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 socio-economic conditions during each period, implementing the policy of decentralization and devolution.

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 income per capita and the average GDP growth rate per capita,” Mr. Cao Anh Tuan emphasized.

The draft Law also revises the progressive tax brackets applicable to resident individuals earning income from salaries and wages, 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 Economy 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 Standing Committee believes the proposed amendments to the family circumstance deduction regulations are necessary to align with current realities.

“The family circumstance deduction regulation is one of the critical aspects, receiving significant attention from the public and media during the law amendment process,” Mr. Phan Van Mai remarked.

Through practical adjustments and revisions to the current law’s family circumstance deduction provisions, and by studying international experiences, the verification agency found that family circumstance deductions do not need frequent, continuous adjustments. Therefore, delegating this authority to the Government is not deemed necessary or urgent to ensure flexibility and timeliness.

Thus, the majority of opinions within the verification agency suggest that the law should specify family circumstance deductions for taxpayers and dependents, as in the current law, to ensure clarity, transparency, and proper authority.

Some opinions agreed to delegate family circumstance deduction regulations to the Government but proposed that the law should stipulate minimum and maximum deduction levels for taxpayers and dependents, establishing basic principles for the Government to determine specific deduction amounts.

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

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

Furthermore, while the tax brackets are set at 5 levels with higher income ranges and both starting and ending points for taxation are higher, some taxable income levels still compare unfavorably with the current law. This will increase the personal income tax burden for taxpayers.

Meanwhile, many other taxable income ranges will reduce the tax burden 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 tax bracket revisions in the draft law are not entirely reasonable or fair for taxpayers across different income groups,” Mr. Phan Van Mai stressed.

Additionally, the Chairman of the Committee on Economy and Finance noted that some opinions suggested retaining the current 7 brackets with 5% intervals and only adjusting the taxable income for each bracket to better suit current realities, ensuring taxpayer rights and interests.