Proposal to Increase the Family Circumstance Deduction for Personal Income Tax? How is the Family Circumstance Deduction for oneself calculated?
What is the current family circumstance deduction rate according to the law?
Based on the provisions of Article 19 of the Personal Income Tax Law 2007 (amended and supplemented by Article 1 of Resolution 954/2020/UBTVQH14) as follows:
Family circumstance deduction rate
1. The deduction rate for taxpayers is 11 million VND/month (132 million VND/year);
2. The deduction rate for each dependent is 4.4 million VND/month.
3. The determination of family circumstance deduction for dependents is based on the principle that each dependent is only counted once for deduction against one taxpayer.
4. Dependents are those whom the taxpayer has a responsibility to support, including:
a) Minor children; children with disabilities, unable to work;
b) Individuals with no income or income below the regulated level, including adult children studying at university, college, professional secondary school, or vocational training; spouses unable to work; parents who are beyond working age or unable to work; other dependents without support whom the taxpayer must directly support.
The Government of Vietnam shall regulate the income level and declaration to determine dependents considered for deduction.
Thus, currently, the deduction rate for taxpayers is 11 million VND/month.
The deduction rate for each dependent is 4.4 million VND/month.
Proposal to increase family circumstance deduction for personal income tax? How is family circumstance deduction for oneself calculated?
Proposal to increase family circumstance deduction for personal income tax?
On the morning of May 22, at the National Assembly House, executing the program of the 5th session, Chairman of the Economic Committee Vu presented a supplementary assessment report on the implementation of the 2022 socio-economic development plan and the state budget, and the situation in the first months of 2023.
The Economic Committee reported that in the first 4 months of 2023, the total number of newly established enterprises and those resuming operations decreased, but the number of enterprises dissolving or bankrupt increased. This trend may continue to become more complex in the future.
According to detailed reports, in the first 4 months, the number of enterprises suspending business with a fixed term was 49,900 enterprises (up 21.8% compared to the same period last year).
Additionally, there were 20,900 enterprises stopping operations awaiting dissolution procedures (up 39.9%) and 6,100 enterprises completing dissolution procedures (up 10.1%). On average, 19,200 enterprises withdrew from the market each month.
This situation led to a common consequence where enterprises lacked orders, causing many workers to lose their jobs in various industrial zones. According to the report of the Vietnam General Confederation of Labor, from September 2022 to January 2023, nearly 547,000 workers at 1,300 enterprises had their working hours reduced or were laid off due to a decrease in orders.
Facing the difficulties of workers, the Economic Committee suggested that the Government of Vietnam report more specifically on the progress of implementing new wage policies according to Resolution 27-NQ/TW 2018 of the Central Executive Committee of the 12th Communist Party on wage policy reform for officials and public employees, armed forces, and workers in enterprises.
Previously, in the preliminary report, the Deputy Prime Minister also stated that in the near future the Government of Vietnam would tighten discipline and order; enhance public service ethics; continue to improve organizational structures and downsize staffing; implement the wage reform roadmap. Additionally, they would develop a plan to adjust the regional minimum wage appropriately.
Besides the wage reform roadmap, the Economic Committee proposed researching a plan to increase the family circumstance deduction rate for personal income tax, reduce value-added tax while ensuring budget balance and the budget deficit in 2023 does not exceed the level permitted by the National Assembly.
How is family circumstance deduction for oneself calculated?
According to the guidelines in Official Dispatch 9188/CTHN-HKDCN 2022 on personal income tax finalization issued by Hanoi Tax Department, the family circumstance deduction for oneself is as follows:
- In case during the tax period, the resident individual has not calculated the family circumstance deduction for oneself or has calculated the family circumstance deduction for oneself for less than 12 months, they are entitled to calculate it for the full 12 months if tax finalization is conducted as prescribed.
- For individuals who are citizens of countries or territories that have signed Agreements with Vietnam on avoiding double taxation and preventing tax evasion on income taxes and are resident individuals in Vietnam, the family circumstance deduction for oneself is calculated corresponding to the number of months the personal income tax liability must be declared in Vietnam as prescribed.
- The deduction rate for taxpayers is 11 million VND/month (i.e., 132 million VND/year).
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