Vietnam: Who is considered a dependent? What are the procedures for registration of dependents for personal deduction?
What is the definition of a dependent? Who is considered a dependent in Vietnam?
Dependents mean people under working age, people unable to work, or helpless people who taxpayers must directly nurture and take care of.
According to Point d, Clause 1, Article 9 of Circular 111/2013/TT-BTC, dependents include:
- Children, legitimate adopted children, illegitimate children, stepchildren. To be specific:
+ Children under 18 years of age.
+ Children from 18 years of age and over who are disabled and incapable of work.
+ Children studying in Vietnam or overseas in universities, colleges, or vocational schools, including children from 18 years of age and over in high schools (including the period awaiting university enrolment results from June to September in 12th grade) that have no income or have the average monthly income of ≤ 1.000.000 VND in the year from all sources.
- The taxpayer's spouse that meets the conditions in Point dd Clause 1 of this Article.
- The taxpayer’s parents, parents-in-law, stepparents, and legitimate adoptive parents that meet the conditions in Point dd Clause 1 of this Article.
- Helpless people who taxpayers must directly nurture and take care of, 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.
According to Clause 1 Article 19 of the Law on Personal Income Tax 2007, amended by Clause 4 Article 1 of the Law on amendments to Law on Personal Income Tax 2012, Personal deduction is the amount of money deducted from the taxable income before calculating the tax on incomes from business, or wages earned by the resident taxpayer.
The latest personal deductions are stipulated in Article 1 of Resolution 954/2020/UBTVQH14 as follows:
- The deduction for the taxpayer is 11 million VND/month (132 million VND/year);
- The deduction for each dependent is VND 4.4 million/month.
What are the cases of deduction for dependants in Vietnam?
According to Point c.2, Clause 1, Article 9 of Circular 111/2013/TT-BTC:
- The taxpayer may make deductions for his or her dependants if the taxpayer has applied for tax registration and been issued with the tax code.
- When registering deductions for dependants, the taxpayer shall be issued with tax codes for dependants and make preliminary deductions in the year from the registration date. The dependants who are registered before this Circular takes effect are still eligible for deductions until being issued with tax codes.
- If the taxpayer has not made deductions for dependants in the tax year, the deductions for dependants shall be made from the month in which the custody is given when the taxpayer settles tax and registers deductions for dependants. Deductions for other dependants defined in Point d.4, Clause 1, Article 9 of Circular 111/2013/TT-BTC must be registered by December 31 of the tax year, otherwise, the deduction for the whole tax year shall not be made.
- The deduction for a dependant shall apply to only one taxpayer in the tax year. Where multiple taxpayers have the same dependant to provide for, they shall reach an agreement on the person that makes the deduction for such dependant.
What are the procedures for registration of deduction for dependents in Vietnam?
According to Clause 10 Article 7 of Circular 105/2020/TT-BTC, for dependents specified at Point l, Clause 2, Article 4 of this Circular, the application for initial tax registration is as follows:
- If the individual authorizes the income payer to apply for tax registration for the dependent, the application for tax registration shall be filed with the income payer.
Required documents in an application for tax registration of the dependent:
+ a letter of authorization and documentation of the dependent. The documentation of the dependent is one of the following documents:
++ copy of unexpired citizen identification card or copy of unexpired ID card, for a Vietnamese dependent aged at least 14;
++ copy of birth certificate or copy of unexpired passport, for a Vietnamese dependent aged less than 14;
++ copy of passport, for a dependent who is a foreign national or overseas Vietnamese).
The income payer shall consolidate and file the application form for tax registration No. 20-DK-TH-TCT (download) appended with their supervisory tax authority.
- If the individual does not authorize the income payer to apply for tax registration for the dependent, the application for tax registration shall be filed with the tax authority. Required documents in the application for tax registration:
+ Application form for tax registration No. 20-DK-TCT (download) ;
+ The documentation of the dependent:
++ Copy of unexpired citizen identification card or copy of unexpired ID card, for a Vietnamese dependent aged at least 14;
++ copy of birth certificate or copy of unexpired passport, for a Vietnamese nationality dependent aged less than 14;
++ copy of passport, for a dependent who is a foreign national or overseas Vietnamese.
If an individual, with respect to his/her personal income tax, has claimed dependent(s) for personal exemption before the date of entry of Circular No. 95/2016/TT-BTC but has not applied for tax registration for the dependent(s), he/she shall file an application for tax registration as required in Clause 10, Article 7, Circular 105/2020/TT-BTC to enable the TIN(s) to be issued to the dependent(s).
LawNet