The Ministry of Finance has just announced a summary, explanation and acceptance of opinions from agencies, organizations and individuals on the proposal to develop a draft Law on Personal Income Tax (replacement).

One of the issues that received many comments was the adjustment of the family deduction level. Many ministries, sectors and localities proposed that the drafting agency study increasing the family deduction level for taxpayers and increasing the deduction level for dependents.

The Ministry of National Defense proposed to increase the family deduction for taxpayers from 11 million VND/month to 17.3 million VND/month and for each dependent from 4.4 million VND/month to 6.9 million VND/month.

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The Ministry of Finance said that determining the family deduction level is based on many factors. Photo: Nam Khanh

Ninh Thuan Provincial People's Committee proposed a family deduction of VND16 million/month for taxpayers and VND6 million/month for dependents. Ha Tinh Provincial People's Committee proposed a family deduction of VND18 million/month for taxpayers and VND8 million/month for dependents.

Notably, the People's Committee of Bac Giang province, when giving comments on the proposal to develop the Personal Income Tax Law project, said that the deduction level should be applied in accordance with the practical living conditions of each region and area in the country instead of applying a single level as it is currently.

According to the People's Committee of Bac Giang province, the current regulations on family deductions are aimed at equalizing, without distinction between regions. However, this is not appropriate because the current law stipulates monthly minimum wages according to 4 regions, while the family deductions do not take into account the different income levels in different regions.

Furthermore, the increasing prices of goods have led to an increase in daily living expenses, so the deduction of 11 million VND/month for taxpayers and 4.4 million VND/month for dependents is no longer suitable in the context of the current market economy.

The Ministry of Information and Communications (formerly) also proposed to develop a deduction level in accordance with the Government's minimum wage policy for four regions.

Responding to this issue, the Ministry of Finance said that the regulations on deductions before calculating taxes ensure the principle that individuals need to have a certain level of income to meet the essential needs of life such as: food, accommodation, travel, study, medical treatment... Therefore, only income above this threshold must pay tax and tax must only be paid on the income above the threshold.

The determination of family deductions is based on many factors, in which the regional minimum wage is only a reference for determining the family deduction. However, the regional minimum wage is not only to compensate for inflation but also to improve the lives of workers in line with economic growth, distinguishing the living standards and costs of workers in different regions. The draft law proposal has raised this issue.

"The detailed amendments and specific assessments will be studied and proposed by the Ministry of Finance when the law is included in the National Assembly's law and ordinance making program," the Ministry of Finance emphasized.