In 2023: What are latest regulations on personal income tax exemptions in Vietnam?

In 2023: What are latest regulations on personal income tax exemptions in Vietnam?

Pursuant to Article 1 of the Resolution 954/2020/UBTVQH14 stipulating as follows:

Exemptions

The exemptions specified in Clause 1 Article 19 of the Law on Personal Income Tax No. 04/2007/QH12, amended by Law No. 26/2012/QH13, are changed as follows:

1. Personal exemption: 11 million VND/month (132 million VND/year);

2. Dependent exemption: 4,4 million VND/dependent/month.

As regulations above, personal exemption is 11 million VND/month (132 million VND/year) and dependent exemption is 4,4 million VND/dependent/month.

Pursuant to Subsection 1, Section III of Official Dispatch 13762/CTHN-HKDCN in 2023, the Hanoi Tax Department provides guidance on personal exemption in 2023 as follows:

PERSONAL EXEMPTION

1. Rate of personal exemption

Rate of personal exemption is promulgated in Resolution 954/2020/UBTVQH14 issued on 02/6/2020 as follows:

- Personal exemption: 11 million VND/month (132 million VND/year);

- Dependent exemption: 4,4 million VND/dependent/month.

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As regulations above, personal exemption is 11 million VND/month (132 million VND/year) and dependent exemption is 4,4 million VND/dependent/month.

How to register the dependent for personal income tax exemptions in Vietnam?

Pursuant to Clause 10 Article 7 of the Circular 105/2020/TT-BTC stipulating regulations on registration of the dependent for personal income tax exemptions in Vietnam 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.

- 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 includes:

++ 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 hereto appended with their supervisory tax authority.

* If the individual does not authorize the income payer to apply for tax registration for the dependent

- 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 as prescribed in Clause 9 Article 7 of the Circular 105/2020/TT-BTC.

- The application includes:

+ Application form for tax registration No. 20-DK-TCT hereto appended;

+ 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.

Is there a limit in the number of dependants regarding personal exemptions in Vietnam?

Pursuant to Clause 1.c Article 9 of the Circular 111/2013/TT-BTC stipulating principles of personal exemptions for dependants in Vietnam as follows:

Deductions

1. Personal deductions

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c) Calculating deduction

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c.2) Deduction for dependants

c.2.1) 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.

c.2.2) 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 that are registered before this Circular takes effect are still eligible for deductions until being issued with tax codes.

c.2.3) 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, who are defined in Point d.4 Clause of this Article, must be registered by December 31 of the tax year, otherwise the deduction for the whole tax year shall not be made.

c.2.4) 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.

As regulations above, there is only limit in the number of deductions for family circumstances per dependent, not the maximum number of dependents.

Best regards!