VietNamNet Bridge – People with monthly taxable incomes of VND5 million (US$240) or less will be exempted from personal income tax for the last six months of last year.

People pay taxes in HCM City's District 1. Those with monthly taxable incomes of VND5 million ($240) or less will be exempted from personal income tax for the last six months of 2012.

The Finance Ministry's General Taxation Administration has issued instructions in Official Letter 187 to this effect following a National Assembly resolution approved last June to help individuals and organisations overcome difficulties due to economic slowdown.

According to the Letter, the income tax payable in 2012 is the multiplication of average monthly taxable income, tax rate and 12 (months).

The tax exemption for eligible people would be half the income tax payable calculated thus. Tax deduction for dependents is calculated from the month tax payers assume responsibility for their dependents.

Any income generated prior to last December but paid this January would be included in this year's tax balance sheet.

Expatriates who are subject to tax in Viet Nam (or those who live and work in Viet Nam for 183 days or more per year) are required to proceed with personal income tax (PIT)'s finalisation at the end their Vietnamese assignment and before exiting the country.

The instruction, however, further advises that in cases where expatriates terminate their Vietnamese assignments and conduct the PIT finalisation prior to 31 December, but subsequently return to work in Viet Nam until the end of 2012, their average taxable income for 2012 at the year-end shall be calculated on the income over the whole year (or from 1 January to 31 December).

The General Taxation Administration also regulates that tax payers can submit PIT finalisation until 1st April, 2013.

An office employee of Ha Noi's Thanh Xuan District, 26-year-old Nguyen Minh Khanh, said that as a beneficiary of the tax-break policy, she only paid VND660,000 for personal income tax last year.

"The reduced sum is small, especially now as everything seems to be more and more expensive," she said.

However, the mother of a two-year-old kid said that the reduction was still useful as she could buy something, milk or clothes for examples, for her daughter.

Under the current Law on Personal Income Tax, the threshold is VND4 million ($192) per month and deduction for each dependant is VND1.6 million ($77) per month.

Last November, the NA approved amendments to the law by which the threshold will be increased to VND9 million ($430) per month and the deduction rate for family will be VND3.6 million ($180) per dependent per month.

The amendment takes effect on July 1, 2013.

Source: VNS