Is there a limit on the number of dependants when registering for personal deductions in Vietnam?

Is there a limit on the number of dependants when registering for personal deductions in Vietnam?

Pursuant to Clause 1 Article 9 of the Circular 111/2013/TT-BTC stipulating as follows:

The deductions guided in this Article are the amounts deducted from the taxable income of the person before calculating taxable income from wages, remunerations, and business. In particular:

1. Personal deductions

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d) Dependants include:

d.1) Children, legitimate adopted children, illegitimate children, stepchildren. To be specific:

d.1.1) Children under 18 years of age.

Example 10: A child of Mr. H born on July 25, 2014 is considered a dependant from July 2014.

d.1.2) Children from 18 years of age and over that are disabled and incapable of work.

d.1.3) 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.

d.2) The taxpayer's spouse that meet the conditions in Point dd Clause 1 of this Article.

d.3) The taxpayer’s parents, parents-in-law, stepparents, legitimate adoptive parents that meet the conditions in Point dd Clause 1 of this Article.

d.4) Other dependants that the taxpayer has to provide for, who meet the conditions in Point dd Clause 1 of this Article, including:

d.4.1) The taxpayer’s brothers and sisters.

d.4.2) The taxpayer’s grandparents, aunts, uncles.

d.4.3) The taxpayer’s nieces and nephews.

d.4.4) Other people to provide for as prescribed by law.

dd) A person that meet the conditions below shall be considered a dependant mentioned in Point d.2, d.3, d.4 Clause 1 of this Article:

đ.1) The person of working age must meet all conditions below:

dd.1.1) The person is disabled and incapable of work.

dd.1.2) The person has no income or his average monthly income from all sources does not exceed 1,000,000 VND.

dd.2) The people outside working age that have no income or their average monthly income from all sources does not exceed 1,000,000 VND.

e) The disabled that are incapable of work mentioned in Point dd.1.1 Clause 1of this Article are the people regulated by regulations of law on the disabled and ill people incapable of works (sufferers from AIDS, cancer, chronic kidney failure, etc.)

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Thus, when registering for personal deductions, there will be no limit to the maximum number of dependants as long as they meet the prescribed conditions to be eligible for deduction. However, each dependant can only be deducted 01 time for each taxpayer in that tax year.

How to calculate deductions for dependants in case the taxpayer has not made deductions for dependants in the tax year in Vietnam?

Pursuant to Clause 1.c Article 9 of the Circular 111/2013/TT-BTC (amended by Clause 6 Article 25 of the Circular 92/2015/TT-BTC) stipulating as follows:

Deductions

The deductions guided in this Article are the amounts deducted from the taxable income of the person before calculating taxable income from wages, remunerations, and business. In particular:

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c) Calculating deduction

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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.

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As regulations above, 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.

Who are dependants of personal deductions in Vietnam?

Pursuant to Article 19 of the Law on Personal Income Tax in 2007 (amended by Clause 4 Article 1 of the Law on amending and supplementing a number of articles of the Law on personal income tax in 2012) and Article 1 of the Resolution 954/2020/UBTVQH14 stipulating dependants as follows:

Reduction based on family circumstances

1. Reduction based on family circumstances means a sum of money deductible from pre-tax income from business, salary or wage of a resident taxpayer. Reduction based on family circumstances consists of the following two parts:

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

b) Dependent exemption: 4,4 million VND/dependent/month.

In case the Consumer Price Index (CPI) changes over 20% compared to the effective time of the Law or the latest time point of adjusting the reduction based on family circumstances, the Government submits to the Standing committee of the National Assembly for adjustment of the reduction based on family circumstances specified in this clause in conformity with changes of price in order to apply for the next tax term.

2. The level of reduction based on family circumstances applicable to dependants is determined on the principle that each dependant may be counted only once for tax reduction for a taxpayer.

3. Dependants of a taxpayer means persons a taxpayer is responsible for nurturing or taking care of, including:

a/ His/her minor children or disabled children who are incapable of working;

b/ Individuals who have no income or have incomes not exceeding the prescribed level, including adult children who are studying at a university, college, professional secondary school or job-training establishment; his/her spouse who is incapable of working; his/her parents who are beyond the working age or incapable of working; other supportless persons whom the taxpayer has to directly nurture.

The Government shall specify the income level and declaration for identification of dependants to be counted for reduction based on family circumstances.

As regulations above, dependants of a taxpayer means persons a taxpayer is responsible for nurturing or taking care of, including:

- His/her minor children or disabled children who are incapable of working;

-  Individuals who have no income or have incomes not exceeding the prescribed level, including

+ Adult children who are studying at a university, college, professional secondary school or job-training establishment;

+ His/her spouse who is incapable of working; his/her parents who are beyond the working age or incapable of working; other supportless persons whom the taxpayer has to directly nurture.

Best regards!