Review and amend the Law on Personal Income Tax in tandem with international practices

	Amending regulations on the time of tax declaration and payment on behalf of individuals receiving dividends and bonuses in form of securities
	Important roles of personal income tax policy
	PIT revenue reaches 74.5% of estimate

Implementing the PIT policy plays a crucialrole in implementing the redistributive policy. Photo: Internet

Voters in Da Nang proposed the Ministry of Finance to advise the Government to submit to the National Assembly for amendment of the Law on Personal Income Tax to increase the level of family circumstance-based deduction for taxpayer’s dependents.

According to current regulations, the maximum deduction level of VND4.4 million/ month per dependent is low, especially for employees who are raising children. Because the cost of childcare is from VND3 to 4 million/month, more than the remaining VND1 million is needed to pay other costs, causing many difficulties.

The Ministry said that as per current regulations of the Law on Personal Income Tax, individuals that are entitled to deductions from social insurance, health insurance, unemployment insurance, and professional liability insurance in some sectorsmust participate in compulsory insurance, and are minus level of family circumstance-based deduction, charitable and humanitarian contributions, allowances. The rest is the income for PIT calculation.

On June 2, 2020, the National Assembly Standing Committee approved Resolution No. 954/2020/UBTVQH14 adjusting the level of family circumstance-based deductionof PIT. Accordingly, the level of family circumstance-based deductionwas revised up for taxpayers from VND9 million/month to VND11 million/month, for each dependent from VND3.6 million/month to VND4.4 million/month and applied from the tax term 2020.

The adjustment to raise the deduction level of PIT has contributed to reducing the obligation for taxpayers, the amount of tax payable is reduced for all PIT payers.

With the current deduction for the taxpayer atVND11 million/month and for each dependent is VND4.4 million/month, the individual earning income from salary and wages at VND17 million/month (with one dependent) or VND22 million/month (with two dependents)after deducting social insurance, health insurance, unemployment insurance, etcis not subject to PIT payment.

According to the Ministry of Finance, the regulation on deduction before tax calculation ensures that individuals need to have a certain income level to meet the essential needs of life such as food, accommodation, travel, education, medical examination and treatment, etc.Therefore, individuals with incomes higher than this threshold must pay taxes. The application of deductions is also aimed at excluding low-income subjects from paying PIT.

The deductionlevel for taxpayers and taxpayers' dependents under the provisions of the Law on PIT is a specific level under the general level of society. It cannot be specified for exceptionalcases.

The current deductionlevel is still higher than the per capita income, the regional minimum wage or the national average standard of living. For individuals who have difficulties due to natural disasters, fires, accidents, or fatal diseases, the Law on Personal Income Tax provides regulations on tax reduction for these cases.

Following Decision No. 2114/QD-TTg dated December 16, 2021, of the Prime Minister, the Ministry of Finance is studying, reviewing and evaluating the Law on PIT to report to the Government and the National Assembly Standing Committee for consideration and an amendmentto ensure compliance with socio-economic conditions of Vietnam as well as international practices and the consistency of the tax policy system.