When does the taxpayer make deductions for dependants in Vietnam? How to register dependents?

When does the taxpayer make deductions for dependants in Vietnam?

Based on sub-item c.2, point c, clause 1, Article 9 of Circular 111/2013/TT-BTC which regulates the personal deductions for dependants as follows:

Deductions

The deductions guided in this Article are amounts deducted from an individual's taxable income before determining taxable income from salary, wages, and business. Specifically as follows:

1. personal deductions

...

c.2) personal deductions for dependants

c.2.1) A taxpayer is entitled to personal deductions for dependants if the taxpayer has registered and has been issued a tax code.

c.2.2) When the taxpayer registers for the personal deductions for dependants, the tax authority will issue a tax code for the dependants and the deduction will be temporarily applied for the year starting from the registration. For dependants registered for deductions before the effective date of this Circular, the deduction will continue until a tax code is issued.

c.2.3) In case the taxpayer has not considered the personal deductions for dependants in the tax year, the deduction can be applied from the month of starting the nurturing obligation when the taxpayer finalizes the tax and registers for the personal deductions for dependants. Particularly for other dependants as guided in sub-item d.4, point d, clause 1, of this Article, the deadline for registration for deduction is by December 31 of the tax year; beyond this deadline, the deduction cannot be applied for that tax year.

c.2.4) Each dependant is only eligible for deduction once against one taxpayer in the tax year. If multiple taxpayers share a dependant, they must agree on which taxpayer registers the personal deductions.

...

Thus, the point of arising for the dependant to calculate the personal deductions is when the nurturing obligation arises.

In summary:

- Within the year, registering dependants from any point allows deduction from that point.

- Upon finalizing taxes, the personal deductions for dependants is calculated from the point the nurturing obligation arises.

When does the taxpayer make deductions for dependants in Vietnam? (Image from the Internet)

How to register dependants in Vietnam?

According to clause 10, Article 7 of Circular 105/2020/TT-BTC, the specific guidance on taxpayer registration documents for dependants is as follows:

(1) In case of authorizing the income-payer

- If an individual authorizes the income-payer for taxpayer registration of dependants, the registration documents are submitted at the income-payer.

- Taxpayer registration documents for dependants include:

+ Authorization letter and documents of the dependants such as:

++ Copy of Citizen Identity Card/ID Card valid for dependants with Vietnamese nationality aged 14 and above;
++ Copy of Birth Certificate/Passport valid for dependants with Vietnamese nationality under 14 years;
++ Copy of Passport for dependants with foreign nationality/Vietnamese nationality living abroad.

+ The income-payer collects and sends Taxpayer Registration Declaration form 20-DK-TH-TCT to the tax authority that directly manages the income-payer.

(2) In case of direct taxpayer registration for dependants

If an individual does not authorize the income-payer for taxpayer registration for dependants, they should submit taxpayer registration documents to the corresponding tax authority as stipulated in clause 9, Article 7 of Circular 105/2020/TT-BTC.

- Taxpayer registration documents include:

+ Taxpayer Registration Declaration form 20-DK-TCT;

+ Copy of Citizen Identity Card or a copy of valid ID Card for dependants with Vietnamese nationality aged 14 and above;

+ Copy of Birth Certificate or valid Passport for dependants with Vietnamese nationality under 14 years;

+ Copy of valid Passport for dependants with foreign nationality or Vietnamese nationality living abroad.

In case individuals subject to personal income tax have submitted registration documents for dependants for personal deductions before the effective date of Circular No. 95/2016/TT-BTC on June 28, 2016, but have not yet registered dependants, they need to submit registration documents as mentioned in this Clause to be issued a tax code for dependants.

What is the personal deduction level for each dependant in Vietnam?

Based on Article 1 of Resolution 954/2020/UBTVQH14 as follows:

personal deductions

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

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

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

Thus, the current personal deductions for each dependant is 4.4 million VND/month.