Official proposal to raise family deduction to 15.5 million VND

According to the Ministry of Finance , by the end of this year, the consumer price index (CPI) had fluctuated by more than 20% compared to the time of the most recent adjustment of the family deduction level (2020) at 21.2%. With the above calculation, the drafting agency said it had ensured the legal basis for adjusting the family deduction level.

In the draft submission, the Ministry of Finance proposed two options for adjusting the family deduction level to submit to competent authorities for consideration and decision.

The Ministry of Finance proposed to submit a plan to increase the family deduction for taxpayers to 15.5 million VND and dependents to 6.2 million VND (Illustration photo)

Option 1: Adjust the family deduction level according to the CPI growth rate as prescribed. Accordingly, the family deduction level for the taxpayer himself/herself will increase from 11 million VND/month to about 13.3 million VND/month; the deduction level for dependents will increase from 4.4 million VND/month to 5.3 million VND/month.

Option 2: Adjust the family deduction according to the growth rate of average income per capita and the growth rate of average GDP per capita. The family deduction for the taxpayer himself can be adjusted from 11 million VND/month to about 15.5 million VND/month and the deduction for each dependent from 4.4 million VND/month to 6.2 million VND/month.

After synthesizing opinions, the Ministry of Finance submitted to the Government a report to the Standing Committee of the National Assembly to adjust the family deduction level according to option 2. This family deduction level is applied according to the growth rate of average income per capita. From 2020 to now, the growth rate of average GDP per capita is about 40-42%.

With this plan, according to the Ministry of Finance, people with salary and wage income of 15 million VND per month, without dependents, do not have to pay personal income tax after deducting social insurance, health insurance , and unemployment insurance. If the income is 20 million VND, the tax payable is about 120,000 VND/month after deducting insurance costs (only about 0.6% of total income).

In the case of an individual with 1 dependent, income of 25 million VND/month, after deducting insurance and family deductions, only about 34,000 VND/month must be paid. Meanwhile, an individual with income of 30 million VND/month must pay about 265,000 VND/month, accounting for less than 1% of income.

In case of 2 dependents, the person earning 30 million VND/month does not have to pay tax. The person earning 40 million VND/month only has to pay about 540,000 VND/month (equivalent to 1.35% of income).

According to the Ministry of Finance, when the family deduction level is increased, most taxpayers at level 1 (over 95%) will no longer have to pay tax. A portion of individuals paying tax at level 2 will be transferred to non-tax status or transferred to level 1. Similarly, individuals at the remaining tax levels will have their personal income tax payable reduced.

Total revenue from personal income tax this year is expected to decrease by about 21,000 billion VND. The number of people still having to pay taxes is about 2.21 million people, a decrease of 2.18 million people (a decrease of 49.66%) (moving from level 1 to non-taxable status).

Currently, the family deduction is 11 million VND/month and each dependent is 4.4 million VND/month, which has been maintained since July 2020.

During the previous consultation period, ministries, branches, National Assembly delegations and localities sent their comments to the Ministry of Finance. The National Assembly delegation of Dien Bien province requested the Ministry of Finance to consider adjusting the family deduction for taxpayers to 20 million VND/month and each dependent to 10 million VND/month.

Regarding this proposal, the Ministry of Finance accepted and said it would study the proposal in the draft Resolution to ensure it is consistent with price fluctuations, people's living standards and the current socio-economic situation.

Source: https://baolaocai.vn/chinh-thuc-de-xuat-nang-muc-giam-tru-gia-canh-len-155-trieu-dong-post881678.html