The government still proposes to impose the highest personal income tax of 35%, because it believes that if it is reduced to 30%, it will be “considered a policy for the rich”.
On the evening of December 2, the National Assembly Standing Committee gave opinions on the explanation and reception of the draft Law on Personal Income Tax (amended). In the latest draft submitted to the National Assembly, the Government still maintains the 5-level tax schedule as proposed in early November. The highest level is still 35%, with income over 100 million VND per month (after deductions for family and dependents).
According to the Government, the highest tax rate of 35% is reasonable, at “an average level, neither too high nor low” compared to other countries in the world. Some countries in the region such as Thailand, Indonesia, and the Philippines are also applying the highest personal income tax rate of 35%, while China is 45%.
“In case of adjusting the level from 35% to 30%, it will be considered a tax reduction policy for the rich,” the Government stated in the report.
Deputy Minister of Finance Cao Anh Tuan explained at the meeting of the National Assembly Standing Committee, on the evening of December 2. Image: National Assembly Media
In the new draft, the Government re-adjusts 2 tax levels, in which the 2nd level tax rate (taxable income of 10-30 million VND a month) is reduced from 15% to 10%.
Similarly, level 3 tax rate (taxable income over 30 to 60 million VND a month) is lowered to 20%.
With this new tax schedule, according to the Government, the new tax schedule helps all individuals reduce the amount of money they have to pay, and at the same time overcome the current situation of tax rates skyrocketing between levels.
In previous discussion sessions, many delegates wondered about the reasonableness of the plan to adjust the collection thresholds and corresponding tax rates. Specifically, the distance between levels has different differences. According to the tax schedule presented in early November, levels 1, 2 and 3 are up to 10% apart, while levels 4 and 5 are only 5%. Therefore, delegates are concerned that people with income at levels 2 and 3 will face higher tax pressure than current regulations, while this is the group that accounts for the majority of individuals subject to personal income tax. In addition, some opinions also suggest considering only setting the highest tax rate at 25% or 30%.
In the verification report, Mr. Phan Van Mai, Chairman of the Economic and Finance Committee, assessed that the Government has absorbed and adjusted the tax rates in the individual’s partially progressive tax schedule to ensure reasonableness.
Mr. Phan Van Mai, Chairman of the Economic and Financial Committee presented the explanation and reception report at session 52 of the National Assembly Standing Committee, on the evening of December 2. Image: National Assembly Media
Commenting at the meeting, Mr. Dau Anh Tuan, Deputy Secretary General of the Confederation of Commerce and Industry (VCCI) said that the draft still does not have a mechanism to adjust tax levels according to inflation fluctuations. This, according to Mr. Tuan, could cause people to be pushed to a higher tax level, even though their actual purchasing power does not increase. Therefore, he proposed adding a mechanism to automatically adjust tax levels according to the CPI index.
Regarding this issue, Deputy Minister of Finance Cao Anh Tuan explained that price slippage or price fluctuations have been handled through the family deduction mechanism. Thus, according to Mr. Tuan, the taxable income (after calculating family deductions) is also adjusted according to price fluctuations. Along with that, the taxable income threshold at level 1 has been increased by the operator to 10 million VND, instead of 5 million as currently.
He added that in the future implementation process, the Government will review and continue to propose to the National Assembly to consider making adjustments if necessary.
The National Assembly is expected to vote to pass the Personal Income Tax Law (amended) on December 10, and take effect from July 1, 2026. Regulations related to income from business, salaries and wages of resident individuals apply from the 2026 tax period.