The Ministry of Finance of Vietnam has reassured citizens about the continuation of exemption on personal income tax for savings deposit interest, following concerns raised about the potential taxation of such income. This announcement, made on February 21, 2025, reflects the government’s commitment to encourage saving among the populace, ensuring financial stability and sustained economic growth.
According to DNTO, the Ministry stated, "The Ministry of Finance affirms continued tax exemption on the interest income from savings to encourage citizens to save." This policy aims not only to bolster household savings but also to sustain the long-term capital flow necessary for economic development, particularly supporting retirees and individuals with disabilities who rely on stable income streams.
The discussion surrounding this policy is timely, as many governments worldwide, including those of Thailand, China, and South Korea, impose taxes on savings interest. The Ministry, drawing on international experiences, noted the potential negative psychological effects of introducing such taxes. The fear is it might disincentivize citizens from depositing their money, leading to decreased liquidity within the banking system and potential macroeconomic instability.
Alongside the continuation of tax exemptions for savings interest, the Ministry of Finance is also proposing significant adjustments to its personal income tax (PIT) structure. Among these adjustments is the reduction of tax brackets from seven down to fewer to simplify the system and ease the tax burden on individuals.
Additional proposals include updating the personal exemption allowance to align with living costs and inflation metrics and introducing allowances for charitable donations, encouraging social responsibility. The Ministry has also suggested granting tax breaks to certain priority sectors to attract high-quality talent needed for socio-economic development.
The General Department of Taxation has been proactive, streamlining the process for taxpayers to receive refunds on their overpaid income taxes. They recently launched automated refund processes via the eTax Mobile application and the iCanhan platform, making it easier for taxpayers to obtain their rightful refunds. VN Finance reported, "Taxpayers can now submit feedback electronically via the upgraded eTax Mobile and iCanhan apps." This is especially beneficial for handling discrepancies arising from false declarations by businesses attributing incorrect earnings to individual taxpayers.
Many taxpayers had expressed frustration over the cumbersome process previously associated with tax refunds, and this new automated system intends to rectify those issues swiftly and efficiently. The eTax system has evolved to allow users to easily communicate discrepancies about income declarations directly to the tax authorities, ensuring accountability, and allowing prompt investigation and correction of potentially fraudulent declarations.
The new procedure includes steps for taxpayers to review suggested tax refund declarations generated by the system. If they agree with the data provided, they can confirm and submit their documents. Alternatively, those who disagree can revise their information and provide justification for discrepancies, all through the app.
The General Department of Taxation emphasized the importance of reducing the administrative burdens on both taxpayers and the tax authorities. The objective is to make the tax collection process more efficient and transparent, reflecting the government's agenda of fiscal reform and modernization.
Taxpayers seeking refunds will only have their inquiries resolved favorably if their accounts have matched tax data recorded by authorities and if they have paid taxes adequately compared to what they intend to be refunded. The increased automation aims to expedite the overall processing times for returns, ensuring funds can be returned to taxpayers swiftly and accurately.
Overall, the recent proposals and tax reforms are part of the broader strategy by Vietnam’s government to adapt its fiscal policies to meet current economic realities. By maintaining tax exemptions on savings interest, streamlining tax refund procedures, and simplifying tax brackets, the government demonstrates its commitment to not just enhancing revenue collection but fostering trust and stimulating growth within the economy.
The Ministry has indicated it will finalize these adjustments after consultation with relevant ministries and agencies, preparing the proposals for government approval before they are presented to the National Assembly. These reforms reflect Vietnam’s approach of ensuring fairness and transparency within its taxation system, improving economic conditions for all citizens.