Finance ministry proposes changes in new personal income tax law

Tax officers help individuals complete their income tax returns. — VNA/VNS Photo

HÀ NỘI - The Ministry of Finance has drafted a proposal to develop a replacement for the current Law on Personal Income Tax.

The current law, enacted by the 12th National Assembly on November 21, 2007, and effective from January 1, 2009, is now considered outdated in the current domestic socio-economic context where price rises and inflation are of people's major concerns, according to the ministry.

The new law is expected to amend and supplement 31 out of 35 articles, so 88.5 per cent of the current law.

Changes will be made regarding taxable income, tax-exempt income, tax bases and methods for determining the amount of tax payable on certain income items.

Also changing, personal income tax rates for income from salaries and wages and family deductions for taxpayers and dependents.

Some tax experts said the amendments are necessary as the current regulations are outdated and causing disadvantages to taxpayers.

For example, the deduction of VNĐ4.4 million (US$173) per month for a parent supporting a child who studies in an urban university is simply inadequate, as the amount would not cover the most essential expenses such as food, accommodation, travel and education.

Another example is the requirement that to be eligible for family deduction, a dependent must have an average monthly income of no more than VNĐ1 million ($39). This level has been fixed for a decade, while prices have all gone up.

Another issue - the highest tax rate for personal income tax is up to 35 per cent, which is unreasonable since it's higher than the corporate income tax rate of 20 per cent.

The Ministry of Finance has sent an official dispatch to other ministries and authorities to seek comments on the proposal for the new Law on Personal Income Tax.

In the dispatch, the ministry said that the proposal had been submitted to the National Assembly Standing Committee.

The ministry and the Government had also proposed to include the new law in the 2025 Law- and Ordinance-Making Programme, which will be submitted to the National Assembly for comments at its 10th session in October 2025 and to be approved at the 11th session in May 2026.

The Ministry of Finance requests related agencies, organisations and individuals to give their opinions on the proposal to develop the new Law on Personal Income Tax.

Comments and contributions should be sent to the ministry before December 20.