Personal income tax in Vietnam

The concept of personal income tax

Based on the provisions of Vietnamese law recorded in the Law on Personal Income
Tax, Decrees and Circulars guiding, it can be understood that personal income tax is
as follows: Personal income tax is a direct tax levied on income. income of
individuals in order to realize social justice, mobilize a part of individual's income
into the state budget and can be used to regulate the macro economy by encouraging
work or rest., through the collection or non-collection of taxes on income from
business, investment, etc.

Features of Personal Income Tax

Firstly, PIT is a direct tax because the taxpayer is also a taxpayer, and it is difficult
to transfer the tax burden to another entity. Tax payment is made from the direct
deduction from that individual's income, without going through any other consumer
or intermediary. Personal income tax is a highly sensitive tax because it is directly
related to the specific interests of the taxpayer and concerns almost every individual
in society. Personal income tax is regulated directly on the income and assets of the
individual, considering the status, circumstances, conditions and ability of the payer to
contribute, thus reducing the disparity in income and assets between the taxpayers.
population class.

People generate income in many different forms. The purpose of income classification
is the basis for determining the taxable objects of different taxes as well as setting up
effective collection mechanisms. Normally, taxable income must be legal income,
actually generated, common and controllable by the State. Thus, the new income tax
law ensures feasibility, fairness and ensures a stable source of revenue for the state
budget.

Secondly, PIT is a stable and complicated tax

This feature of PIT is reflected in the regulations on taxable income, taxable income
does not often change according to fluctuations of the economy in each period. In
addition, regulations such as family deductions and tax rates also have flexible
changes because taxes are directly regulated on individuals' incomes, so they have a
great impact on the living standard of the population and are affected. affected by
market prices.

Thirdly, sources of law governing the PIT relationship include national and
international legal documents

Most of the personal income tax of countries in the world applies not only to their
own citizens but also to foreigners whose taxable income arises in that country's
territory. In order to avoid double taxation on a single taxable object, double taxation
treaties are signed between countries and are also the source of law governing PIT
relations.

Current status of personal income tax law in Vietnam

PIT is a mandatory form of incentive, a non-refundable contribution to the payer and

is always associated with social policies. Income subject to PIT includes income from
business, salary income, wages received by employees from employers, income from
investment capital, income from capital transfer which is interest. receive from the
transfer of personal capital, etc.

In fact, the issue of income tax in Vietnam is only raised during the renovation
process of the economy, which is moving from a centralized economy to a market
economy. The State advocates calculating the basic needs of each person's material
income and minimum income. On the other hand, the business types are diverse, there
is competition in all fields, so the buying and selling is increasingly differentiated. At
the same time, high and stable economic growth has created favorable framework
conditions. Conditions to improve the life of the whole society in general, especially
the community group, people with qualifications and knowledge.

The Law on Personal Income Tax has been amended and supplemented and
increasingly asserted its role. The management of personal income tax is gradually
improving and improving to suit the situation of the country in the period when it
wants to achieve many achievements. In general, the policies put forward for personal
income are suitable to the economic conditions of the country's society, ensuring
revenue sources for the budget, controlling individual incomes, implementing social
justice, and improving the quality of life. raise the awareness of taxpayers about their
responsibility to pay tax to the state budget.

Inadequacies in regulations of Personal Income Tax:

Firstly, the increasing spending and living needs make workers must find more
sources of income to compensate, but the first income to reduce family circumstances
has not yet been adjusted accordingly.

Secondly, there are many loopholes in determining the object and actual income of
taxpayers. The current PIT law still lacks specific regulations for independent
taxpayers such as: doing business and selling online, teaching, medical examination
and treatment after hours; brokerage… Tax authorities have not yet managed all
industries. In the case of income other than salary from previous activities, this must
be specified in order to calculate the total income and thereby determine the payable
income tax rate. However, in reality, these people are not fully aware of the obligation
to register, declare and pay income tax according to the provisions of the registration
law, specifically, have not voluntarily declared and paid income tax. lead to tax loss.
Thirdly, there are too many procedures, papers, records, etc. that taxpayers need to
perform to meet the requirements of tax authorities. When paying taxes, but too many
procedures, papers, etc., taxpayers must spend a lot of time completing these
requirements, causing other things to be affected. Along with that, the habit of using
cash in payment of Vietnamese people is considered a significant obstacle for tax
collection in general and for PIT in particular. The widespread use of cash makes the
monitoring of income by the authorities limited, and at the same time creates
opportunities for subjects to hide their sources of income or move assets, thereby not
declaring it to the public. pay taxes according to regulations.

Personal recommendations and opinions on personal income tax

Firstly, the state needs to improve the income tax policy to be harmonized and
appropriate in order to narrow the gap between the rich and the poor, and to increase
the efficiency of fulfilling obligations to the country.

Secondly, impose sanctions that are sufficiently deterrent for those who intentionally
make false statements about their income or hide their income in order to reduce the
personal income tax payable to the State.

Thirdly, simplify the declaration and finalization of PIT. Along with adjustments on
tax base, tax structure and tax rates, PIT policy reform must aim at ensuring
simplicity, transparency and efficiency.

Finally, applying scientific and technological achievements in information technology

and network technology to tax collection management will help to manage accurately,
quickly, shorten procedures, simplify but bring high efficiency.