Proposed Tax Deductions for Tuition, Medical Expenses, and Home Loans Under Personal Income Tax

The Vietnamese Government Office proposes maintaining the standard deduction package as outlined in the draft Law on Personal Income Tax. Additionally, they suggest introducing an expanded deduction package, covering expenses such as housing, transportation, healthcare, and education for taxpayers and their dependents (exceeding basic costs). This also includes student loan repayments and unforeseen expenses due to natural disasters, fires, or theft affecting homes, assets, or vehicles, requiring repairs or replacements.

However, these expenses must be supported by invoices and documents as per legal requirements and should not be covered by other sources.

The Ho Chi Minh City Tax Consultancy and Agency Association agrees with the proposal but suggests limiting education expenses to taxpayers and their children, while healthcare costs should only apply to taxpayers and dependents they are legally obligated to support. The Association also proposes expanding deductions to include rental expenses and other essential costs for taxpayers.

Echoing this sentiment, Vietcombank recommends adding interest expenses on loans from credit institutions for healthcare, education, and social housing purchases to the deductible list. According to Vietcombank, many individuals borrow from banks to cover healthcare and education costs, resulting in significant interest payments.

The bank argues that these are actual expenses and should be deductible to accurately reflect taxpayers’ income. If the deduction for social housing loan interest is approved, it would make housing more accessible for low-income earners, aligning with the National Assembly’s Resolution No. 161/2024/QH15 on promoting social housing loans.

To ensure proper implementation and prevent abuse, confirmation from banks or land registration authorities, possibly integrated through electronic identification numbers, is necessary.

Similarly, LAWS Vietnam LLC highlights that interest on loans for a first home is a significant burden for young families. They propose including interest expenses on loans for social housing or first commercial homes in the deductible list for personal income tax calculations.

Regarding housing loan deductions, Lawyer Nguyen Duc Nghia, Deputy Director of the Small and Medium Enterprise Support Center, Ho Chi Minh City Business Association, emphasizes that interest on first-home loans is a substantial burden for many families. Deductions for such interest would support the need for stable housing.

He suggests that the Law on Personal Income Tax could set a maximum deductible loan amount, such as interest on a debt balance of 1 billion VND. For healthcare and education expenses, deductions should be allowed at appropriate levels. For instance, families with members suffering from severe illnesses requiring long-term, expensive treatments should be considered for higher healthcare deductions.