Minister of Finance explains why family deduction level has not been adjusted

At the discussion session on the results of the implementation of the socio -economic plan on May 29, delegate Nguyen Thi Thuy - Vice Chairwoman of the Judicial Committee spent all her time analyzing the fact that the current family deduction level is "very outdated" and "does not truly reflect the basic spending of families and individuals, nor does it reflect the current actual living standards".

Therefore, the delegates proposed that the Government should soon submit the law to the National Assembly for consideration and amendment at the October session this year so that it can be passed in May 2025 instead of considering it in mid-2026 as planned.

Minister of Finance Ho Duc Phoc reported and explained a number of issues raised by National Assembly deputies at the working session on May 29.

Speaking to explain this issue, Minister of Finance Ho Duc Phoc said that the Personal Income Tax Law took effect in 2009, at which time the deduction for taxpayers was 4 million VND and each dependent was deducted 1.6 million VND/month.

The 2013 amended Personal Income Tax Law increased the deduction to VND9 million, which means VND108 million/year and VND3.6 million/month for dependents. The law also stipulates that when the consumer price index (CPI) fluctuates over 20%, the Standing Committee of the National Assembly must adjust the family deduction.

On June 2, 2020, the National Assembly issued Resolution 954, raising the deduction to 11 million VND/month, and 4.4 million VND/month for dependents. Thus, currently, employees with 1 dependent must have an income of 17 million VND or more to pay tax, while employees with 2 dependents must have an income of over 22 million VND to pay tax, not including mandatory insurance deductions.

In response to the concerns of delegates about the fact that the family deduction level has not been reviewed for adjustment for a long time, the Minister of Finance said that the law stipulates that the CPI must be above 20% to be reviewed for adjustment, while in reality, the CPI level from 2020 to 2023 is only 11.47%.

Furthermore, the current tax payable is 11 million VND, 2.2 times higher than the average income (4.96 million VND), while the world's is only less than 1 time higher.

"Thus, the Ministry of Finance is implementing the law correctly" - Mr. Ho Duc Phoc affirmed.

Regarding the time of submitting the law amendment, the Minister of Finance said that according to the law and ordinance development program, the Government will submit it to the National Assembly in October 2025 and consider passing the law in May 2026.

“If the National Assembly Standing Committee decides to put the draft law on the agenda for consideration at the end of this year’s session, we will comply. At that time, we will seek opinions from National Assembly deputies, the people and ministries to come up with appropriate regulations, including whether or not to set the CPI at over 20%,” said Mr. Ho Duc Phoc.

Source: https://vov.vn/chinh-tri/bo-truong-tai-chinh-ly-giai-viec-chua-dieu-chinh-muc-giam-tru-gia-canh-post1098253.vov