What is the guidance on personal exemption calculation in Vietnam for 2025? What documents are required to prove dependants for personal exemption in Vietnam in 2025?

What is the Guidance on personal exemption calculation in Vietnam for 2025?

Based on Article 1 of Resolution 954/2020/UBTVQH14, the personal exemption levels for calculating personal income tax (PIT) are stipulated as follows:

- The deduction level for the taxpayer is 11 million VND/month (132 million VND/year);- The deduction level for each dependant is 4.4 million VND/month.

Accordingly, individuals who qualify as dependants, as stipulated in Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC, include:

- Children: biological children, adopted children, illegitimate children, stepchildren of a wife/husband, specifically including:

+ Children under 18 years old (calculated fully by month).+ Children 18 years or older with disabilities, incapable of working.+ Children studying in Vietnam or abroad at university, college, professional schools, vocational training, including children 18 years or older attending high school (including the period awaiting university exam results from June to September of 12th grade) with no income or an average monthly income from all sources not exceeding 1,000,000 VND.

- Spouse of the taxpayer who meets the conditions at Point đ, Clause 1, Article 9 of Circular 111/2013/TT-BTC.

- Biological parents; parents-in-law; step-parents; adoptive parents of the taxpayer who meet the conditions at Point đ, Clause 1, Article 9 of Circular 111/2013/TT-BTC.

- Other individuals without support that the taxpayer is directly caring for and who meet the conditions at Point đ, Clause 1, Article 9 of Circular 111/2013/TT-BTC include:

+ Siblings of the taxpayer.+ Grandparents; uncles, aunts, cousins of the taxpayer.+ Nephews and nieces, including children of siblings of the taxpayer.+ Other eligible dependants as defined by law.

Additionally, based on Point đ, Clause 1, Article 9 of Circular 111/2013/TT-BTC, conditions are stipulated for identifying a dependant of the PIT taxpayer in cases of spouse; biological parents; parents-in-law; step-parents; adoptive parents; and other individuals without support whom the taxpayer is directly caring for as follows:

- For persons of working age, they must meet both of the following conditions:

+ Disabled, incapable of working.+ No income or average monthly income from all sources not exceeding 1,000,000 VND.

- For persons outside working age, they must have no income or average monthly income from all sources not exceeding 1,000,000 VND.

Below is the detailed guidance on personal exemption calculation for 2025 that you may refer to:

Step 1: Determine taxable income

Taxable income is the total income from salary and wages received by the taxpayer after deducting tax-exempt amounts (such as meal allowances, travel allowances, overtime pay above the regulated level, etc.).

Calculation formula:

Taxable Income = Total Income - Tax-exempt Amounts

Example:

Mr. A has a monthly salary of 30 million VND, with a travel allowance of 3 million VND (tax-exempt according to regulations).

Taxable Income = 30 million - 3 million = 27 million VND/month.

Step 2: Apply personal personal exemptions

Taxpayers can deduct 11 million VND per month.

Calculation formula:

Taxable Income = Taxable Income - 11 million VND

Example:

Mr. A has a taxable income of 27 million VND.

Taxable Income for Mr. A = 27 million VND - 11 million VND

After deducting 11 million VND, 16 million VND remains to continue tax calculation.

Step 3: Apply personal exemptions for dependants

Each dependant can deduct 4.4 million VND per month. The calculation formula is as follows:

Taxable Income = Taxable Income - 11 million VND - (4.4 x Number of dependants)

Example: Currently, Mr. A has 2 young children under 18 years old.

Taxable Income calculation for him is as follows:

- Deduction for himself: 11 million VND.- Deduction for 2 children: 4.4 million x 2 = 8.8 million VND.- Total deduction amount = 11 million + 8.8 million = 19.8 million VND.

>> Taxable Income = 27 million - 19.8 million = 7.2 million VND/month.

Step 4: Calculate personal income tax

Once the taxable income is calculated, apply the progressive tax bracket to calculate the PIT. Specifically, we have the PIT calculation formula as follows:

PIT Payable = Taxable Income x Tax Rate

- The tax rate on salary and wages is calculated progressively per part as regulated in Article 22 of the Personal Income Tax Law 2008. Specifically:

Example continuing with Mr. A:

As above, Mr. A's taxable income = 7.2 million VND/month.

Apply tax brackets:

Mr. A’s taxable income is 7.2 million VND, falling into part of bracket 1 and part of bracket 2, thus the tax calculation is as follows:

- The first 5 million (bracket 1) is taxed at 5%

5,000,000 x 5% = 250,000 VND

- The portion exceeding 5 million, i.e., 7.2 million - 5 million = 2.2 million (bracket 2) is taxed at 10%

2,200,000 x 10% = 220,000 VND

Thus, the total tax Mr. A must pay = 250,000 + 220,000 = 470,000 VND/month.

Note:

- dependants must register with the tax authorities and have a tax identification number to be considered for deduction.

- In cases where the dependant does not yet have a tax identification number, the deduction can still be claimed but must be supplemented before finalizing taxes.

- If multiple people are supporting the same dependant, only one person is eligible for the deduction.

What is the guidance on personal exemption calculation in Vietnam for 2025? (Image from the Internet)

What are principles for calculating personal exemptions for dependants in Vietnam?

The principle for calculating personal exemptions for taxpayers is determined according to Sub-item c.2, Point c, Clause 1, Article 9 of Circular 111/2013/TT-BTC (Personal income tax provisions related to business individuals in this Article are repealed by Clause 6, Article 25 Circular 92/2015/TT-BTC) as follows:

- Taxpayers are entitled to calculate personal exemptions for dependants if the taxpayer has taxpayer registration and has been assigned a tax identification number.

- When the taxpayer registers a personal exemption for dependants, the tax authority will issue a tax identification number for the dependants, and the personal exemption will be temporarily calculated for the year from the time of registration. For dependants registered for personal exemption before October 1, 2013, the personal exemption continues until a tax identification number is assigned.

- If the taxpayer has not calculated personal exemptions for dependants in the tax year, they are entitled to calculate deductions for dependants from the month of the obligation to provide care, once the taxpayer finalizes taxes and registers personal exemptions for dependants.

For other dependants as guided in Sub-item d.4, Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC, the deadline for registering personal exemptions is no later than December 31 of the tax year. If past this deadline, the personal exemption may not be counted for that tax year.

- Each dependant is only allowed to be deducted once into one taxpayer in the tax year. Where multiple taxpayers have a common dependant to support, taxpayers need to agree on registration for personal exemption into one taxpayer.

What documents are needed to prove dependants for personal exemptions in Vietnam?

Based on Point g, Clause 1, Article 9 of Circular 111/2013/TT-BTC amended by Article 1 of Circular 79/2022/TT-BTC, the documents needed to prove dependants for personal exemptions are as follows:

* For Children:

- Children under 18 years of age: Proof includes a copy of the Birth Certificate and a copy of the Identity Card or Citizen ID card (if available).

- Children aged 18 and older with disabilities, incapable of working, proof includes:

+ A copy of the Birth Certificate and a copy of the Identity Card or Citizen ID card (if available).+ A copy of the Disability Certificate according to the provisions of the law on persons with disabilities.

- Children attending educational institutions as guided in Sub-item d.1.3, Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC, proof includes:

+ A copy of the Birth Certificate.+ A copy of the Student ID or a declaration signed by the school or other documents proving enrollment at the specified educational levels.

- In cases of adopted children, illegitimate children, stepchildren, besides the documents for each specific case above, proof documents need additional papers to demonstrate the relationship such as a copy of the adoption recognition decision, or a decision recognizing parent-child relationships by competent state authorities...

* For Spouse, the required documents include:

- A copy of the Identity Card or Citizen ID card.

- A copy of the Residence Information Verification Form or Notification of Personal Identification and information in the National Population Database or other documents issued by the Police Agency (proving marital relation) or a copy of the Marriage Certificate.

In cases where the spouse is of working age, in addition to the above documents, proof documents need additional papers to demonstrate the dependant's incapability to work such as a copy of the Disability Certificate under the law on persons with disabilities for those with disabilities incapacity for work, a copy of medical records for those with diseases that incapacitate work (e.g., AIDS, cancer, chronic renal failure, etc.).

* For biological parents, parents-in-law, step-parents, legitimate adoptive parents, necessary proof documents include:

- A copy of the Identity Card or Citizen ID card.

- Legitimate papers to determine the relationship of the dependant to the taxpayer such as a copy of the Residence Information Verification Form or Notification of Personal Identification and information in the National Population Database or other documents issued by the Police Agency, birth certificate, recognition decision of parent-child relationships by a competent state authority.

In cases of working age, in addition to the above documents, proof documents need additional papers demonstrating dependency due to disability incapability for work as a copy of the Disability Certificate under the law will be accepted, or medical record copies for persons suffering from work-incapacitating diseases (such as AIDS, cancer, chronic renal failure, etc.).* For other individuals as guided in sub-item d.4, point d, clause 1, Article 9 **** Circular 111/2013/TT-BTC, the documentation required includes:

- A photocopy of the Identity Card, Citizen Identity Card, or Birth Certificate.

- Legal documents to determine the responsibility of support as prescribed by law.

In cases where the dependant is of working age, in addition to the documents mentioned above, further documentation is required to prove incapacity for work, such as a photocopy of the Disability Certificate in accordance with law regarding persons with disabilities for individuals unable to work due to disability, or a photocopy of the medical record for individuals with illnesses that result in incapacity for work (such as AIDS, cancer, chronic kidney failure, etc.).

Legal documents at sub-item g.4.2, point g, clause 1, Article 9 Circular 111/2013/TT-BTC include any legal documents that determine the relationship of the taxpayer with the dependant such as:

- A photocopy of the document determining the obligation of support as prescribed by law (if any).

- A photocopy of the Certificate of Residence Information or Notification of Personal Identification Number and Information in the National Database on Population or other documents issued by the Police Authority.

- A self-declaration by the taxpayer according to the form issued with Circular 80/2021/TT-BTChttps://lawnet.vn/vb/Thong-tu-111-2013-TT-BTC-Huong-dan-Luat-thue-thu-nhap-ca-nhan-va-Nghi-dinh-65-2013-ND-CP-3222C.html#dieu_9 and Decree 126/2020/ND-CP with confirmation from the People's Committee of the commune where the taxpayer resides concerning the dependant living with them.

- A self-declaration by the taxpayer according to the form issued with Circular 80/2021/TT-BTC and Decree 126/2020/ND-CP with confirmation from the People's Committee of the commune where the dependant resides, stating the dependant is currently residing in the locality and has no one to rely on (if not living together).

* For resident individuals who are foreigners:

Resident individuals who are foreigners and do not have the documentation as guided for each specific case mentioned above must have equivalent legal documents to serve as a basis for proving the dependant.

* For taxpayers working in economic organizations, administrative, and career agencies with parents, spouses, children, and others eligible to be considered dependants as declared in the taxpayer's profile:

Documentation to prove dependants follows the guidance at sub-items g.1, g.2, g.3, g.4, g.5, point g, clause 1, Article 9 Circular 111/2013/TT-BTC, or only a Registration Declaration Form for dependants according to the form issued with Circular 80/2021/TT-BTC and Decree 126/2020/ND-CP with confirmation from the Head of the unit on the left side of the form.

The Head of the unit is only responsible for the following details: name, year of birth, and relationship of the dependant to the taxpayer; for other details, the taxpayer declares and takes responsibility.

Note: From the date the Tax Authority announces the completion of data connection with the National Database on Population, taxpayers are not required to submit the above-mentioned documents proving dependants if the information in these documents is already available in the National Database on Population.