Amending PIT Law and doing it immediately is a burning issue at the ongoing National Assembly session.
Doan Thi Thanh Mai, deputy chair of the NA Economics Committee, stressed that the current family-circumstance deduction of VND 11 million a month for taxpayers and VND4.4 million for every dependent family member, which has been applied since July 2020, are no longer suited to the new conditions, thus creating inequality on taxpayers.
Mai stressed that expenses increased by 20-30 percent after the pandemic because goods prices increased steadily while incomes have not increased or decreased.
“For many families, especially in large cities, the current deductions for family circumstances are not enough to cover basic needs,” Mai said.
The law on amending and supplementing articles of the PIT Law, was enacted by the NA in November 2012 and took effect on July 1, 2013. Since then, the taxation threshold has been adjusted only once, from VND 9 million to VND 11 million, applied to the 2020 taxation period onwards.
The law is now described as inadequate and out of date.
The deductions for family circumstances have become outdated and are not based on the minimum standards of living, average income per capita, general minimum wage and regional minimum wage.
While there are four regional minimum wages with a difference of 1.5 times, the PIT threshold and family allowances are the same, applied to all regions.
Meanwhile, many expense items, such as life insurance premiums, health insurance premiums, medical examinations and education fees are paid by workers themselves. These items are not listed among the deductions before calculating tax.
In the last 10 years, after the amended PIT Law took effect, the regional minimum wage has been raised nine times, from VND2 million/head/month to VND4.68 million, while family allowances for taxpayers and their dependents have been adjusted only once.
The Ministry of Finance (MOF), when collecting opinions for the PIT Law in early 2018, admitted that some regulations of the law were detrimental to taxpayers.
In late 2022, voters from some localities voiced complaints about the PIT Law, calling for higher family allowances for taxpayers.
After the Covid-19 pandemic, people have been facing difficulties. Since early 2023, many businesses have shut down, scaled down operation, laid off workers, or cut salaries. Many families have incomes that are not high enough to feed themselves, but still have to pay PIT.
What people want is the adjustment of family allowances.
In current difficult conditions, the 2 percent VAT cut is still not a breakthrough measure, because consumers benefit only when buying goods from sellers who issue invoices. Meanwhile, if cutting PIT, taxpayers will get benefits.
Minister of Finance Ho Duc Phoc, talking to the press on the sidelines of the ongoing National Assembly session on May 25, said the PIT Law is on the National Assembly’s upcoming agenda of the policymaking program.
This can be understood that the PIT Law won’t be amended immediately as expected, which must not be good news for millions of taxpayers. They cannot understand why the fixing of the shortcomings of the PIT Law goes slowly and needs so much time.
Some asked the National Assembly Standing Committee to immediately intervene in the case to solve the burning problem – adjusting the family allowances to make it more reasonable, temporarily adjusting the taxable levels tax rates in order to support people who are in big distress.
They stressed that the MOF needs to hurry to amend the PIT Law instead of leaving people to wait some more years.
Experts said that it is necessary to redesign PIT Law, which starts from changing the viewpoint about taxation, for example imposing PIT to regulate incomes in the society instead of increasing the tax collections for the state budget. Therefore, tax rates need to be designed reasonably for taxpayers.