The Ministry of Finance has just sent a document responding to the petition of voters of 6 provinces (Binh Dinh, Ha Giang, Thai Nguyen, Tra Vinh, Tuyen Quang, Tay Ninh) on considering adjusting the family deduction level for personal income tax (PIT) payers and dependents, especially after the salary increase from July 1, 2024.
The petition was sent to the Ministry of Finance by the Petition Committee in mid-June 2024, in the context that many people want to increase the family deduction level for taxpayers.
The deduction is still higher than the average income of the richest group.
According to the response of the Ministry of Finance, it is currently not possible to adjust the family deduction level, for two reasons.
First, the current tax deduction is higher than the common rate applied by other countries.
The Ministry of Finance noted that the specific family deduction level needs to be carefully studied and calculated, ensuring that it is higher than the average GDP per capita, regional minimum wage, and average spending per capita in a certain period.
According to the 2023 population living standards survey report of the General Statistics Office (Ministry of Planning and Investment), Vietnam's average monthly income per capita in 2023 is 4.96 million VND, and the group of households with the highest income (including the richest 20% of the population) has an average income of 10.86 million VND/month/person.
“The family deduction for taxpayers (VND 11 million/month) is more than 2.2 times higher than the average income per capita (much higher than the common level applied by other countries of 0.5 - 1 times); at the same time, it is also higher than the average income of the 20% of the population with the highest income. The deduction for dependents is also close to the current average income per capita,” the Ministry of Finance stated in a document responding to voters’ petitions.
CPI fluctuation less than 20%
The second reason, as explained by the Ministry of Finance, is related to fluctuations in the consumer price index (CPI).
The Law amending and supplementing a number of articles of the Law on Personal Income Tax, effective from July 1, 2023, has added a provision in Clause 4, Article 1: "In case the consumer price index (CPI) fluctuates by more than 20% compared to the time the law comes into effect or the time of the most recent adjustment of the family deduction level, the Government shall submit to the National Assembly Standing Committee an adjustment of the family deduction level in accordance with price fluctuations to apply to the next tax period".
According to the General Statistics Office, the CPI increases from 2020 to 2023 are: 3.23%, 1.84%, 3.15% and 3.25%, respectively.
“CPI has fluctuated less than 20% since the last adjustment of the family deduction (2020). Therefore, according to the current Personal Income Tax Law, it is not possible to adjust the family deduction,” the Ministry of Finance emphasized.
In the document responding to voters' petitions, the Ministry of Finance also reiterated the two increases in family deductions over the past 15 years, contributing to reducing taxpayers' obligations.
Specifically, the Personal Income Tax Law effective from January 1, 2009 stipulates a deduction of 4 million VND/month (48 million VND/year) for taxpayers; a deduction of 1.6 million VND/month/1 dependent.
The Law amending and supplementing a number of articles of the Personal Income Tax Law, effective from July 1, 2013, has increased the deduction level to 9 million VND/month for taxpayers; deduction of 3.6 million VND/month/1 dependent.
And in early June 2020, the National Assembly Standing Committee issued Resolution No. 954, raising the deduction level for taxpayers to 11 million VND/month (132 million VND/year); for each dependent, it is 4.4 million VND/month.
With the current deduction level, "people with income from salary and wages at the level of 17 million VND/month (if having 1 dependent) or 22 million VND/month (if having 2 dependents) after deducting social insurance, health insurance, unemployment insurance... do not have to pay personal income tax", the Ministry of Finance analyzed.
“Along with other revenue sources, revenue from personal income tax has created a state budget fund to meet many spending needs for development investment, national defense and security, ensuring social security, and poverty reduction,” the Ministry of Finance noted, adding that it is reviewing and evaluating the overall Law on Personal Income Tax to report to the Government, the National Assembly Standing Committee, and the National Assembly for consideration of amendments and supplements.
It is expected that the amended and supplemented Law on Personal Income Tax will be included in the 2025 law-making program, submitted to the National Assembly for comments in October 2025 and approved in May 2026.
VN (according to Vietnamnet)Source: https://baohaiduong.vn/bo-tai-chinh-noi-2-ly-do-chua-nang-muc-giam-tru-gia-canh-cho-nguoi-nop-thue-391365.html
Comment (0)