Proposed Personal Income Tax on Gold Bullion Transactions

On the afternoon of October 13th, continuing the 50th session agenda, the National Assembly Standing Committee provided feedback on the draft Law on Personal Income Tax (amended).

The draft Law outlines provisions regarding taxpayers, taxable income, tax-exempt income, tax reductions, and the basis for calculating personal income tax.

Presenting the Government’s proposal, Deputy Minister of Finance Cao Anh Tuan stated that the draft Law introduces additional provisions for other income groups subject to personal income tax, including income from the transfer of car license plates won through auctions as per legal regulations, income from the transfer of digital assets, and the transfer of gold bars…

The draft Law authorizes the Government to detail other income categories to ensure alignment with practical developments.

Regarding family circumstance deductions (including deductions for the taxpayer and dependents), Mr. Cao Anh Tuan clarified that the Government proposes amendments to delegate authority to the Government to regulate these deductions in accordance with socioeconomic conditions during each period, implementing decentralization and devolution policies.

According to the Deputy Minister, the Government has drafted a Resolution of the National Assembly Standing Committee to adjust family circumstance deductions for submission to the Standing Committee during the October session.

“The family circumstance deduction will be adjusted upwards from the current level (11 million VND/month for taxpayers and 4.4 million VND/month for each dependent) by over 40% (to 15.5 million VND and 6.2 million VND, respectively). This adjustment is based on the growth rate of average per capita income and the average per capita GDP growth rate,” Mr. Cao Anh Tuan emphasized.

The draft Law also revises the progressive tax brackets applicable to resident individuals earning income from salaries and wages by reducing the number of brackets and widening the income ranges between them.

Specifically, the current 7 tax brackets (5%, 10%, 15%, 20%, 25%, 30%, 35%) will be reduced to 5 brackets (5%, 15%, 25%, 30%, 35%).

The income ranges will be widened: Bracket 1 (5% tax rate) increases from 5 million VND/month to 10 million VND/month, Bracket 2 (15% tax rate) increases from 15 million VND/month to 30 million VND/month, and Bracket 5 (35% tax rate – the highest) increases from 80 million VND/month to 100 million VND/month (a 25% increase).

Presenting the verification report, Chairman of the National Assembly’s Committee on Economics and Finance Phan Van Mai noted that many opinions suggested carefully considering the taxation of gold bar transfers to avoid inconveniencing individuals who transfer gold for non-speculative or business purposes.

“Some opinions propose adding a provision to determine/limit the weight threshold of gold bars subject to personal income tax,” Mr. Phan Van Mai said.

Regarding family circumstance deductions, Mr. Phan Van Mai stated that the Committee believes the proposed amendments to family circumstance deductions are necessary to align with current realities.

“The regulation on family circumstance deductions is a critical issue that has garnered significant public attention during the law amendment process,” Mr. Phan Van Mai remarked.

Based on the practical adjustments and revisions to existing laws on family circumstance deductions, and studying international experiences, the verifying agency concluded that family circumstance deductions need not be adjusted frequently or continuously. Therefore, delegating this authority to the Government is not deemed necessary or urgent.

Consequently, the majority within the verifying agency propose that the law should explicitly stipulate family circumstance deductions for taxpayers and dependents, as in the current law, to ensure clarity, transparency, and appropriate authority.

Some opinions agreed to delegate the regulation of family circumstance deductions to the Government but suggested that the law should specify minimum and maximum deduction levels for taxpayers and dependents, establishing fundamental principles for the Government to determine specific deduction amounts.

Regarding tax brackets, Mr. Phan Van Mai mentioned that many in the Standing Committee questioned the rationale behind adjusting income thresholds and corresponding tax rates.

He explained that these tax brackets apply to individuals earning income from salaries and wages. However, the taxable income threshold for the year remains too low compared to actual income levels since 2009, when the Law on Personal Income Tax was first implemented.

Furthermore, while the tax brackets are set at 5 levels with higher thresholds and tax rates, some taxable income levels still impose a heavier tax burden on taxpayers compared to the current law.

Meanwhile, many other income levels will see reduced tax burdens compared to the current law, such as income between 80-100 million VND/month, where the current tax rate is 35%, but the draft law reduces it to 30%…

“The proposed tax bracket revisions in the draft law are not entirely reasonable or equitable for taxpayers across different income groups,” Mr. Phan Van Mai stressed.

Additionally, the Chairman of the Committee on Economics and Finance noted that some opinions suggested retaining the current 7 brackets with 5% intervals and only adjusting the taxable income levels within each bracket to better reflect current realities and protect taxpayer rights and interests.