Wednesday,  Oct 24, 2018,04:36 (GMT+7) 0 0
Higher PIT threshold sought
Tam An
Thursday,  Jan 18, 2018,18:14 (GMT+7)

Higher PIT threshold sought

Tam An

GrabBike drivers are seen transporting passengers on a road in HCMC. High discount rates eat into Grab drivers’ incomes - PHOTO: THANH HOA

HCMC – Tax experts have called for a higher personal income tax (PIT) threshold for household businesses and salaried workers as the current level is too low, putting pressure on them.

Last week, hundreds of Grab drivers in HCMC turned off the mobile app in protest against the new policy of ride-hailing firm Grab to raise the discount rate from 20% to 23.6%.

The firm explained that the hike, equivalent to 4.5% of 80% of Grab drivers’ income, is aimed at compensating for the tax the firm has to pay on behalf of its member drivers including 3% for value added tax and 1.5% for personal income tax.

Under the prevailing rules, Grab and Uber drivers will be taxed if their revenues reach VND100 million per year or VND277,000 a day.

Nguyen Thai Son, a tax expert who is former head of the personal income tax division under the HCMC Department of Taxation, said the PIT threshold is unreasonable as household businesses’ revenues include earnings from sales and profits.

Notably, setting a low taxable income threshold is unfair for Grab drivers and vendors at traditional wet markets as they are under the management of companies or market management boards while others are exempted from tax.

In a related development, the Ministry of Finance earlier proposed increasing the PIT threshold to VND150 million a year. However, the proposal was no longer mentioned though the ministry repeatedly submitted draft amendments to the Law on Personal Income Tax last year.

The low PIT threshold also affects salaried workers as those with income from VND9 million a month or VND108 million a year must pay the tax, plus a deduction of VND3.6 million a month for each of their dependents.

In the latest draft law the ministry has sent to the Government, the PIT threshold is kept unchanged.

The current threshold has been in place since 2013 while consumer goods’ prices have increased by over 20% in the period. Meanwhile, value added and special consumption taxes may be raised in the coming time, sending goods prices up.

Therefore, it is a must to increase the PIT threshold to a minimum of VND12 million for wage earners and a deduction of 40% of the amount for each of their dependents.

Ngo Tri Long, another tax expert, commented on the draft law, saying the Ministry of Finance should take inflation into account while proposing tax rates to ensure workers’ benefits.

Moreover, he proposed regulating the deduction in the PIT threshold for workers’ dependents on a percentage basis instead of a specific number.

The PIT threshold must be suitable to the country’s inflation, workers’ salaries and minimum wages to ensure fairness for workers. The ministry should also maximize the number of taxpayers to raise State budget revenue.

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