According to the draft Resolution of the National Assembly Standing Committee on adjusting the family deduction level of personal income tax, the Ministry of Finance proposed 2 options for adjusting the family deduction level to submit to competent authorities for consideration and decision.

Option 1: Adjust the family deduction level according to the CPI growth rate as prescribed. Accordingly, the family deduction level for the taxpayer himself increases from 11 million VND/month to about 13.3 million VND/month; the deduction level for dependents increases from 4.4 million VND/month to 5.3 million VND/month.

Option 2: Adjust the family deduction level according to the growth rate of average income per capita and the growth rate of average GDP per capita. The family deduction level for the taxpayer himself can be adjusted from 11 million VND/month to about 15.5 million VND/month and the deduction level for each dependent from 4.4 million VND/month to 6.2 million VND/month.

Proposal to increase family deduction level higher

Sharing with VietNamNet reporter, Mr. Nguyen Van Duoc, Head of Policy Department of Ho Chi Minh City Tax Consultants and Agents Association, General Director of Trong Tin Accounting and Tax Consulting Company Limited, said that among the two options proposed by the Ministry of Finance, option 2 adjusting the family deduction for the taxpayer himself to 15.5 million VND/month and the deduction for each dependent to 6.2 million VND/month is more suitable and closer to reality.

According to Mr. Duoc, the proposed plan has changed compared to previous tax law amendments, showing the receptiveness of the Ministry of Finance when not only relying on CPI but also on other socio -economic factors to come up with a family deduction level that is closer to the previous approach.

Sharing the same view, Dr. Nguyen Ngoc Tu, Lecturer at Hanoi University of Business and Technology, also said that, not only calculating on CPI, the plans of the Ministry of Finance also take into account the growth rate of average income per capita and the growth rate of average GDP per capita, showing innovation, demonstrating a very positive receptiveness, listening to the opinions of experts and public opinion of the drafting agency.

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Experts recommend increasing the family deduction to 17-18 million VND/month and applying it from the 2025 tax period. Photo: Nam Khanh

The plan to increase family deductions to 15.5 million VND/month for taxpayers and 6.2 million VND/month for dependents, according to Mr. Tu, although not fully meeting taxpayers' requirements, has partly met them.

“If the family deduction level is raised to 17-18 million VND/month, it will be more suitable for taxpayers, and applied in 2025 and 2026, it will promptly encourage and motivate taxpayers, as well as compensate for their previous disadvantages, creating confidence in amending the personal income tax law,” Mr. Tu suggested.

According to the expert, this adjustment is temporary and local. When the new tax law is applied, there will be different family deduction levels. At that time, it is necessary to consider more comprehensively, based on each region and many other factors.

Similarly, Lawyer Truong Thanh Duc, Director of ANVI Law Firm, also said that we should choose option 2 out of the two proposed adjustment options of the Ministry of Finance, which is to increase the family deduction for taxpayers to 15.5 million VND/month, and for dependents to 6.2 million VND/month to ensure the lives of both salaried workers and dependents while there are no regulations allowing deductions for many other essential expenses such as healthcare and education.

Should be applied immediately for tax period 2025

According to Mr. Nguyen Van Duoc, since Covid-19, although the economy has recovered, people's income is still limited, while prices have increased, so the family deduction should be applied immediately for the 2025 income tax period, which will be finalized in 2026 to show concern, listening, and support for people through tax policy.

“In the long term, the Personal Income Tax Law needs to adjust its regulations. Instead of waiting for the CPI to increase to 20% before adjusting the family deduction level as previously calculated, it should be regulated that when the consumer price index increases from 5-10%, the Government will decide to adjust it to make the policy more flexible, instead of having to wait as previously stipulated,” Mr. Duoc further suggested.

Dr. Nguyen Ngoc Tu also proposed that the new adjusted family deduction level should be applied from the 2025 tax period, not from the 2026 tax period as suggested by the Ministry of Finance.

This is also the recommendation of Lawyer Truong Thanh Duc. According to him, the resolution to adjust the family deduction level passed by the National Assembly Standing Committee needs to be implemented immediately for the 2025 tax period.

According to the lawyer, if it is approved in October, there will still be a few months until the 2025 personal income tax settlement period, so its application is always reasonable and cannot be extended to the 2026 tax period.

Furthermore, according to Mr. Duc, the application of this new family deduction level is only temporary, because after amending the Personal Income Tax Law, when calculating the family deduction level, it should be regulated appropriately by region and allow deductions for essential expenses in people's lives, especially expenses for health care and education.

In the summary, explanation, and acceptance of comments from agencies, organizations, and individuals on the proposal to develop the draft Law on Personal Income Tax (replacement), the Ministry of National Defense proposed to increase the family deduction for taxpayers from 11 million VND/month to 17.3 million VND/month; increase the deduction for each dependent from 4.4 million VND/month to 6.9 million VND/month.

The reason is that the basic salary at the time of promulgation was 1.49 million VND/month, up to now (December 2024) the basic salary is 2.34 million VND/month, an increase of 57.05%.

Or, the People's Committee of Ha Tinh province also proposed a family deduction for taxpayers of 18 million VND/month (216 million VND/year); the deduction for each dependent is 8 million VND/month.

The reason is that the basic salary has increased 2.03 times (from 1,150 million VND in 2013 to 2,340 million VND), so it is proposed to adjust the deduction level to match the increase rate of the basic salary.

Source: https://vietnamnet.vn/tinh-thue-tncn-muc-giam-tru-gia-canh-can-nang-len-17-18-trieu-thang-2424496.html