"It is necessary to include medical and educational expenses in personal deductions."

Experts believe that the proposal to include education, healthcare, and mortgage interest expenses in personal deductions demonstrates fairness and encourages taxpayers.

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For the first time in many years, in the draft Personal Income Tax Law (replacement) recently announced by the Ministry of Finance , the authorities are discussing redefining the method of calculating family allowances, taking into account medical and educational expenses.

Ms. Nguyen Thuy Duong, Director and Head of Personal Income Tax Advisory at KPMG Vietnam, assessed this draft as a positive turning point from the regulators, demonstrating a fair and reasonable approach to taxation.

The authorities therefore proposed expanding the list of essential expenses deductible from taxable income, such as medical expenses and education /training costs for taxpayers and their dependents. The amount of deductions would be determined by the Government.

Instead of applying a "uniform" model to everyone, implementing specific deductions such as for education and healthcare helps tax policy accurately reflect the living circumstances and actual ability to pay of each individual, Ms. Duong noted.

"With the same income level, those raising young children, caring for elderly parents, or bearing the costs of chronic illness treatment clearly have different tax burdens," the KPMG expert added.

The inclusion of specific expenses such as healthcare and education in the calculation of taxable income is supported by many experts. Mr. Do Quoc Tuan, a former official of the Ho Chi Minh City Tax Department (now the Ho Chi Minh City Tax Department), pointed out the reality: "Some workers have to sell assets or borrow money to cover the treatment costs for their wives, children, or relatives suffering from serious illnesses, but they are still subject to personal income tax. This is completely unreasonable."

This expert recommends including the cost of treating serious illnesses in the personal allowance deduction, provided there are supporting documents showing the actual expenses. At the same time, tuition fees from preschool, primary, and secondary school should also be included in the personal allowance deduction, and a ceiling should be applied to tuition fees at the college and university levels.

Parents bring their children to register for the 2022 high school graduation exam at Phu Nhuan High School, Phu Nhuan District, on July 6, 2022. Photo: Quynh Tran

According to KPMG experts, the Ministry of Finance could also consider expanding the scope of expenses to include costs such as rent or mortgage interest – recurring and essential expenses for the majority of workers in large urban areas. These are fixed financial burdens that taxpayers find difficult to reduce, especially in the context of rising housing prices.

For workers, owning their first apartment/house is an essential and legitimate need. However, according to the Deputy Director of Housing and Real Estate Market Management (Ministry of Construction), in large cities, to own an average house (70 m², priced at around 3-4 billion VND), young people need 20-25 years of income accumulation, without financial support from family or preferential credit programs.

The current housing price-to-income ratio is very high compared to the safe threshold (6-8 times income), which is a major bottleneck hindering young people's access to commercial housing.

In the context of the government's policies to encourage young people to own their first home, tax policies that incentivize the workforce to "settle down and build a career" are essential.

Therefore, recording medical expenses, education costs, and mortgage interest as deductibles not only more accurately reflects remaining actual income, but, according to Ms. Nguyen Thuy Duong, also demonstrates humanity and encourages stable living conditions for the people. "This is a fundamental element in building a sustainable, committed, and productive workforce," she said.

Adding further input on tax policy development, Mr. Nguyen Quang Huy, CEO of the Finance and Banking Faculty at Nguyen Trai University, also emphasized that tax policies should prioritize vulnerable groups such as single parents raising young children, people with elderly dependents, and workers in the education, health, and social sectors who are disadvantaged in terms of wages. The national interest here is to ensure social stability, retain high-quality human resources, and promote domestic consumption – a major driver for sustainable economic growth.

According to international experience, specific deductions usually consider the "behavior" of how taxpayers use their income. These are deductions that taxpayers are entitled to when they meet certain criteria, for example, spending on things encouraged by the state, such as education or healthcare. The scope of these deductions varies widely depending on the regulations of each country.

Currently, some countries allow deductions for social insurance and health insurance contributions to encourage participation, while others allow deductions for children's education costs, mortgage interest (to encourage home ownership), or charitable contributions.

Besides adding specific personal deductions, Mr. Do Quoc Tuan proposed increasing the deduction for dependents compared to individual taxpayers. He argued that the current deduction rate for dependents, at only 40% of the taxpayer's allowance, is too low. "Meanwhile, raising a child incurs actual costs that are even higher than those of a working parent," he said.

According to a 2022 survey by VnExpress of over 23,900 readers with an average monthly income of 22 million VND, taxpayers spend more than 10 million VND per month on themselves, but they spend at least 7 million VND to support a dependent – ​​accounting for 70% of their personal expenses, much higher than the 40% figure set by the Ministry of Finance.

Currently, some countries apply the same personal allowance for dependents as the taxpayer. Therefore, Mr. Tuan proposed raising the personal allowance for dependents to at least 60% of the individual taxpayer's allowance.

According to Mr. Nguyen Van Duoc, General Director of Trong Tin Accounting and Tax Consulting Company, increasing the personal allowance for dependents is even seen as a policy to "encourage childbirth" in the context where the cost of raising children is one of the reasons why young people are hesitant to have children.

According to VnExpress

Source: https://baocamau.vn/can-thiet-dua-chi-phi-y-te-giao-duc-vao-giam-tru-gia-canh-a121298.html