Toward building fair and humane tax policies

Raising the tax-free revenue threshold; adjusting the progressive tax bracket structure from seven levels down to five; increasing family-circumstance deductions for taxpayers and their dependents… these are among the new tax policies in the Draft Revised Personal Income Tax (PIT) Law, which have been actively debated in the National Assembly and have drawn significant public attention in recent days.

The draft PIT Law will have a major impact on household businesses. In the photo: A household business selling diapers and milk in Trang Bom commune, Dong Nai province. Photo: Ngoc Lien

The above contents are included in the Draft Revised PIT Law submitted to the 10th session of the 15th National Assembly. The draft has been highly appreciated by National Assembly deputies for the efforts of the specialized agencies in formulating tax policies, with proposals oriented toward fairness, humanity, and alignment with the trends of integration and the development of a modern economy.

Highlights of the Draft PIT Law

Information from the group discussions at the 10th session of the 15th National Assembly shows that the Draft Revised PIT Law is gradually being supplemented and finalized for submission to the National Assembly, aiming to implement the new tax policies for the public in 2026.

Most recently, based on feedback on the Draft Revised PIT Law, the Ministry of Finance reported to the Government on the reception and clarification of appraisal opinions and National Assembly deputies’ comments regarding the draft law. One of the key points attracting public attention is the proposal to raise the tax-free revenue threshold for individuals from 200 million VND per year to 500 million VND per year. The 500 million VND per year level would also be the amount deducted before calculating tax based on the revenue rate. According to the Ministry of Finance, applying this threshold would exempt about 90% of household businesses nationwide from paying tax, equivalent to approximately 2.3 million individuals and household businesses.

Alongside the proposal to raise the tax-free revenue threshold, another issue drawing significant public attention is the proposed increase of the family circumstance deduction for taxpayers to 15.5 million VND per month. Specifically, the deduction for the taxpayer would rise from 11 million VND per month to 15.5 million VND per month, while the deduction for each dependent would increase from 4.4 million VND per month to 6.2 million VND per month. Responding to National Assembly deputies’ comments, Finance Minister Nguyen Van Thang emphasized that the family circumstance deduction for taxpayers and dependents is a standardized amount based on the general social average, regardless of whether the individual has a high or low income, differing consumption needs, or resides in different localities.

The progressive tax rates applied to resident individuals earning income from salaries and wages are proposed to be simplified from 7 brackets to 5 brackets, with tax rates ranging from 5% to 35% according to the specified income ranges. However, many opinions indicate that some brackets still have relatively high rates and suggest that the National Assembly consider lowering the rates to ensure a more balanced progression between brackets. For example, a worker in the first income bracket would pay 5% tax, but with an income of 11 million VND per month, they would already fall into the second bracket with a 15% rate (a 10% jump). Therefore, many suggest that the tax rate increments between brackets should increase gradually, e.g., from 5% to 10%, then 15%, and so on.

Policy decisions in alignment with people’s aspirations

PIT is one of the main revenue sources for the state budget. In 2024, the former Dong Nai province collected over 6.7 trillion VND from PIT, indicating that the number of taxpayers in the province is very large. Therefore, tax policies are always a matter of significant public interest.

Tax officers from Tax Unit 10, Dong Nai province, guide small traders at Dong Xoai market (Binh Phuoc ward) on electronic tax payment. Photo: Truong Hien

Tran Van Son, a senior manager at a foreign-invested company in Amata Industrial Park (Long Binh ward), shared that he contributes nearly 100 million VND annually in PIT to the state budget. Therefore, he has been closely following the proposed adjustments in the Draft Revised PIT Law during this National Assembly session. According to Son, raising the family circumstance deduction and adjusting the tax brackets are very appropriate measures, and he hopes the National Assembly will approve them soon so that the tax policies can be implemented, providing people with more opportunities to save and improve their lives.

Sharing the same view, Nguyen Thi Minh Y, owner of a grocery store in Tran Bien ward, Dong Nai province, said that the Draft Revised PIT Law includes changes that align with taxpayers’ expectations. In particular, the proposal to raise the tax-free revenue threshold for individuals and household businesses to 500 million VND per year is one of the policies that wins public support, helping millions of household businesses reduce their tax burden while also encouraging them to declare taxes, providing a basis to report actual income to the tax authorities.

The amended PIT Law is expected to take effect on January 1, 2026. According to economic experts, to fulfill their PIT obligations, citizens need to proactively apply proper tax registration and declaration methods in accordance with regulations. This includes compliance with electronic invoice requirements, such as e-invoices generated from cash registers connected to the tax authorities.

According to economic experts, the Draft Revised PIT Law represents a significant step forward both in thinking and content. The adjustments in the draft show that central ministries and sectors have actively listened to and acknowledged feedback to address existing shortcomings in current tax policies and regulations. This also reflects efforts to realize the major policies of the Party and State to support and promote the development of the private economy, translating resolutions of the Politburo and the National Assembly into practice.

By Ngoc Lien – Translated by Dang Huyen, Thu Ha