Notice on Family Circumstance-Based Deduction When Finalizing Personal Income Tax

Deductible Personal Exemption:

- Self: 9 million VND/month; 108 million VND/year;- Dependents: 3.6 million VND/month/per dependent.

These above deductions are the amounts subtracted before calculating the tax on income from business, salary, and wages of resident individual taxpayers.

If a resident individual has income from both business and wages, the family deductions are calculated once on the total income from business and wages.

Principles of Deduction Calculation:

- Personal Exemption Deduction for the Taxpayer:

Taxpayers with multiple sources of income from salaries, wages, and business will, at a specific point in time (calculated on a monthly basis), choose to calculate the family-based deductions for themselves at one place.

Foreign individuals residing in Vietnam will be deducted for personal exemption from January or from the month they arrive in Vietnam (in cases where the individual first arrives in Vietnam until the end of the contract and leaves Vietnam within the tax year).

If during the tax year, the individual has not deducted for themselves or has deducted for less than 12 months, they are entitled to a full 12 months deduction when finalizing taxes.

- Deduction for Dependents:

Taxpayers are entitled to a family-based deduction for dependents if they have taxpayer registration and have been issued a taxpayer identification number. If the taxpayer has not been issued a taxpayer identification number, they are not entitled to deductions for dependents.

Simultaneously, when registering for dependent deductions, the tax authority will issue a taxpayer identification number for the dependent and temporarily apply the family-based deductions within the year from the date of registration.

Each dependent can only be deducted for one taxpayer within the tax year.

Article 6, Clause 5 of Circular 95/2016/TT-BTC stipulates: "Income-paying organizations are responsible for registering the taxpayer identification for individuals with income from salaries and wages and for dependents of individuals once a year, at least 10 working days before the deadline for submitting the annual personal income tax finalization dossier."

Besides the above family-based deductions, taxpayers should also note the rules on deductions for insurance contributions, voluntary pension funds, and other contributions (charity, humanitarian, educational support). To be specific:

- Insurance contributions include: Social insurance, health insurance, unemployment insurance, professional liability insurance (for certain professions).- Voluntary pension fund: Contributions to the voluntary pension fund are deductible from taxable income according to the actual occurrence but not more than 1 million VND/month (12 million VND/year).- Other contributions include contributions to:- Organizations or establishments caring for and nurturing children with special difficulties, disabled persons, and elderly persons with no place of support.- Charity funds, humanitarian funds, and educational support funds established and operating under the regulations of the Government of Vietnam.

Note: Insurance contributions, contributions to the voluntary pension fund, and other contributions of any year are deductible from the taxable income of that year.

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