At the Government press conference on August 7, Deputy Minister of Finance Nguyen Duc Chi answered the press about the issue of the personal income tax exemption amount in the draft Law on Personal Income Tax (amended).
Deputy Minister of Finance Nguyen Duc Chi
According to the Deputy Minister, during the drafting process, experts and professionals proposed several options to determine the personal income tax exemption amount, including calculations based on regions and areas.
“We believe that if we consider dividing the exemption amount by region, there will be limitations and difficulties in implementation,” said Mr. Nguyen Duc Chi.
Specifically, even within a province or city, different areas have varying living costs and require different considerations for personal income tax exemption amounts, which can be significantly diverse.
For example, in Ho Chi Minh City or Hanoi, the core urban areas have very high living costs, while the rural areas have lower living expenses and personal living costs.
Therefore, in the latest draft, the Ministry of Finance proposed two options for calculating the exemption amount: based on the CPI as currently applied or based on the growth rate of per capita income.
In an earlier interview with NLD reporters, Dr. Nguyen Quoc Viet, a lecturer at the University of Economics – Vietnam National University, Hanoi, opined that adjusting the personal income tax exemption amount solely based on a 20% increase in the CPI threshold, as is currently practiced, has become outdated and no longer suitable.
He suggested that the personal income tax policy should be built on regularly measured indices that closely reflect the actual living standards and conditions of the people, instead of relying solely on a general index like the CPI.
The expert also recommended that the reform should be implemented synchronously within the framework of amending the Law on Personal Income Tax, instead of issuing a temporary resolution.
A notable proposal from Dr. Viet is to determine the personal income tax exemption amount based on the regional minimum wage, that is, using the minimum wage as a basis and multiplying it by a reasonable coefficient to arrive at an appropriate exemption amount for each region.
This option, according to Dr. Viet, is both scientific and reflective of the differences in living costs across regions.
In addition, the regional minimum wage also needs to be regularly adjusted to reflect the cost of living in each locality and can even serve as a reasonable basis for designing a more equitable tax policy.
Previously, as reported by NLD, the Ministry of Finance is developing a draft resolution of the Standing Committee of the National Assembly (NA) to adjust the personal income tax exemption amount from the 2026 tax period.
The draft resolution has proposed two options for the exemption amount. Option 1: The exemption amount for taxpayers is VND 13.3 million/month (VND 159.6 million/year), and the exemption amount for each dependent is VND 5.3 million/month.
Option 2: The exemption amount for taxpayers is VND 15.5 million/month (VND 186 million/year), and the exemption amount for each dependent is VND 6.2 million/month.
According to the current regulations, the personal income tax exemption amount for individuals is VND 11 million/month, and the exemption amount for each dependent is VND 4.4 million/month, which has been in effect since July 2020.
Thus, in Option 1, the personal income tax exemption amount for taxpayers will increase by VND 2.3 million/month, and for dependents by VND 0.9 million/month. Option 2 will increase the exemption amount for taxpayers by VND 4.5 million/month and for dependents by VND 1.8 million.
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