Reduce personal income tax burden

For many years, personal income tax and family deductions have not been adjusted while people's actual spending has increased continuously.

For many years, personal income tax and family deductions have not been adjusted while people's actual spending has been increasing continuously. These shortcomings are making many people expect an early amendment to the Personal Income Tax Law.

Pressure from obsolete deductions

Ms. Le Thu Ha, a teacher in Thanh Dong ward, has a total monthly income of about 17 million VND from salary and allowances. Her husband earns about 10 million VND/month. The family is raising a child in college - who she is declaring as a dependent. However, the cost of education for the child alone is up to 10 - 11 million VND/month. In addition, living expenses such as electricity, water, food, transportation, etc. cost the couple more than 10 million VND.

“The current family deduction is too low compared to actual expenses. My husband and I do not have any savings, so we have to borrow money every time something unexpected happens,” Ms. Ha shared.

Similarly, Mr. Nguyen Dinh Giang, an office worker at An Duong Industrial Park, said that his income is about 12 million VND/month. As a single person, he has no dependents to declare for deductions. Meanwhile, the cost of rent, living expenses, transportation, etc. consumes almost all of his monthly income. “It is already difficult to be unmarried, if I have a wife and children in the future, I don’t know how to manage. It is very unreasonable to have an income that is just enough to live on but still be taxed,” Mr. Giang said.

Mr. Pham Van Hai, a manager at a business in Kien An ward with an income of 16 million VND/month, is also subject to tax. He has a small child who is declared as a dependent. According to current regulations, his family deduction is 11 million VND/month for himself and 4.4 million VND for his dependents. According to Mr. Hai, this level, applied from July 2020 until now, is too outdated, causing disadvantages for taxpayers, because the cost of living is increasing. Mr. Hai believes that the deduction level is no longer suitable when prices are increasing "dizzily" every year. With the current income, it is difficult to save or invest in the future with personal income tax.

Not only Ms. Ha, Mr. Giang or Mr. Hai, most workers, especially in central urban areas where the cost of living is high, are under pressure from personal income tax.

Need to be revised soon

Personal Income Tax Law No. 04/2007/QH12 was issued in 2007 and took effect from January 1, 2009, then amended and supplemented once in 2012. Since then, the progressive tax schedule with 7 tax brackets (from 5% to 35%) has remained unchanged. The current family deduction level of VND 11 million/month for taxpayers and VND 4.4 million/month for dependents - most recently adjusted according to Resolution 954/2020/UBTVQH14, after the previous adjustment in 2013.

Thus, over the past 13 years, the family deduction has only been adjusted twice, while people's lives have changed a lot, prices of goods, services, tuition fees... have all increased sharply. From 2020 to now, the State has adjusted the basic salary twice and is preparing to adjust it for the third time, but the personal income tax deduction remains the same.

According to many financial experts, the delay in adjusting tax schedules and deductions makes tax policies no longer practical, even putting pressure on workers, the group least likely to "avoid taxes".

Given the above shortcomings, the amendment of the Personal Income Tax Law has been included in the law-making program, expected to be submitted to the National Assembly for consideration at the October 2025 session.

Accordingly, the Ministry of Finance proposed two options to adjust the deduction level. Option 1, based on the growth rate of the consumer price index (CPI). The deduction level for the taxpayer himself is expected to increase from 11 million VND to 13.3 million VND/month; dependents will increase from 4.4 million VND to 5.3 million VND/month. Option 2, based on the growth rate of average income per capita and average GDP per capita in the period 2020 - 2025. Accordingly, the deduction level for the taxpayer himself will increase to 15.5 million VND/month and dependents will increase to 6.2 million VND/month.

The new deduction will apply from the 2026 tax period, if approved by the National Assembly.

Many workers expressed their hope that this amendment to the law will be implemented on schedule. “In the past 5 years, the basic salary has been adjusted twice, the regional minimum wage has also been adjusted three times. Yet the personal income tax deduction remains the same. We hope that this proposal will actually come into effect and will not be delayed any longer,” said Mr. Pham Van Hai.

Currently, personal income tax accounts for nearly 10% of the total state budget revenue, most of which comes from the group of salaried workers, those who are not capable of doing business and cannot evade taxes. Meanwhile, more than 3.6 million individual business households, including those with high revenue, contribute less than 2% of the total budget revenue from both personal income tax and value added tax. This shows the unreasonable allocation of tax obligations. Personal income tax needs to be adjusted so as not to create an unreasonable burden on workers. Tax policy should aim for fairness, humanity, and motivation to contribute, not be a barrier that makes people lose faith in the policy.

This amendment to the Personal Income Tax Law aims to address long-standing shortcomings and move towards a fair, transparent and modern tax system. If passed and effectively implemented, the new law will contribute to stabilizing the budget, promoting production and business, and increasing confidence in tax policy.

HA VY

Source: https://baohaiphong.vn/giam-ganh-nang-thue-thu-nhap-ca-nhan-519207.html