About 1 million people won’t have to pay personal income tax

VCN- After more than half a year of research, review, and consultation, the Ministry of Finance's proposal on raising family circumstance-based reduction upon personal income tax (PIT) calculation submitted to the Government to submit to the National Assembly Standing Committee has been approved. More than 1 million people subject to tax payment at the lowest level will no longer pay taxes in the 2020 tax term.   
about 1 million people not to have to pay personal income tax Raising family circumstances-based reduction level must comply with current law
about 1 million people not to have to pay personal income tax Business households have been offset Family Circumstance Deduction when calculating Personal Income Tax
about 1 million people not to have to pay personal income tax Increasing family allowances: An additional one million people will not have to pay personal income tax
about 1 million people not to have to pay personal income tax
Reducing tax obligations will be a resource for taxpayers to reinvest. Photo: TL

Budget revenue to fall by VND10,800 billion

According to Clause 4, Article 1 of Law No. 26/2012 / QH13 (Law on Personal Income Tax), in case the consumer price index (CPI) changes by more than 20% compared to the effective time of law or the latest time of adjusting the family circumstance-based reduction level, the Government submits to the Standing Committee of the National Assembly for adjustment of the family circumstances-based reduction specified in this clause in conformity with changes of price in order to apply for the next tax term.

According to the General Statistics Office, the CPI at the end of December 2019 compared to July 1, 2013 was 123.2%, up 23.2%. Based on the provisions of Clause 4, Article 1 of Law No. 26/2012 / QH13, it is necessary to study the adjustment of family circumstance-based reduction for personal income tax.

Accordingly, the Government proposes to adjust the family circumstance-based reduction level specified in Clause 1, Article 19 of the Law on Personal Income Tax (amended and supplemented in Clause 4, Article 1 of Law No. 26/2012 / QH13) as follows: the deduction level for taxpayers is VND11 million per month (VND132 million per year); the deduction level for each dependent is VND4.4 million per month.

Mr. Tran Quang Chieu, Standing Member of National Assembly's Finance and Budget Committee:

The adjustment of the family circumstance-based reduction level based on the CPI is perfectly reasonable with the current law. This content is prescribed in Clause 4, Article 1 of Law No. 26/2012 / QH13. With other criteria such as: GDP per capita, regional minimum wage, income and average social spending, etc. The Ministry of Finance should study and consult the revision of the provisions on the family circumstance-based reduction level in the PIT Law later.

Mr. Nguyen Truong Giang, Vice Chairman of the Legal Committee and Deputy General Secretary of the National Assembly, said that at the 45th session, the National Assembly Standing Committee reviewed and decided to agree with the Government's proposal on raising the family circumstance-based reduction level as mentioned above. The new family circumstance-based reduction level will apply from the 2020 tax term.

The new family circumstance-based reduction level will reduce the level of PIT payable for all taxpayers, ensure consistency with changes in CPI and reduce the state budget revenue about VND10,800 billion per year (equivalent to a 14% reduction of the total state budget revenue on PIT from salaries and wages in 2019). The Ministry of Finance said that this adjustment will contribute to alleviating difficulties for taxpayers in the context of increasing prices and inflation compared to 2013. The tax payable will be reduced for all taxpayers, in which the reduction level of the tax payable by the group of taxpayers at the low level will be higher than those at the high level.

Those have income of more than VND20 billion must pay tax

Commenting on this content, Mrs. Pham Thi Thu,Director of Hung Linh International Trade Company, said that raising the family circumstance-based reduction level upon PIT calculation has been significant in the difficult economy situation due to the Covid-19 pandemic. This is a positive move of the State to support and share the burden with taxpayers. When the family circumstance-based reduction level increases, the PIT will falland the remaining income of taxpayers will increase. Thereby, taxpayers will face fewer difficulties and have conditions to take care of their lives, families and children. Especially, for taxpayers in the business sector, their incomes and employees’ incomes will be a source to reinvest in business and production activities, making more contributions to society.

As an expert, Mrs. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consultants' Association (VTCA) said: motivated by this adjustment, about one million people who are paying the PIT at level 1 will not have to pay anymore because under the current deduction level, those who have two dependents and an income of over VND16.2 million per year have to pay PIT. When thefamily circumstance-based reduction increases to VND11 million per person, dependents is VND4.4 million each, this means that those who have income over VND19.8 million must pay PIT. Those who have higher incomes and have to pay taxes at the second level on wards will be benefitted when the tax payable falls significantly. The adjustment level is also quite reasonable and currently higher than many other countries in the world. Not to mention, an individual with an income of VND20 million per month from salaries and wages in big cities, this level is normal, but in rural and mountainous provinces, this level is relatively high.

From the research perspective, Mr. Truong Ba Tuan, Deputy Director of the Institute of Financial Strategy and Policy (Ministry of Finance), said that people with lower incomes will benefit more from this adjustment. However, in the long term, it is necessary to have a plan to summarize and assess the PIT Law, thereby reporting to the Government to submit to the National Assembly for consideration and amendment to the law at an appropriate time, to ensure consistency with the overall reform of tax policy system, and compliance withsocio-economic development.

Hong Van/ Huyen Trang

Related News

Ensure harmony of interests of “3 parties” when applying 5% VAT on fertilizers

Ensure harmony of interests of “3 parties” when applying 5% VAT on fertilizers

VCN - In the short term, applying 5% VAT on fertilizers may increase selling prices, but in the long term, farmers will benefit from this policy. When the fertilizer manufacture is deducted input tax, it will help reduce investment cost and production cost.
Businesses can choose a suitable electronic invoice model generated from the cash register

Businesses can choose a suitable electronic invoice model generated from the cash register

VCN - The Ministry of Finance said that individual business households can choose a suitable model to apply electronic invoice solutions from cash registers, depending on the number of invoices used in the year, in the month and the current status of software solutions and technical infrastructure.
Tax, fee, and land rent exemption, reduction, and deferral policies: a driving force for business recovery and growth

Tax, fee, and land rent exemption, reduction, and deferral policies: a driving force for business recovery and growth

Recently, the implementation of a series of policies on tax, fee, and land rent exemption, reduction, and deferral has provided timely support for businesses to recover and develop, thereby making positive contributions to economic growth.
Rush to finalize draft decree on public asset restructuring

Rush to finalize draft decree on public asset restructuring

VCN - According to the Ministry of Finance, the draft Decree regulating the rearrangement and handling of public assets is being urgently completed by the Ministry of Finance to submit to the Government for promulgation.

Latest News

M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there are still difficulties, the economy is gradually returning to a high growth trajectory. In that context, it is necessary to let fiscal policy return to normal state.
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ceiling and safety threshold approved by the National Assembly, ensuring national financial security, increasing proactive response to risks arising from external and internal causes of the economy.
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

VCN - Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment; renovating, upgrading, expanding, and constructing new construction items in projects that have been invested in and constructed in the past.

More News

Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Striving for average CPI not to exceed 4%

Striving for average CPI not to exceed 4%

VCN - According to the report of the Ministry of Finance, there are still some factors that put pressure on price levels in the remaining months of 2024, so the Ministry has updated 2 scenarios of average inflation in 2024 increasing in the range of 3.7-3.92%.
Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

Delegating the power to the government to waive, lower, or manage late tax penalties is suitable

VCN - Discussing in groups about the project "1 law amending 7 laws" in the financial sector according to the program of the 8th Session on October 29, 2024, National Assembly delegates proposed that the Government should be assigned to make specific regulations on decentralization, granting the right to exempt and reduce taxes, and handling penalties for late payment of taxes...
Removing difficulties in public investment disbursement

Removing difficulties in public investment disbursement

VCN - According to the report of the Investment Department (Ministry of Finance), the estimated disbursement from the beginning of the year to October 31, 2024 is VND 355,616.1 billion, reaching 47.43% of the 2024 plan, reaching 52.29% of the plan assigned by the Prime Minister.
State-owned commercial banking sector performs optimistic growth, but more capital in need

State-owned commercial banking sector performs optimistic growth, but more capital in need

VCN - According to the report sent to the National Assembly before the 8th Session of the Government on investment, management and use of state capital in enterprises nationwide in 2023, the business performance of the state-owned commercial banking sector achieved positive growth.
Stipulate implementation of centralized bilateral payments of the State Treasury at banks

Stipulate implementation of centralized bilateral payments of the State Treasury at banks

VCN - The Ministry of Finance (MOF) gathers feedback on the draft Circular regulating the management and use of accounts of the State Treasury opened at the State Bank of Vietnam (SBV) and commercial banks.
Inspection report on gold trading activities being complied: SBV

Inspection report on gold trading activities being complied: SBV

The State Bank of Vietnam (SBV) has announced that inspections on compliance with legal policies in gold trading activities of credit institutions and gold trading businesses have been completed and an inspection report is being compiled.
Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

Budget revenue in 2024 is estimated to exceed the estimate by 10.1%

VCN -The Government estimates that state budget revenue in 2024 will exceed VND 172.3 trillion, up 10.1% over the estimate, of which tax and fee revenue will reach 13.1% of GDP.
Ensure timely and effective management and use of public asset

Ensure timely and effective management and use of public asset

VCN – In order to promptly and effectively implement public asset management and use, ensuring compliance with legal regulations, the Ministry of Finance has just issued an official dispatch requesting ministries, branches and localities to comply with regulations in the Government’s Decree No. 114/2024/ND-CP dated September 15, 2024.
Read More

Your care

Latest Most read
M&A activities show signs of recovery

M&A activities show signs of recovery

Mergers and acquisitions (M&A) activities in Vietnam have been showing signs of recovery in recent months as several large companies announced finished deals, which may create a ripple effect in the M&A market.
Fiscal policy needs to return to normal state in new period

Fiscal policy needs to return to normal state in new period

VCN - To recover the economy during and after the Covid-19 pandemic, fiscal policy has been flexibly and promptly managed, becoming a solid foundation to help businesses and the economy gradually overcome difficulties. After nearly 5 years, although there
Ensuring national public debt safety in 2024

Ensuring national public debt safety in 2024

VCN - Since the beginning of the year, public debt management has been conducted proactively and effectively, meeting the need of raising capital for development investment. At the same time, debt indicators by the end of 2024 are guaranteed within the ce
Removing many bottlenecks in regular spending to purchase assets and equipment

Removing many bottlenecks in regular spending to purchase assets and equipment

Decree No. 138/2024/ND-CP, which has just been issued, is expected to contribute to resolving bottlenecks in allocating funds for purchasing assets and equipment
Continue to handle cross-ownership in banks

Continue to handle cross-ownership in banks

VCN - The situation of excess share ownership, cross-ownership between credit institutions (CIs), CIs and enterprises, although has decreased significantly compared to previous periods, is still complicated and requires continued inspection and control.
Mobile Version