Vietnam: People with serious illnesses shall be considered for personal income tax exemption and reduction

15:40, 11/07/2024

Very disadvantageous for some individuals when they fall into the situation of suffering from a serious illness and are not aware of the preferential policy for the exemption and reduction of personal income tax (PIT). Tax exemption and reduction for individuals with serious illness is a long-standing content stipulated in the Law on Personal Income Tax of Vietnam and guiding documents.

According to Article 5 of the Personal Income Tax Law of Vietnam: Taxpayers who face difficulties caused by natural disasters, fires, accidents or severe diseases and affecting their tax payment ability may be considered for tax reduction corresponding to the extent of damage they suffer from but not exceeding payable tax amounts.

As guided in Article 4 of Circular 111/2013/TT-BTC of the Ministry of Finance of Vietnam, the reduced tax amount is determined as follows:

- Tax reduction shall be considered in the tax year. The taxpayer shall receive tax reduction for the tax year in which the taxpayer suffers from natural disaster, fire, accident, or fatal disease.

- The tax payable used for calculating tax reduction is the total personal income tax payable in the tax year, including:

+ The paid or withheld personal income tax on incomes from capital investment, incomes from capital transfer, incomes from real estate transfer, incomes from winning prizes, incomes from royalties, incomes from franchising, incomes from inheritance, and incomes from gifts.

+ The personal income tax payable on incomes from business and incomes from wages, remunerations.

- The basis for calculating the damage eligible for tax reduction is the total expenditure for repairing damage minus the indemnities provided by insurers (if any) or compensations provided by the organization or individual that caused the accident (if any).

- The reduced tax is determined as follows:

+ If the tax payable in the tax year is higher than the damage level, the reduced tax is equal to the damage level.

+ If the tax payable in the tax year is lower than the damage level, the reduced tax is equal to the tax payable.

As guided in Official Dispatch 6383/BTC-TCT (dated May 18, 2015) on determining individuals with severe illnesses eligible for personal income tax reduction, the Ministry of Finance has announced a list of 42 severe illnesses as the basis for personal income tax reduction assessment for taxpayers with severe illnesses as stipulated in Article 5 of Decree 65/2013/ND-CP, as follows:

No.	Illness Name	No.	Illness Name	No.	Illness Name
1	Cancer	16	Progressive muscular atrophy	31	Organ transplant (heart, liver, kidney transplant)
2	First heart attack	17	Severe rheumatoid arthritis	32	Progressive pulmonary tuberculosis
3	Coronary artery surgery	18	Gangrene due to hemolytic streptococcus infection	33	Severe burns
4	Heart valve replacement surgery	19	Aplastic anemia	34	Cardiomyopathy
5	Aortic surgery	20	Paralysis of two limbs	35	Alzheimer's disease or dementia
6	Stroke	21	Blindness in both eyes	36	Pulmonary hypertension
7	Coma	22	Loss of two limbs	37	Neuromuscular transmission disorder
8	Multiple sclerosis	23	Hearing loss	38	Severe brain injury
9	Amyotrophic lateral sclerosis	24	Loss of speech	39	Elephantiasis
10	Parkinson's disease	25	Total and permanent disability	40	Occupational HIV infection
11	Bacterial meningitis	26	Kidney failure	41	Bone marrow transplant
12	Severe encephalitis	27	Medullary cystic disease	42	Poliomyelitis
13	Benign brain tumor	28	Chronic recurrent pancreatitis
14	Muscular dystrophy	29	Liver failure
15	Progressive bulbar palsy	30	Systemic lupus erythematosus

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