Personal tax breaks for first-threshold payers okayed
Bigger investments for agriculture and rural development
By Lan Nhi - The Saigon Times Daily
HANOI – Individuals subject to the first personal income tax threshold will enjoy a six-month tax holiday starting from July 1, 2012, according to a resolution that the National Assembly (NA) passed on Thursday.
As the first tax threshold applies to taxable income from VND5 million after deducting approved expenses of VND4 million, those people with a net income of VND9 million will enjoy the tax break.
The resolution on preferential tax policies aimed to remove difficulties for organizations and individuals brings forward the aforesaid tax break although it was not proposed by the Government. With affirmative votes accounting for 95.79%, the resolution got the nod from NA at the closing session of the third NA sitting on Thursday.
A survey on first-threshold personal income tax exemptions conducted by NA earlier saw positive replies make up 84% while 15.24% was negative.
At present, taxpayers belonging to the first threshold account for 73% of the total number of personal income taxpayers. This tax bracket levies the lowest rate of 5% on earners of VND5 million per month after family allowances are deducted.
Although the minimum monthly wages have been raised, they are still at very low levels. Meanwhile, prices of essential items currently stay high, making the lives of taxpayers more difficult.
The fact that people are tightening their purse strings sends the economy to the verge of deflation and production stagnation. Therefore, personal income tax exemptions will help stimulate demand and boost production and business.
It is estimated that tax holidays for first-threshold personal income taxpayers in the year’s second half would reduce the State budget revenue by only VND1.9-2 trillion. On the other hand, personal income tax breaks will create a motivation for stimulating consumption, and thus increase revenue from other taxes on production and business activities.
Furthermore, personal income tax exemption is a great encouragement for people.
NA also approved a 30% corporate income cut in 2012 for labor-intensive enterprises and small and medium businesses, excluding those operating in the fields of lottery, real estate, securities, banking and insurance.
Lump-sum tax exemptions for individuals and households leasing houses or providing catering services to workers and students were initially disagreed by the NA Financial and Budgetary Committee, but eventually got approved by the NA and included in the resolution.
The Government also decided to give a nine-month extension for corporate income tax payments in 2011 and earlier that the aforesaid entities have not paid into the central budget.
In addition, a 50% land rental cut will be offered to economic organizations active in commerce and service. Project owners in financial distress will enjoy a 12-month land rental payment extension.
* The National Assembly has also passed a resolution to pour more capital into agriculture and rural areas in the future, with the State investment to double for every five years.
According to the NA Standing Committee, total investment in agriculture, farmers and rural areas allocated from the State budget and Government bonds during 2009-2011 was VND286.2 trillion, or around US$14 billion, some 1.95 times higher than in the period 2006-2008.
NA said from now on the allocation of State-owned capital for agriculture and rural development will be increased two-fold after every five years in line with the orientation to give priority to agriculture and rural development. The committee also said investment amounts could be higher subject to actual State budget from time to time.
In addition, the Government also decided to review, amend and supplement investment incentives, especially land use fee payments, land rent, land use purpose changes and corporate income taxes for firms and agricultural cooperatives investing in projects to develop agriculture and rural areas.