In the MOF’s draft resolution submitted to the National Assembly’s Standing Committee on adjusting the family circumstance deduction for PIT, two options have been proposed.

Option 1: Adjusting the deduction based on the CPI growth rate. The deduction for taxpayers would increase from VND11 million per month to about VND13.3 million per month, and for each dependent, from VND4.4 million per month to VND5.3 million per month.

Option 2: Adjusting the deduction based on the income per capita growth rate and GDP per capita. The deduction for the taxpayer could rise from VND11 million per month to about VND15.5 million per month, and for each dependent, from VND4.4 million per month to VND6.2 million per month.

Higher deductions wanted

Nguyen Van Duoc from the HCM City Tax Consultants Agent Association and General Director of Trong Tin Tax Accounting and Consulting Co said among the two options proposed by MOF, Option 2 of raising the deduction to VND15.5 million per month for taxpayers and VND6.2 million per month for each dependent is more suitable.

He said this proposal marked an improvement over previous tax law amendments, reflecting the Ministry’s responsiveness by considering not only CPI but other socio-economic factors to set family circumstance deductions more reasonably than previously approached.

Raising the deduction to VND15.5 million per month for taxpayers and VND6.2 million per month for dependents, according to Tu, partially meets taxpayers’ needs but falls short of full expectations. 

Sharing the same view, Nguyen Ngoc Tu, a lecturer at Hanoi University of Business and Technology, noted that the MOF also takes into account the growth rate of average income per capita and the growth rate of average GDP per capita, showing innovation, demonstrating a very positive receptiveness, listening to the opinions of experts and public opinion of the drafting agency.

“A deduction of VND17-18 million per month would be more appropriate for taxpayers, applicable for 2025 and 2026, to encourage and motivate taxpayers, compensate for past disadvantages, and build trust in PIT law reforms,” Tu recommended.

He added that this adjustment is temporary and partial. When the new tax law is implemented, a more comprehensive approach should consider regional differences and other factors.

Lawyer Truong Thanh Duc from ANVI Law Firm supported Option 2, i.e., increasing the deduction to VND15.5 million per month for taxpayers and VND6.2 million per month for every dependent, to ensure a decent standard of living for salaried workers and their dependents, especially since deductions for essential expenses like healthcare and education are not yet permitted.

Application

According to Duoc, the national economy has recovered after Covid-19, but it has been slow, with limited income growth for citizens amid rising prices. Thus, the new deduction level should be applied immediately for the 2025 tax period, and settled in 2026, to demonstrate support and responsiveness to citizens through tax policy.

“For the long term, the PIT Law should be revised, particularly on the principle of taxation. Instead of only adjusting deductions when the CPI increases by 20 percent or more, the government should be authorized to make adjustments when CPI rises by 5-10 percent, enabling more flexible policy changes,” Duoc said.

Tu also suggested applying the new deduction level from the 2025 tax period, rather than delaying it to 2026 as proposed by MOF.

Lawyer Truong Thanh Duc echoed this, stating that the NA Standing Committee’s resolution on adjusting the deduction should take effect for the 2025 tax period. If approved in October, there would still be a few months before the 2025 PIT settlement, making immediate implementation reasonable.

Moreover, Duc noted that this adjustment is just temporary. When revising the PIT, deductions should be tailored to regional differences and allow for deductions of other essential living expenses, particularly for healthcare and education.

The Ministry of Defense has suggested raising the taxpayer deduction from VND11 million per month to VND17.3 million per month and the dependent deduction from VND4.4 million per month to VND6.9 million per month. 

Meanwhile, the Ha Tinh Provincial People’s Committee proposed a taxpayer deduction of VND18 million per month (VND216 million per year) and a dependent deduction of VND8 million per month. This is because the base salary has increased 2.03 times (from VND1.15 million in 2013 to VND2.34 million), warranting a proportional adjustment to the deduction level. 

Hanh Nguyen