1. Adjustment of Tax Threshold and Tax Rates

One of the significant changes is the adjustment of the tax threshold and the progressive tax scale. The Ministry of Finance has proposed raising the starting threshold for taxable income, meaning that individuals with incomes below the new level will not be subject to tax. The tax brackets are also being revised to better align with the actual income of the population, reducing the tax burden for low and middle-income groups. At the same time, restructuring the tax brackets aims to enhance fairness and encourage higher-income individuals to contribute more to the budget.

2. Addition and Expansion of Tax Exemptions and Deductions

The new draft law will expand the categories of tax-exempt and deductible income to support vulnerable groups and encourage positive social activities. This includes tax exemptions for certain types of income from charitable activities, social assistance, or investments in priority sectors like education and healthcare. Additionally, expenses related to health insurance, children’s education, and other social expenses are being considered for inclusion in the exemption and deduction list.

3. Simplification of Procedures and Improvement of Tax Management

The Ministry of Finance proposes simplifying the procedures for tax declaration and payment, reducing paperwork and complex processes. The new project aims to promote the use of information technology in tax management, encouraging individuals to declare and pay taxes online. This change will not only reduce the time and cost for taxpayers but also enhance transparency and supervisory capabilities of the tax authorities.

4. Review of Family Circumstance Deduction Regulations

Another notable change is the review of the family circumstance deduction levels. These deductions are currently seen as insufficient to accurately reflect the cost of living and living standards, especially in the context of rising inflation and the increasing cost of living in major cities. The Ministry of Finance proposes raising the family circumstance deduction to better match reality and ensure fairness for individuals with average incomes.

5. Enhancement of Transparency and Fairness in the Tax System

The Ministry of Finance emphasizes that the changes in the new PIT Law project will ensure greater transparency and fairness in the tax system. This includes strengthening controls and combating tax evasion through improved monitoring mechanisms and cooperation with relevant agencies. In addition, the regulations on penalties and sanctions for violations will also be adjusted to increase deterrence and ensure compliance by taxpayers.

The Personal Income Tax Law (Replacement) is expected to bring many positive changes to Vietnam’s tax system, ensuring fairness and transparency while reducing the tax burden on citizens. However, the implementation of these changes requires careful preparation and extensive consultation from experts and affected parties to ensure practicality and effectiveness in reality.

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