Vietnam Revises its Personal Income Tax

Vietnam just revised it's personal income tax law. One change is that foreigners and Vietnamese now face the same tax rates. These new tax rates are (by monthly income):

First 5million dong/month ($295) - 5%
5-10m ($295-592)/month - 10%
10-18m ($591-1,065)/month - 15%
18-32m ($1065-1,893)/month - 20%
32-52m (1,893-3,076)/month - 25%
52-80m (3,076-4,773)/month - 30%
over 80m/month (over $4,773 per month, or $56,000 per year) - 35%

So the top tax bracket is an annual salary of $56,000/year. Considering that I will make around $10,000 a year and I have a very highly paying job that means I can live pretty well, that is a truly luxurious salary. Our office estimates only 2% of the population earns that much in income.

I am actually a little bit surprised that in a socialist country the tax rate is so low. The highest marginal tax rate in many European countries hits 50-60%! Moreover, the bulk of the population here would fall into the first 3 tax brackets, meaning that in terms of income redistribution, the government is not doing a whole lot.

Also, the revision of the tax code actually raised the marginal tax rate on the first 5 million up from 0%, and lowered the highest marginal tax rate from 40% to 35%.

Like I said. Doesn't sound like the mom and pop version of socialism I learned about in history class.

UPDATE

In an earlier post, I noted that Vietnam had changed its income tax. What I did not point out at the time was that people earning under $5,000 were being taxed for the first time. The system introduced millions and millions of people into the tax system for the first time.

Insiders say that may be why the Vietnamese government suddenly declared a "no tax" payment period until May. Ostensibly it is supposed to help families in tough economic times; realistically, it may be the result of a completely overwhelmed, un-computerized tax system. Word is that they literally had to close their doors and shut the office, because their system is utterly overwhelmed.

Speaking of good economic news - Vietnam's stock exchange the HOSE has lost about 75% of it's value from a high of around 1100 in August of 2007. It's down to around 244 now.

And did I mention inflation was running around 28%?