Vietnam Will Not Delay Introduction Of New Personal Income Tax Law

by Mary Swire, Tax-News.com, Hong Kong

29 December 2008

Vietnam's National Assembly Standing Committee has insisted that the country's new Personal Income Tax (PIT) Law will be coming into force on January 1, 2009, as planned, despite attempts by the government to try and delay its introduction.

Under the new law, the taxable income threshold will become VND4m (USD238) per month for both local and foreign workers. Taxpayers will then be allowed to claim around VND1.6m in deductions for each dependent.

Due to the recent economic conditions, the government had expressed some concern about introducing this law, and had proposed some amendments to its introduction, which included delaying the onset of the law for up to 12 months.

If this had gained approval, then the government suggested that the Ordinance on Income Tax on the country's top earners could still enter into force, but a 30% reduction on tax liabilities would be applied.

Failing this, the government then suggested that an exemption from capital gains on investments should run throughout the course of 2009, with additional tax exemptions applied to dividend income taxes. This would be coupled with the introduction of a 30% cut to personal income taxes for those who were previously burdened with the costs of corporate income taxes.

However, both of these suggestions were unanimously declined by the NA Standing Committee when it met on December 27, with the NA's Deputy Chairman, Tong Thi Phong dismissing the government's reasons for holding back on the implementation of the tax, which was first approved in November.

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