According to Article 9 of Circular 111/2013/TT-BTC (amended and supplemented in Circular 92/2015/TT-BTC, Resolution 954/2020/UBTVQH14 and Circular 79/2022/TT-BTC), deductions are deductions deducted from taxable income of individuals residing before determining taxable income from salaries and wages. Details are as follows:
(1) Reduced family deductions (reduced family deductions for taxpayers themselves and reduced family deductions for dependents):
(i) Reduced family deductions deducted from taxable income before tax for income from salaries and wages of taxpayers who are residential individuals.
(ii) Family deduction level
- For taxpayers themselves: The family deduction is 11 million VND/month, 132 million VND/year.
- For each dependent: The family deduction is 4.4 million VND/month.
(iii) Principles of family deduction:
- Reduced family deductions for taxpayers: Taxpayers with many sources of income from salaries and wages, at one time (calculated in full month) the taxpayer chooses to calculate family deductions for themselves in one place.
- Reducing family deductions for dependents
+ Taxpayers are entitled to family deductions for dependents if the taxpayer has registered for tax and is granted a tax code.
+ Each dependent is only allowed to deduct a one-time deduction for one taxpayer in the tax calculation year. In case many taxpayers have the same dependent who needs to support, the taxpayer will negotiate to register for family deduction to one taxpayer.
(2) Reductions for insurance contributions, Voluntary Pension Funds
- Insurance contributions include: Social insurance, health insurance, unemployment insurance, professional liability insurance for some occupations that must participate in compulsory insurance.
- Payments to the Voluntary Pension Fund, purchase of voluntary pension insurance
The contribution rate to the voluntary pension fund, purchase of voluntary pension insurance is deducted from taxable income according to actual arising income but not exceeding one million VND/month for employees participating in voluntary pension products according to the guidance of the Ministry of Finance, including the amount paid by the employer to employees and the amount paid by employees themselves (if any), even in cases of participating in many funds. The basis for determining the deductible income is a photocopy of the payment certificate (or fee payment) issued by the voluntary pension fund or insurance company.
- Foreigners who are individuals residing in Vietnam, Vietnamese individuals who are individuals residing but working abroad with income from wages and wages abroad who have participated in paying compulsory insurance according to the provisions of the country where the individual resides or work similarly to the provisions of Vietnamese law such as social insurance, health insurance, unemployment insurance, compulsory occupational liability insurance and other compulsory insurance (if any) shall have those insurance fees deducted from taxable income from wages and wages when calculating personal income tax.
Foreigners and Vietnamese individuals who have paid the above insurance payments abroad will be temporarily deducted immediately from their income to deduct taxes during the year (if they have a certificate) and calculated according to the official figure if the individual conducts tax settlement according to regulations. In case there is no document to temporarily deduct during the year, a one-time deduction will be made when tax settlement is made.
- The insurance contribution amount, contributed to the Voluntary Pension Fund for each year is deducted from the taxable income of that year.
- The document proving the above deductible insurance amounts is a photocopy of the collection document of the insurance organization or a confirmation by the income payment organization about the insurance amount that has been deducted or paid (in case the income payment organization pays on behalf of the insurance agency).
(3) Reductions for charitable, humanitarian, and academic contributions
- contributions to charity, humanitarian affairs, and study promotion are deducted from taxable income for income from salaries and wages before tax of taxpayers who are residential individuals, including:
+ The expenditure is contributed to organizations and facilities for caring for and raising children in especially difficult circumstances, people with disabilities, and homeless elderly people (according to the provisions of Decree 68/2008/ND-CP; Decree 81/2012/ND-CP and Decree 109/2002/ND-CP).
Documents to prove contributions to organizations and facilities for caring for and raising children in especially difficult circumstances, people with disabilities, and homeless elderly people are legal documents of the organization or facility.
+ The amount of contributions to charity funds, humanitarian funds, and study promotion funds is established and operated according to the provisions of Decree 30/2012/ND-CP.
Documents proving contributions to charity, humanitarianism, and study promotion are documents issued by organizations and funds of the Central or the province.
- contributions to charity, humanitarian affairs, and education promotion arising in each year are deducted from taxable income of the tax calculation year, if the deduction is not complete, they will not be deducted from taxable income of the following tax calculation year. The maximum deduction does not exceed the taxable income from salary and wages of the taxable year arising from contributions to humanitarian charity and education promotion.
