From January 1, 2023: What is the application for reduction based on family circumstances in Vietnam?
How much is the reduction based on family circumstances in Vietnam?
First of all, in Article 19 of the Law on Personal Income Tax 2007 (amended by Article 1 of Resolution 954/2020/UBTVQH14), the reduction based on family circumstances means a sum of money deductible from pre-tax income from business, salary or wage of a resident taxpayer.
Regarding the deduction for family circumstances, Article 1 of Resolution 954/2020/UBTVQH14 provides as follows:
- Personal exemption: 11 million VND/month (132 million VND/year);
- Dependent exemption: 4,4 million VND/dependent/month.
From January 1, 2023: What is the application for reduction based on family circumstances in Vietnam?
Who are the dependents for consideration of reduction based on family circumstances in Vietnam?
Pursuant to the content specified at point d, clause 1, Article 9 of Circular 111/2013/TT-BTC as amended by clause 6, Article 25 of Circular 92/2015/TT-BTC, dependants include:
(1) Children, legitimate adopted children, illegitimate children, stepchildren. To be specific:
- Children under 18 years of age.
- Children from 18 years of age and over that are disabled and incapable of work.
- Children studying in Vietnam or overseas in universities, college, vocational schools, including children from 18 years of age and over in high schools (including the period awaiting university enrolment result from June to September in 12th grade) that have no income or the average monthly income in the year from all sources ≤ 1,000,000 VND.
(2) The taxpayer's spouse that meet the conditions in Point dd Clause 1 of this Article.
(3) The taxpayer’s parents, parents-in-law, stepparents, legitimate adoptive parents that meet the conditions in Point dd Clause 1 of this Article.
(4) Other dependants that the taxpayer has to provide for, who meet the conditions in Point dd Clause 1 of this Article, including:
- The taxpayer’s brothers and sisters.
- The taxpayer’s grandparents, aunts, uncles.
- The taxpayer’s nieces and nephews.
- Other people to provide for as prescribed by law.
Thus, according to the current regulations, there are 04 groups of subjects who are considered as dependents for consideration of family circumstances deduction when paying PIT.
What are the amendments to application for reduction based on family circumstances in Vietnam from January 1, 2023?
Recently, on December 30, 2022, the Ministry of Finance issued Circular 79/2022/TT-BTC amending and supplementing a number of legal documents issued by the Ministry of Finance.
In which, Article 1 of Circular 79/2022/TT-BTC amends and supplements a number of contents at point g, clause 1, Article 9 of Circular 111/2013/TT-BTC on documents to prove dependents.
Specifically, the documents proving dependents when paying PIT are amended and supplemented as follows:
- For children under 18 years of age and children aged 18 and above who are disabled and unable to work: Add a photocopy of the citizen's identity card to replace the identity card (if any);
- For spouses:
+ Add a copy of the citizen's identity card to replace the people's identity card (if any);
+ Remove "Copy of household registration book (proving husband and wife relationship)" instead of "Copy of Certificate of Residence Information or Notice of personal identification number and information in the National Database on residence or other papers issued by the Public Security Authority";
- For the biological father, natural mother, father-in-law, mother-in-law (or father-in-law, mother-in-law), stepfather, stepmother, legal adoptive father, lawful adoptive mother:
+ Add a copy of the citizen's identity card to replace the people's identity card (if any);
+ Remove the "photocopy of the household registration book (if it has the same household registration book)", and replace it with "a copy of the certificate of residence information or the Notice of personal identification number and information in the National Database on residence or other papers issued by the Public Security Authority";
- For other individuals as guided in Item d.4 Point d Clause 1 Article 9 of Circular 111/2013/TT-BTC as amended by Clause 6, Article 25 of Circular 92/2015/TT-BTC:
+ Add a copy of the citizen's identity card to replace the people's identity card (if any);
+ Legal papers to determine the responsibility for nurturing: Remove ""photocopy of household registration book (if there is the same household book)", and replace it with "photocopy of Certificate of residence information or Notice of identification number personal identity and information in the National Database of Residence or other documents issued by the Public Security Authority";
+ Replace the phrase "document on tax administration" into "Circular 80/2021/TT-BTC dated September 29, 2021 of the Minister of Finance guiding the implementation of a number of articles of the Law on Tax Administration and Decree 126/2020/ND-CP dated October 19, 2020 of the Government detailing a number of articles of the Law on Tax Administration";
- For taxpayers working in economic organizations, administrative agencies, non-businesses with father, mother, wife (or husband), children and other people who are counted as dependents:
Change the phrase "document on tax administration" to "Circular 80/2021/TT-BTC dated September 29, 2021 of the Minister of Finance guiding the implementation of a number of articles of the Law on Tax Administration and Decree No. Decree 126/2020/ND-CP dated October 19, 2020 of the Government detailing a number of articles of the Law on Tax Administration";
- Add item g.7, point g, Clause 1, Article 9 of Circular 111/2013/TT-BTC as amended by Clause 6, Article 25 of Circular 92/2015/TT-BTC as follows: "From the date on which the tax authority informed After completing the connection of the database with the National Population Database, the taxpayer is not required to submit the above-mentioned dependent proofs if the information in this document is already in the database. national data on population".
Circular 79/2022/TT-BTC will officially take effect from January 1, 2023.
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