(NLDO) - A series of ministries, branches and localities jointly proposed the Ministry of Finance to increase the family deduction level.
Individual transactions at Ho Chi Minh City Tax Department
The Ministry of Finance has just announced a summary of comments on the draft Law on Personal Income Tax (PIT). In particular, the Ministries of National Defense, Transport, Health, Agriculture and Rural Development, Information and Communications,... and the authorities of several provinces and cities all said that the family deduction applied to taxpayers of VND 11 million/month and VND 4.4 million/month for dependents is no longer suitable for the current economic conditions and living standards of the people.
The People's Committee of Ha Tinh province proposed to increase the family deduction for taxpayers to 18 million VND/month, and for dependents to 8 million VND/month. The province cited the 2012 Personal Income Tax Law, which stated that the deduction for taxpayers is 9 million VND/month, and for dependents is 3.6 million VND/month, applied from July 2013. At that time, the basic salary was 1.15 million VND. Up to now, the basic salary has increased 2.03 times, equivalent to 2.34 million VND, so it is necessary to increase the family deduction in accordance with the increase rate of the basic salary.
Meanwhile, the Ministry of National Defense proposed to increase the family deduction for taxpayers to 17.3 million VND/month and for dependents to 6.9 million VND/month. Because the basic salary at the time of promulgation of the family deduction of 11 million VND/month at the end of 2019 was only 1.49 million VND, by the end of 2024 it had increased to 2.34 million VND, equivalent to an increase of 57.05%.
Most opinions point out that another unreasonable point of the Personal Income Tax Law is that when the consumer price index (CPI) increases by 20%, the Government will submit to the National Assembly Standing Committee to adjust the family deduction level to match the price fluctuations. This regulation is no longer appropriate because Vietnam's inflation only increases by about 3-4%/year, if the CPI increases by 20%, it will take about 5 years to adjust the family deduction level. Meanwhile, the annual CPI increase affects the income and life of taxpayers.
According to Associate Professor, Dr. Ngo Tri Long, former Deputy Director of the Institute for Price Market Research - Ministry of Finance, using the CPI index as the basis for adjusting the family deduction level is not appropriate. Because the CPI does not fully reflect the increase in prices of essential goods and services in daily life that people have to pay. Therefore, adjusting the family deduction level is not only based on the CPI, but also on the increase in people's income.
General Director of Trong Tin Accounting and Tax Consulting Company, Mr. Nguyen Van Duoc, said that adjusting family deductions should be consistent with price fluctuations. This should not wait for the National Assembly Standing Committee to decide, but only for the National Assembly to assign the Government to decide on changing the family deduction level when the CPI increases to a certain limit, and at the same time consider calculating the deduction level based on the actual expenses of taxpayers.
Meanwhile, Mr. Dong Minh Hong, Director of DVL Tax Agent and Business Consulting Company, said that if the total deduction for family and dependents is increased from 15.4 million to 26 million VND, it will help reduce a lot of pressure for salaried workers. At that time, this amount and other tax-free income will be deducted from the total income, helping each individual reduce taxable income, thereby minimizing the amount of tax payable.
According to Ms. Phan Thi Bich Phuong, Deputy Director of Bac Trung Nam Tax Agency Company Limited, increasing the family deduction level is an important measure to support workers and their families to reduce financial pressure. The State needs to consider the economic situation and living conditions of workers to determine a reasonable and fair family deduction level, and at the same time, it needs to be considered with the budget revenue and economic development goals.
Source: https://nld.com.vn/nang-muc-giam-tru-gia-canh-thue-thu-nhap-ca-nhan-len-18-trieu-dong-thang-la-hop-ly-196250210122659299.htm
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