Family deduction increased to 11 million VND, how much income is required to pay tax?
With the family deduction for personal income tax increased to 11 million VND/month for taxpayers and 4.4 million VND/month for dependents, how much income do employees have to earn to pay tax?
On the afternoon of May 18, Mr. Nguyen Truong Giang, Deputy Secretary General of the National Assembly, said that at the 45th session last week, the National Assembly Standing Committee considered and decided to increase the family deduction level to 11 million VND/person/month according to the Government's proposal.
Specifically, the family deduction for taxpayers will increase from the current VND9 million/person/month to VND11 million/month and the dependent deduction will increase from VND3.6 million/person/month to VND4.4 million/person/month. With the newly approved family deduction for taxpayers and dependents, an employee with an income of VND15 million or less will not have to pay tax if he/she has one more dependent (child or parent...).
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| Increase family deduction to 11 million VND/month. |
If the income is 20 million VND/month and there is 1 dependent, the tax payable in 2020 is 230,000 VND/month, a decrease of 260,000 VND compared to the old level; if there are 2 dependents, the tax payable is only 10,000 VND compared to 190,000 VND. If the income is 30 million VND/month and there is 1 dependent, the tax payable will be 1.44 million VND/month instead of 1.86 million VND/month; if there are 2 dependents, the tax payable is 780,000 VND/month instead of 1.32 million VND/month...
According to the Government's proposal, the new family deduction level will be applied to the 2020 tax period, because according to current regulations, the tax period for wages and salaries of enterprises is calculated annually, from January 1. Cases that have temporarily paid tax according to the family deduction level of 9 million VND per month, 3.6 million VND for each dependent will have their personal income tax payable re-determined according to the new family deduction level when finalizing personal income tax in 2020.
With the new deduction, the income thresholds not yet subject to tax will increase to 11 million VND/month (no dependents); 15.4 million VND/month (with 1 dependent) and 19.8 million VND/month (with 2 dependents). Thus, a large number of people who are paying personal income tax at level 1 (accounting for 44% of personal income tax payers) will switch to non-taxable status. People with income under 15 million VND/month with dependents will not have to pay tax.
