Progressive tax is a term commonly used in determining personal income tax. How is the progressive tax calculation applied in determining tax? Find the answer with MISA MeInvoice in the article below.
What is progressive tax? How to calculate progressive tax?
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1. Overview of progressive tax
What is progressive tax?
Purpose of applying progressive tax
2. Subjects of calculating personal income tax according to the progressive method
3. Latest progressive tax schedule
4. How to calculate progressive personal income tax
Progressive personal income tax calculation formula
Progressive personal income tax calculation procedure
Specific example of calculating progressive personal income tax
1. Overview of progressive tax
What is progressive tax?
Currently there is no legal document that defines exactly what progressive tax is, but we can understand it as follows:
Progressive tax, also known as graduated tax, is a method of calculating personal income tax in which
the tax rate increases with each level of taxable income.
Progressive means that the tax rate will increase gradually from low to high (from 05 – 35%) corresponding to each income level. This also means that people with high income will apply high tax rates, people with low income will apply low tax rates.
Purpose of applying progressive tax
The purpose of applying progressive tax when calculating personal income tax is:
Ensure fairness in the distribution of tax burden among individuals with different income levels.
Contribute to income regulation and ensure social security
Redistribution of resources and assets among social classes
Reduce the gap between rich and poor among social classes
2. Subjects of calculating personal income tax according to the progressive method
The progressive tax schedule is applied to italy telegram data individuals with income, also known as personal income tax , as clearly stipulated in Clause 1, Article 27 of the Law on Personal Income Tax and the additional content in Point b, Clause 1, Article 25 of Circular 111/2013/TT-BTC. In other words, the progressive tax schedule is applied to resident individuals with income from salaries, wages and signing labor
contracts of 03 months or more.
For income from other sources such the bezos effect: amazon technologies that changed ecommerce as capital investment, capital ws data contribution transfer, copyright, franchise, income from winning prizes, income from salaries and wages, the tax rate of 10% is deducted before payment to the individual. In case the income of a non-resident individual is above VND 2,000,000, the full progressive tax rate will be applied.
See more: Latest personal income tax law and guiding documents
3. Latest progressive tax schedule
According to the provisions of Article 22 of the 2007 Law on Personal Income Tax, below is the latest progressive tax schedule for your reference.4. How to calculate progressive personal income tax
Progressive personal income tax calculation formula
progressive tax calculation