Why is family deduction for personal income tax not divided by region?

(Dan Tri) - According to the Ministry of Finance, the family deduction for personal income taxpayers and dependents is based on the general level of society, without distinguishing between high and low income earners or people in different locations.

Before the draft revised Law on Personal Income Tax was discussed by the National Assembly in the hall during the working session on the afternoon of November 19, the Ministry of Finance (the agency in charge of drafting the Law) had a report on receiving and explaining opinions in the group discussion session, sent to the National Assembly delegates.

Discussing in groups about this draft law, a delegate suggested adding a mechanism to determine the deduction level according to economic regions, because the cost of living is different between urban areas and rural areas. This opinion suggests that the deduction level should be linked to the regional minimum wage to ensure fairness in tax payment capacity between regions.

To explain more clearly, the agency in charge of drafting the law said that if the deduction threshold in rural areas is lower than in urban areas, it will invisibly tax people with low incomes and difficult living and working conditions.

National Assembly deputies attend the 10th session at Dien Hong Hall (Photo: Hong Phong).

Furthermore, determining where a taxpayer resides is complicated by the frequent movement of a segment of the workforce in the economy.

The Ministry of Finance also pointed out some limitations when determining the deduction levels by region. In particular, recently the whole country has rearranged its administrative boundaries, the areas of provinces and cities have been expanded, so even within the same province/city, there may be differences in living standards and living expenses between regions.

The Ministry of Finance said that many developed and developing countries generally only prescribe a common family deduction level, applied uniformly, without distinction by locality or population segment.

For individuals working in difficult areas, the Personal Income Tax Law stipulates that regional subsidies, attraction subsidies, and relocation subsidies... are not included in taxable income to support workers and attract individuals to work in these areas.

Therefore, the drafting agency proposes to keep the general deduction principle as it is currently, without distinguishing details by group of subjects or regions.

The group discussion session also recorded a number of opinions suggesting raising the family deduction level to 17.3 million for taxpayers and 6.9 million for dependents, considering a new family deduction level in line with the expected increase in minimum wage to 3.45 million VND/month from July 1, 2026, instead of the 15.3 million and 6.9 million levels proposed by the Ministry of Finance.

The Ministry of Finance explained that according to current law, when the CPI index fluctuates by more than 20%, the Government will submit to the National Assembly Standing Committee an adjustment to the family deduction level in accordance with price fluctuations applicable to the next tax period.

Based on the fluctuations in the CPI index, the Government has proactively developed a draft Resolution to adjust the family deduction level, proposing two options and sending them for public comments.

The synthesis of opinions shows that the majority of opinions agree to adjust the deduction level for the taxpayer himself from 11 million VND/month to about 15.5 million VND/month, each dependent from 4.4 million VND/month to about 6.2 million VND/month. The National Assembly Standing Committee then passed a resolution on this adjustment level.

The Ministry of Finance calculated that with this new family deduction, an individual with an income of 17 million VND/month (if no dependents), 24 million VND/month (if 1 dependent) or 31 million VND/month (if 2 dependents) would not have to pay tax.

Regarding the proposal to stipulate a family deduction for dependents equal to 50% of the deduction for taxpayers, the drafting agency explained that the family deduction consists of two parts, one for taxpayers and one for dependents.

According to the Ministry of Finance, the Personal Income Tax Law, effective from January 1, 2009, still maintains the deduction for dependents at 40% compared to the taxpayer and is adjusted accordingly according to the adjustment level for the taxpayer. Therefore, the drafting agency proposes to keep it as in the draft Law.

Source: https://dantri.com.vn/thoi-su/vi-sao-giam-tru-gia-canh-de-nop-thue-thu-nhap-ca-nhan-khong-chia-theo-vung-20251119110108086.htm