Need to increase family deduction this year

The consumer price index fluctuated from 2020 to this year and could reach 20%, so the family deduction level was also raised to a minimum of over 13 million VND/month for taxpayers.

Associate Professor, Dr. Phan Huu Nghi, National Economics University, proposed to increase the family deduction level to 20-25 million VND/month - Photo: Contributor

Many experts and scientists recommended that the family deduction level should be increased this year without waiting for the Personal Income Tax Law to be revised in 2026, at the workshop on Personal Income Tax Law - ensuring fairness and promoting growth, organized by Lao Dong newspaper on the afternoon of March 14.

Proposed family deduction of 20-25 million VND/month

Speaking at the workshop, Associate Professor Dr. Phan Huu Nghi, Deputy Director of the Institute of Banking and Finance, National Economics University, said that the current trend of personal income tax reform in the world in general and in Vietnam in particular is aiming at reducing the tax burden on workers and promoting economic growth.

Currently, personal income tax is mainly collected from income sources such as salaries, wages, business income, stock investment, real estate transfer... Of which, salaries and wages account for the largest proportion.

From January 1, 2026, the taxable revenue threshold for individual business households will increase from VND100 million/year to VND200 million/year, equivalent to an income of about VND18 million/month. Meanwhile, the current family deduction is only VND11 million/month, showing the unreasonableness of current regulations.

"So what is the appropriate family deduction level? According to studies on income distribution, the most common income level of workers today is around 8,400 - 10,500 USD/year, or about 20 - 25 million VND/month.

If this level is used as a basis, I think the reasonable family deduction level should be between 20 - 25 million VND/month, instead of 18 million VND as some current proposals," Mr. Nghi suggested.

With the fluctuations in the consumer price index from 2020 to present, Associate Professor, Dr. Le Xuan Truong, head of the tax and customs department of the Academy of Finance, suggested that the Ministry of Finance study and propose family deductions this year instead of waiting for the amendment of the Personal Income Tax Law.

"With the increase in the consumer price index from 2020 to the end of this year likely to exceed 20%, the upcoming family deduction will be increased by 20%, equivalent to over 13 million VND/month for taxpayers," Mr. Truong estimated.

Widening the gap between tax brackets to reduce the burden on people

Along with considering raising the family deduction level to match fluctuations in the consumer price index and minimum wage, Ms. Nguyen Thi Cuc, President of the Vietnam Tax Consultants Association, recommended amending the progressive tax schedule to reduce the tax burden on wage earners.

According to current regulations, after family deductions, the first 5 million VND has a tax rate of 5%; the next 5 million VND has a tax rate of 10%; the next 8 million VND has a tax rate of 15%. And the 7th tax bracket applies to taxable income from 80 million VND and up with a tax rate of 35%. Thus, the gap between the brackets is too large.

"One of the biggest shortcomings of the personal income tax policy for wages and salaries is the progressive tax schedule. Therefore, it is necessary to widen the gap between tax brackets in the tax schedule. For example, the first taxable income level is 5 million VND, the tax rate is 5%. The second level should be from 5 to 30 million VND, with a tax rate of 10%," Ms. Cuc recommended.

Experts and scientists suggest that in addition to widening the gap between tax brackets, the number of tax brackets should also be reduced to less than 7 brackets.

At the same time, it is necessary to reduce the tax rate at the highest level to below 35% to ensure fairness with the common corporate income tax rate of 20%.

Thus, appropriate policies create conditions to attract high-quality labor.

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Source: https://tuoitre.vn/can-nang-muc-giam-tru-gia-canh-ngay-trong-nam-nay-20250314184822073.htm