PROPOSAL TO INCREASE FAMILY DEDUCTION TO MAXIMUM 18 MILLION VND PER MONTH

Recently, the Ministry of Finance has announced the Draft of the Personal Income Tax Law (PIT), replacing the 2007 Personal Income Tax Law. In addition, many ministries, sectors and localities have continuously proposed to amend the family deduction level in the PIT Law, with the highest proposed level being 18 million VND.

Outline of the Draft Law on Personal Income Tax (new)

Accordingly, the Ministry of Finance has proposed to amend and supplement a number of regulations as follows:

(1) Income subject to personal income tax

• Review and amend taxable revenue levels for income from business activities.
• Expand the scope of income from inheritance and gifts.
• Supplementing regulations on other income groups subject to PIT.

(2) Income exempted from personal income tax

Supplementing regulations on PIT exemption for:

• Income from dividends of members of agricultural cooperatives, individual farmers signing contracts with enterprises participating in “Big Field” cooperative model;
• Income paid by voluntary pension funds and supplementary pension insurance funds;
• Income from the transfer of emission reduction certificates, the first transfer of carbon credits after issuance by individuals granted emission reduction certificates, carbon credits;
• Income from interest on green bonds;
• Income from the initial transfer of green bonds after issuance to institutionalize the Party and State’s guidelines on rural agricultural development, enhance the coverage of the social security system and promote green growth and sustainable development.

(3) Income with reduced personal income tax

• Supplementing regulations on reducing PT on income from salaries and wages of individuals who are high-tech human resources (CNC) working at enterprises and projects in the fields of information technology, agriculture, and agricultural processing, including: CNC enterprises, CNC agricultural enterprises, CNC application projects in the list of CNC products prioritized for investment and development, CNC product manufacturing projects in the list of CNC products encouraged for development.
• Supplementing regulations assigning the Prime Minister to allow tax exemption and reduction in some special cases: foreign experts working in programs and projects funded by official development assistance (ODA); foreign experts working in foreign non-governmental programs and projects in Vietnam; Vietnamese individuals working at representative offices of international organizations of the United Nations System in Vietnam.

(4) Partial progressive tax rates and flat tax rates

• Partial progressive tax rates: it is expected to review the partial progressive tax rates and the corresponding taxable income levels; research to simplify the partial progressive tax rates.
• Flat tax rates: Review and adjust flat tax rates corresponding to the proposed amendments on income from capital transfer and real estate transfer.

Proposal to increase family deduction level

Accordingly, regarding the family deduction regulation (Article 19 of the draft Law), many ministries, sectors and localities have proposed to increase the family deduction for taxpayers (currently at 11 million VND/month) and the deduction for each dependent (currently at 4.4 million VND/month). The specific proposed levels in the family deduction for taxpayers are from 16 to 18 million VND/month, and the deduction for each dependent are from 5 to 8 million VND/month.

If approved by the National Assembly, this Draft Law is expected to replace Personal Income Tax Law No. 04/2007/QH12 dated November 21, 2007 of the National Assembly, Law No. 26/2012/QH13 dated November 22, 2012 and Law No. 71/2014/QH13 dated November 26, 2014 of the National Assembly amending and supplementing the 2007 Personal Income Tax Law, Resolution No. 954/2020/UBTVQH14 dated June 2, 2020 of the National Assembly Standing Committee on adjusting the family deduction level of personal income tax.