 |
| A store on Hang Chieu street, Hanoi. (Photo: VNA) |
Hanoi (VNS/VNA) - The Ministry of Finance has proposed raising the annual revenue threshold for exemption of personal income tax for household businesses from 100 million VND (3,790 USD) currently to 500 million VND.
The 500 million VND threshold would allow 90% of household businesses to be exempted from paying tax and reduce the tax burden on them by an estimated sum of 11.8 trillion VND per year.
The proposal was outlined in a recent report to the Government on revision to the draft amended Law on Personal Income Tax.
Under the draft previously submitted to the National Assembly, the tax-free revenue threshold for household businesses is proposed at 200 million VND per year.
The ministry said that the 200 million VND revenue threshold for tax exemption is no longer appropriate and should be reviewed to ensure fairness with salaried taxpayers.
Accordingly, the ministry proposed the revenue threshold for tax exemption to be increased to 500 million VND. This sum would also be deducted before calculating taxes based on revenue.
The ministry also proposed introducing an income-based taxation mechanism for household and individual businesses with revenues from 500 to 3 billion VND per year, with a tax rate of 15% – equivalent to the corporate income tax rate applied to enterprises with revenues below 3 billion VND under the Law on Corporate Income Tax.
Only business households which cannot determine their expenses would pay taxes on revenue.
The ministry also proposed amending the Law on Value Added Tax to raise the annual revenue threshold for exemption from 200 million to 500 million VND to ensure consistency with the upcoming Law on Personal Income Tax.
Official data showed that there are more than 2.54 million household businesses operating regularly in Vietnam as of the end of October./.
