The Ministry of Finance commented on the proposal to increase the deduction for family circumstances

DNHN - According to the Ministry of Finance, under the rules of the present Personal Income Tax Law, people may deduct social insurance, health insurance, unemployment insurance, and so on from their gross income when computing personal income tax.

Following the direction of the Government, the Ministry of Finance develops an outline of a research report, reviews, evaluates and proposes to amend 6 tax laws, including the Law on Personal Income Tax. Agencies with comments should send them to the Ministry of Finance before April 15.

Instead of a "hard column" with a defined rate, some believe that the reduction of family circumstances should be based on the regional minimum pay, such that each year when the regional minimum wage increases, the deduction automatically increases as well. as it is currently, resulting in double losses for employees.

According to some, the reduction of family circumstances should be based on the regional minimum wage, so that as the regional minimum wage increases each year, the deduction will automatically increase as well, rather than a "hard column" at the current fixed rate, causing workers to suffer double losses.

Additionally, the deduction for dependents must be increased to 70% of the deduction for employees, or 7.7 million VND, because the existing deduction of 4.4 million VND/month is insufficient. 

According to the Ministry of Finance, individuals are entitled to deductions for social insurance, health insurance, and unemployment insurance, minus the deduction. After deducting family circumstances, charity and humanitarian donations, allowances and allowances (if any), the residual income is used to calculate personal income tax.

For individuals who are employees affected by the Covid-19 epidemic, if they lose their jobs, have no income or have income that is not yet taxable, they do not have to pay tax. Unexpected hardship allowances, severance allowances, job loss allowances... are also not included in the individual's taxable income.

The National Assembly Standing Committee passed Resolution No. 954/2020/UBTVQH14 on June 2, 2020, revising and enhancing the personal income tax deduction for family situations.

Accordingly, the adjustment increases the deduction for taxpayers from 9 million VND/month to 11 million VND/month, for each dependent from 3.6 million VND/month to 4.4 million VND/month and applies right from the tax year 2020.

"The adjustment to raise the personal income tax deduction level contributes to reducing the obligations of taxpayers, reducing the amount of tax payable for all individuals who are paying personal income tax", the Ministry of Finance affirmed.

According to the Ministry of Finance, with the adjustment to increase the deduction for the taxpayer himself from 9 million VND to 11 million VND/month and for each dependent from 3.6 million VND to 4.4 million VND/month. the person earning income from salary or wages is 17 million Dong/month (if there is 1 dependent) or 22 million dong/month (if there are 2 dependents) does not have to pay personal income tax.

In case an individual earns more than 17 million VND/month or 22 million VND/month, the tax payable is also very small compared to the individual's income.

For individuals with high incomes of over 100 million VND, the new personal income tax payable is at a higher rate of 20%/income. Specifically, for individuals with an income of 110 million VND/month, the personal income tax payable is 20.15%/income; If the income is 150 million VND/month, the personal income tax payable is 24.11%/income...

Additionally, there are views that the current partial progressive tariff is unreasonable, resulting in a slew of problems.

The existing tax schedule contains too many steps and the gap between the lower tiers is too narrow, which often results in tax step jumps when income is summarized at the end of the year, increasing the amount of tax payable and the amount to be finished. Taxable income at each stage in odd numbers is difficult to recall, and taxpayers have difficulties calculating their tax liability.

BesiBesidese taxation threshold of 100 million VND per year for business individuals is deemed insufficient. According to experts, this taxable income ceiling does not even cover basic living expenses.

Quy Thu