income Tax Law, which was passed by the National Assembly in 2007, was to take effect in January this year, but tax payments were deferred for the first six months before being exempted at the latest NA session that ended last week.
During the online session Tuesday, many questions focused on taxation on income from extra work.
"Payments for singers, MCs and dancers for performances without contracts from VND500,000 (US$28) onwards will attract income tax of ten percent," Tan said.
Nga gave another example to clarify the tax on income from extra work, of a retired man with a pension of VND2 million ($113) a month and earnings of VND1.5 million ($85) from extra work.
She said this man will not have to pay tax for the extra work, although it is above the limit of VND500,000, because he enjoys a deduction based on the taxable income threshold of VND4 million ($226) per month.
The personal income tax is not levied on pensions, she added.
A student from District 3 asked if the new law would tax income of more than VND500,000 a month earned without contracts by students doing seasonal work.
Nga said the tax rate of 10 percent applied to all kinds of extra work, but this income would be exempt if the total income was below the taxable threshold of VND4 million per month.
Property rentals and trade
Tan said in response to a question that income from the sale or transfer of land use rights in June would be taxed, adding, however, that the transferor or seller doesn't have to pay taxes if it was the only land plot she or he owns in Vietnam.
Vietnam does not technically allow land ownership but grants land-use rights, which confer the same rights as freehold property.
Do Quoc Tuan, deputy head of the department's propaganda sector, said income from renting properties is also taxable under the new law.
He answered several questions about instances where a family has already paid personal income tax at their workplaces but earn extra income from renting houses.
For a house rented at VND5 million ($281) per month, the personal income tax would be VND87,500 ($5), he said, calculating at five percent of 35 percent of the taxable income.
Registering and updating documents
Under the new law, both Vietnamese and foreigners are subject to the taxable income threshold of VND4 million per month, but are allowed a deduction of VND1.6 million ($90) per dependent.
Dependents include children under 18, disabled children of all ages, an unemployed spouse, and retired and unemployed parents.
Nguyen Thi Minh Nhut of the HCMC Tax Department said taxpayers have to update any changes on deductions with tax agencies within 30 days.
If a taxpayer, for example, had a new child on June 3, she/he would have to register information about the new dependent with tax authorities by the month's end to benefit from the policy for that month.
For registering tax codes, Nga said household businesses that already had a tax code will not have to register another one, and this code will be used to tax personal income.
These business owners can update deduction information of dependents at the local tax offices where they run the business, she added.
She also said each person will have only one tax code and the department is expediting issuance of tax codes for individuals, and this task is expected to be completed in October.