Vietnam: May an employee register personal exemption for their in-laws?

Vietnam: May an employee register personal exemption for their in-laws?

Based on subpoint d.3, point d, clause 1, Article 9 of Circular 111/2013/TT-BTC (provisions related to personal income tax for individual businesses in this Article are repealed by clause 6, Article 25 of Circular 92/2015/TT-BTC) as stipulated below:

Deductible Expenses

The deductible expenses guided in this Article are those subtracted from the taxable income of an individual before determining taxable income from salaries, wages, and business income. Specifically:

1. personal exemptions

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d) dependants include:

d.1) Children: biological children, legally adopted children, illegitimate children, stepchildren of the wife, stepchildren of the husband, specifically including:

d.1.1) Children under 18 years of age (calculated by full months).

Example 10: Mr. H's child, born on July 25, 2014, is considered a dependant from July 2014.

d.1.2) Children aged 18 or older who are disabled and unable to work.

d.1.3) Children studying in Vietnam or abroad at university, college, professional secondary school, vocational training, including children aged 18 or older who are attending high school (including the period waiting for university exam results from June to September of 12th grade), who do not have income or have an average monthly income from all sources not exceeding 1,000,000 VND.

d.2) The spouse of the taxpayer who meets the conditions stated at point đ, clause 1, of this Article.

d.3) Biological father, mother; father-in-law, mother-in-law (or father-in-law, mother-in-law); stepfather, stepmother; legally adopted father, adopted mother of the taxpayer who meet the conditions stated at point đ, clause 1, of this Article.

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dd) Individuals considered dependants according to the guidance at subpoints d.2, d.3, d.4, point d, clause 1 of this Article must meet the following conditions:

dd.1) For individuals of working age, they must meet both conditions:

dd.1.1) Being disabled, unable to work.

dd.1.2) Having no income or having an average monthly income from all sources not exceeding 1,000,000 VND.

dd.2) For individuals outside of working age, they must have no income or have an average monthly income from all sources not exceeding 1,000,000 VND.

Therefore, according to the above regulation, an individual can register their in-laws as dependants for personal exemptions when calculating personal income tax if the in-laws meet the following conditions:

(1) For individuals of working age, they must meet both conditions:

- Being disabled, unable to work.

- Having no income or having an average monthly income from all sources not exceeding 1,000,000 VND.

(2) For individuals outside of working age, they must have no income or have an average monthly income from all sources not exceeding 1,000,000 VND.

Vietnam: May an employee register personal exemption for their in-laws? (Image from the Internet)

What are the current personal exemption levels in Vietnam?

According to Article 1 of Resolution 954/2020/UBTVQH14, the latest personal exemption level is as follows:

Personal exemption level

Adjusting the personal exemption level stipulated in clause 1, Article 19 of the Personal Income Tax Law No. 04/2007/QH12, as amended and supplemented by Law No. 26/2012/QH13, as follows:

1. The deduction for the taxpayer is 11 million VND/month (132 million VND/year);

2. The deduction for each dependant is 4.4 million VND/month.

Therefore, according to the above regulation, the latest personal exemption levels are as follows:

- The deduction for the taxpayer is 11 million VND/month (132 million VND/year);

- The deduction for each dependant is 4.4 million VND/month.

How many dependants can one have for personal exemptions?

Based on point c, clause 1, Article 9 of Circular 111/2013/TT-BTC, it is stipulated:

Deductions

1. personal exemptions

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c) Principles for calculating personal exemptions

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c.2) Family deduction for dependants

c.2.1) The taxpayer is eligible for family deductions for dependants if the taxpayer has taxpayer registration and is assigned a tax identification number.

c.2.2) When a taxpayer registers for family deductions for dependants, the tax authority will assign a tax code for the dependant and the family deduction will be temporarily calculated during the year starting from registration. For dependants already registered for family deductions before this Circular came into effect, the deductions will continue until the tax identification number is issued.

c.2.3) If a taxpayer has not yet claimed family deductions for dependants in the tax year, they can claim deductions for dependants from the month the support obligation arises when the taxpayer settles their tax and registers for family deductions for dependants. For other dependants as guided at subpoint d.4, point d, clause 1 of this Article, the deadline for family deduction registration is December 31 of the tax year; after this deadline, deductions for that tax year are not allowed.

c.2.4) Each dependant can only be claimed once for deduction by one taxpayer in the tax year. If multiple taxpayers have a common dependant, they must agree which taxpayer will claim the family deduction.

Therefore, the law states that each dependant can only be claimed once for deduction by one taxpayer in the tax year without setting a limit on the maximum number of dependants a person can have when considering personal exemptions for personal income tax.