Tax industry proposes to increase family deduction level
Tax authorities propose to amend the Personal Income Tax Law when the deduction for dependents remains unchanged, while the CPI has increased by more than 20%.
Ms. Ta Thi Phuong Lan - Deputy Director of the Department of Tax Management for Small & Medium Enterprises and Business Households and Individuals (General Department of Taxation) said that she has reported to the Department of Tax Policy (Ministry of Finance) to increase the family deduction for personal income taxpayers. However, she has not mentioned the proposed increase.
The current family deduction of VND9 million (for the taxpayer) and VND3.6 million (for dependents) has been in place for the past six years. That is, each individual with one dependent will have to pay tax when their income exceeds VND12.6 million a month. This level, according to experts, is "outdated" because prices and many other expenses have increased.
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Transaction at a tax office. Photo:Thanh Lan |
According to the provisions of the Personal Income Tax Law, the Government can propose a plan to adjust this deduction if the consumer price index (CPI) fluctuates by more than 20% compared to when the law took effect (July 1, 2013). According to Ms. Lan, by the end of 2018, the CPI had increased by more than 20% compared to that time, so the General Department of Taxation made the proposal.
According to the representative of the General Department of Taxation, if the family deduction level is increased, the budget revenue will decrease but the impact will not be significant. The number of taxpayers at the first level - the lowest level - will decrease but the tax amount of this group accounts for a very small proportion.
Finance Minister Dinh Tien Dung said he had received the proposal and was reviewing it to calculate it thoroughly before reporting to the Government. According to regulations, the Government will submit the adjustment to the National Assembly Standing Committee for approval.
According to the General Department of Taxation, up to now, there have been 50 million people paying personal income tax. The personal income tax rate in Vietnam is currently progressive, the lowest is 5%, the highest is 35%. In 2013, personal income tax contributed 47,000 billion VND to the budget and increased to nearly 97,000 billion VND in 2018. It is expected that in 2019, this revenue could reach more than 113,000 billion VND.
