Currently, individuals earning over 11 million VND are subject to Personal Income Tax (PIT) and a 4.4 million VND per person reduction for dependents. PIT is based on an individual’s wages with 7 tax brackets ranging from 5% to 35%.
After deducting dependents, the tax brackets are as follows: 5% for income up to 5 million VND per month; 10% for income between 5-10 million VND per month; 15% for income between 10-18 million VND; 20% for income between 18-32 million VND; 25% for income between 32-52 million VND; 30% for income between 52-80 million VND; and 35% for income above 80 million VND.
In the regular Government meeting in January 2024, the Government requested the Ministry of Finance to study and propose adjustments to the dependent deduction in PIT to support and alleviate difficulties in people’s lives.
Prior to that, in the 5th session of the 15th National Assembly in July 2023, the Assembly requested the Government to study the adjustment of the dependent deduction for PIT.
People doing PIT tax settlement procedure. (Illustrative photo: ST).
The deduction for dependents in PIT has been a concern for many years. Mr. Le Quan (in Hanoi) stated that he earns nearly 30 million VND per month but his parents and parents-in-law are all afflicted with serious illnesses. The cost of his own family’s living expenses, as well as the costs of visiting, transportation, and medical treatment for his parents, are increasing, and he still has to pay monthly income tax.
“The revision of the dependent deduction is uncertain. As an employee, I am eagerly awaiting the revision. The relevant agencies have been studying and proposing it from year to year, but it has not been implemented; meanwhile, the economy is difficult and costs are increasing,” said Mr. Quan.
Sharing the same view, Ms. Nguyen Hanh – an office worker in Ho Chi Minh City – shared that decreasing income while costs are increasing makes life truly difficult. Ms. Hanh hopes for an early adjustment of policies to alleviate difficulties.
According to the General Department of Taxation, the total PIT in 2023 was over 155 trillion VND. Of that, the PIT from wages and salaries accounted for the highest proportion, with 108.228 trillion VND (about 70% of total PIT).
In 2024, the General Department of Taxation will continue to summarize the difficulties and obstacles in policies and laws on PIT, and policies and laws on tax administration at all levels, for taxpayers’ research and proposal when amending policies and laws on PIT and tax administration (to meet the basis for designing automatic PIT management software processes, tax refunds, and withholdings).
Economic expert Dinh Trong Thinh believes that the core principle of PIT is to target high-income individuals, encouraging them to create jobs and ensuring fairness among taxpayers.
According to Mr. Thinh, the current PIT laws in Vietnam are relatively high compared to the trend of lower rates in other countries. He cited examples of Singapore (20% PIT), Indonesia (25% PIT), while Vietnam’s PIT is currently at 35%.
“People earning hundreds of millions of VND per month are often those who contribute to society through job creation and wealth accumulation, not just through paying taxes. Additionally, in Vietnam, wage earners bear the majority of PIT. Therefore, it’s necessary to increase the dependents’ deduction to be in line with the sliding price trend and increasing living costs,” recommended Mr. Thinh.
Some local voters in Thai Binh and Ho Chi Minh City also suggested increasing the dependent deduction. Specifically, voters suggested that tax authorities should base the deduction on minimum regional wages, so that when the minimum wages increase, the deduction automatically increases as well.
In response to this suggestion, the Ministry of Finance stated that it is currently reviewing and evaluating tax laws, including PIT laws, to report to the Government and the National Assembly Standing Committee for consideration and amendments at the appropriate time.
