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The Ministry of Finance (MOF) has reported that the collection from PIT payments was VND121.2 trillion in the first nine months of the year, a decrease of VND7.2 trillion compared with the same period last year, or 6 percent. The figure is just equal to 78 percent of the 2023 state budget collection estimates (VND154.652 trillion).

This was the first time in the last 10 years MOF reported a decrease in PIT collection.

The PIT Law was approved by the 12th National Assembly on November 20, 2007 which replaced the Ordinance on Personal Income Tax on High-income Earners and took effect on January 1, 2009. Since then, the revenue of the state budget from PIT has accounted for a large proportion of the state budget collection, with revenue of the next year higher than the previous year.

The PIT collection surged from VND38.5 trillion in 2011 to VND166 trillion in 2022. The collection in the first nine months 2023 decreased compared with 2022, but the figure is still nearly equal to the total revenue of the whole year 2021.

The year 2019 marked an important milestone in history when the revenue from PIT exceeded VND100 trillion, reaching VND109.4 trillion.

In 2020 and 2021, despite Covid-19, the revenue from PIT still kept increasing over the previous years, reaching VND115 trillion.

According to MOF, with the current family circumstance deduction of VND11 million a month for tax payers and VND4.4 million a month for one dependent family member, the taxpayers with the monthly incomes of up to VND17 million and one dependent family member, and those with the total incomes of up to VND22 million and two dependent family members won’t have to pay PIT after deducting the payment for social insurance, health insurance and unemployment insurance premiums.

The PIT policy plays a very important role in implementing the redistribution policy in socio-economic development stages. Together with other sources of revenue, the receipt from PIT helps create a state budget fund to be spent on the investment for development, national defense and security, ensuring social security and poverty reduction.

However, tax payers and economists have many times asked to amend the PIT law and raise the taxation thresholds. 

It is expected that the amendment of PIT Law would be submitted to National Assembly and added into the list of the law building program in May 2025. The draft law would be submitted for National Assembly’s opinions for the first time in October 2025 and for the second time in May 2026.

The information has disappointed tax payers, who affirmed that it would be too late to only amend the taxation thresholds in 2025.

Minister of Finance Ho Duc Phoc, when talking to the press on the sideline of the National Asembly session earlier this year, commented that the deductions for family circumstances are high if compared with the average wages, but they are low if compared with the living standards in urban areas.

Asked to comment about the income threshold of VND12 million a month, Phoc said the income is not high enough to cover basic needs in cities.

Under the PIT Law, when CPI (consumer price index) fluctuates by more than 20 percent compared with the CPI at the moments the PIT Law takes effect, or the moments of latest adjustments of the deductions for family circumstances, MOF will consider adjusting the deduction levels to suit to the price fluctuations for the next taxation periods.

Under the PIT Law, which took effect on January 1, 2009, the deduction for tax payer was VND4 million a month (VND48 million a year), and the deduction for every dependent individual was VND1.6 million.

Under the Law on amending and supplementing some articles of the PIT Law No 26/2012/QH13, applied since July 1, 2013, the deduction level for tax payers was raised to VND9 million (VND108 million a year) and the figure was VND3.6 million for every dependent individual.

On June 2, 2020, the National Assembly Standing Committee issued Resolution 954/2020/UBTVQH14, stipulating that the deduction level for taxpayers was raised to VND11 million a month, and the level was VND4.4 million for every dependent individual. The levels have been applied since the 2020 taxation calculation period.

Luong Bang