Sai Gon Giai Phong newspaper yesterday held an interactive session between its readers and Mr. Nguyen Dinh Tan, head of the HCM City’s Tax Department, on some issues related to the Law on Personal Income Tax, which will take effect on Jan 1, 2009.
Also taking part in the session was Ms. Tran Thi Le Nga, the head of the Tax-payer Assistance Office.
The below is an excerpt from the exchange session.
Reader: If I had an income of more than VND4 million and I spent all of it, I would pay double taxes: VAT and personal income tax. I consider such tax payment unreasonable. Could I be given tax reimbursement?
Mr. Tan: The two kinds of taxes are different from each other. VAT is paid when goods or services are bought; personal income tax is paid on the remaining amount after the “deduction for family considerations” (hereinafter referred to as “deduction”) is taken away from the taxable income. For example, when you have an income of VND5 million, the personal income tax you pay is: (VND5 million - VND4 million) x 5% = VND50,000.
Reader: I monthly spend an amount of money on supporting my parents in the countryside. Could I get a deduction?
Mr. Tan: If your parents are beyond working age or are incapable of working, you will enjoy a deduction at a rate of VND1.6 million per month. Subject to whom a deduction is applied is stipulated in Article 19 of the Law on Personal Income Tax, which is applied for resident individuals, foreigners and locals alike.
Reader: I let my house, earning US$6,000 per month. My spending on my two children’s overseas study is US$70,000 per year; and I am supporting my 81-year-old mother. How will I pay the tax?
Mr. Tan: The deduction for three dependents that have no income is VND4.8 million per month, and the deduction for yourself is VND4 million per month. As such, the total deduction is VND8.8 million. After this amount is taken away from your taxable income, you will pay the tax according to the progressive taxation table.
Reader: I have three children to support. So can I get a deduction for my third child?
Mr. Tan: A deduction is applied for minors and students at universities, colleges and vocational high schools who have no income or have income that do not reach the taxable income level. There are no limits in the number of dependents.
Reader: Businesses sometimes are caused difficulties by some tax officers, but they dare not make complaints against them for fear of continuing harassment. In such cases, who can protect us?
Mr. Tan: I undertake to strictly deal with harassments by some tax officers. In case of harassment, send exact and detailed information to me or the Internal Inspection Office of the HCM City’s Tax Department. My cell number is 0903 812 976. I am ready to receive your opinions or complaints.
Reader: If I gain a profit from land transfer, I must pay personal income tax at a rate of 25%. If I suffer a loss, can I enjoy tax reimbursement?
Ms. Nga: Taxable income from real estate transfers is the difference between the transfer price and the buying price plus all transfer-related expenses. If you gain a profit from that transfer, you must pay personal income tax at a rate of 25%; if you suffer a loss, you are free from the tax.
Reader: How can tax authorities collect personal income tax from individuals who are engaged in trade of real estates and get huge profits but they have no business license?
Ms. Nga: According to the Law on Real Estate Transactions, transactions of real estate transfer shall be made through real estate trading floors, and tax authorities will collect the tax from such transactions.
