Finance ministry rejects city proposal to tax income from bank savings interest

The southern city of Can Tho had proposed imposing income tax on interest except for "small" depositors.

But the finance ministry said the non-taxation policy seeks to encourage deposits by those who do not want to invest directly in manufacturing and other businesses and provide welfare to people who cannot work.

Deposits play a key role in funding the economy, it added.

Taxing retail clients’ deposit interest has been proposed several times in the past but always been shot down.

The tax does exist in some countries such as Thailand and China.

In Vietnam only companies have to pay tax on income from deposits.