According to the Resolution of the regular Government meeting in January 2024 of the Government, ministries, agencies and localities, according to their assigned functions and tasks, need to continue to synchronously, resolutely and effectively implement the tasks according to the resolutions and conclusions of the Central Committee, the Politburo, the National Assembly, the Government, especially Resolution No. 01/NQ-CP, Resolution No. 02/NQ-CP of 2024 of the Government and the direction of the Prime Minister. In particular, the Government assigned the Ministry of Finance to study and propose adjustments to the family deduction level for calculating personal income tax.
Specifically, the Ministry of Finance must synchronously and effectively implement solutions on taxes, fees and charges issued by competent authorities; promptly propose and report to competent authorities on policies on exemption, reduction and extension that need to be applied in the coming time. Research and propose to the Government to adjust the family deduction level in calculating personal income tax to support and remove difficulties in people's lives...
Adjusting family deductions in calculating personal income tax to support people's lives
Currently, the family deduction for individual taxpayers is 11 million VND and the deduction for each dependent is 4.4 million VND. This is a family deduction that has been adjusted and applied since July 2020. However, in reality, this family deduction is outdated and inappropriate in calculating personal income tax, when spending and living are increasingly expensive. Especially in big cities like Hanoi and Ho Chi Minh City, the family deduction for the taxpayer himself and his dependents cannot cover all the expenses for food, education, medical treatment, etc.
According to the 2022 population living standards survey by the General Statistics Office, the average income per capita in 2022 is estimated to reach 4.6 million VND/person/month, an increase of 9.5% compared to 2021. This figure is many times higher than the average income per capita announced in 2006 at only 636,000 VND (an increase of 31.3% compared to 2004 - the time of drafting the Personal Income Tax Law). Thus, people's income has increased more than 7 times in 16 years. Meanwhile, the Personal Income Tax Law has been applied since 2007, after 2 adjustments to the family deduction for taxpayers (from 4 million VND/month to 9 million VND/month and 11 million VND/month in 2020), the increase has been less than 3 times.
In addition, the average spending per person in 2008 was about 792,000 VND/month, and by 2020 it had increased to more than 2.8 million VND/month, an increase of nearly 3.6 times. Thus, to ensure that the current living standards remain the same as before, people must spend more, which means that the family deduction must at least be increased accordingly.
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