MoF complies with regulations in Law on Personal Income Tax

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Delegate Dang Bich Ngoc, Hoa Binh province National Assembly delegation speaks at the session. Photo: Quochoi.vn

Highly appreciating the Ministry of Finance for its financial and budget management as well as proactiveness in reviewing recent tax laws, delegate Nguyen Thi Thuy (Bac Kan delegation) proposed to revise regulations on family deduction in the Law on Personal Income Tax.

According to the delegate, the family deduction for the taxpayer is 11 million VND/month and for each dependent is 4.4 million/month which has been maintained since 2020 while in the past five years, many essential goods and services have increased and are no longer suitable, so the National Assembly should consider amending them soon and not wait until 2026 to approve them as proposed.

Moreover, delegate Nguyen Thi Thuy said that salary increases but income tax and family deduction are not adjusted in time, which will lead to obstacles because the salary reform policy will be implemented from July 1 as planned, and it is expected that the average salary of cadres, civil servants and public employees will be revised up compared to the current date. Therefore, if it is not adjusted promptly, it will directly affect the meaning of the salary reform policy.

Delegate Dang Bich Ngoc (Hoa Binh delegation) also said that it is necessary to adjust the level of family deductions for taxpayers, and the partially progressive tax tariff should be adjusted. The delegate said that the Law on Personal Income Tax was issued from 2007, so the application of tax rate and tariff since 2007 is no longer consistent with the reality. From 2007 to present, Vietnam’s average income and GDP growth and economic scale have changed greatly.

Therefore, delegate Dang Bich Ngoc proposed that the Government should soon report to the National Assembly to comprehensively amend the Law on Personal Income Tax, and only apply this tax for high-income tax payers to meet requirements and scale of the country’s development and not to affect the income of low-income workers.

Minister of Finance Ho Duc Phoc explains and clarifies a number of issues at the meeting. Photo: Quochoi.vn

Minister of Finance Ho Duc Phoc said that the Law on Personal Income Tax has taken effect from 2009. At that time, the Law stipulates that the family deduction for each tax payer is VND4 million/month (VND48 million/year); the deduction for each dependent is VND1.6 million/month. In 2013, it was revised up to VND9 million/month (VND108 million/ year) for each tax payer; for each dependent was VND3.6 million/month.

In 2020, Resolution 954/2020/UBTVQH14 revised up the family deduction to VND11 million/ month (VND132 million/ year) for each taxpayer, and VND4.4 million/ month for each dependent of the taxpayer. Thus, if the tax payer that has one dependent and income over VND17 million/month, and has two dependent and income over VND22 million/month, must pay Personal Income tax

The Minister stated that, as per the provisions of the Law on Personal Income Tax, when the CPI fluctuates above 20%, the Government submits to the National Assembly Standing Committee to adjust the family deduction. Currently, it has not been adjusted yet because the data from the General Statistics Office shows that the average income per capita is currently VND4.6 million, the deduction of VND11 million is 2.2 times higher than the average income, while many countries in the world at less than 1 times. Along with that, the CPI from 2020 up to now has increased by 11.47%. The Law stipulates that CPI rises over 20%, the deduction will be adjusted, so Minister of Finance Ho Duc Phoc said that the Ministry is implementing it in line with the law.

The Minister said that currently, the adjustment and amendment of the Law on Personal Income Tax is included in the law-making program at the National Assembly session in October 2025, expected to be approved at the session in May 2026. If the National Assembly Standing Committee agrees to get opinion to build the law in the end of the year and approve it in 2025, the ministry will comply and ask for opinions from National Assembly delegates and people to make appropriate regulations.