The Ministry of Finance has just submitted to the Government a draft decree guiding the implementation of a number of articles of the Law on Personal Income Tax (PIT).
Regarding the proposal to allow deduction of medical and educational - training expenses before calculating personal income tax, the drafting agency said that the majority of opinions agreed to choose option 2. Therefore, the Ministry of Finance submits to the Government regulations in the draft decree according to this option.
Accordingly, taxpayers who are resident individuals are entitled to deductions from taxable income before tax calculation for income from salaries, wages, and expenses for health, education and training of taxpayers and dependents.
Which includes: Expenses for medical examination and treatment at domestic medical facilities within the scope of the list paid by health insurance not exceeding 23 million VND/year.
Expenses for education and training at domestic institutions do not exceed 24 million VND/year. This amount includes tuition fees for preschool, general education, vocational education, university according to the provisions of law and other professional skills at educational institutions.
The Ministry of Finance said that in case individuals incur health, education - training costs and are applied the maximum deduction level according to the draft Decree, taxpayers with 1 dependent with an income of 28 million VND/month, after deducting insurance expenses, deductions for themselves, deductions for dependents and deductions for health, education - training, they are still not subject to tax.
According to calculations, individuals with income over 28.63 million VND/month only have to pay tax with a starting tax rate of 5%.
Regarding the new proposal of the Ministry of Finance, Ms. Tran Thu Ha (35 years old, office worker in Hanoi) believes that allowing deduction of medical and educational expenses before calculating personal income tax is appropriate for the reality of many young families living in large cities.
According to Ms. Ha, the current income level seems high, but in fact in big cities, after deducting house rent, tuition fees, and living expenses, many families still face great financial pressure. "My family has two young children, each month tuition alone is more than ten million VND. If education and medical expenses are further reduced, it will provide a lot of support for young families," Ms. Ha shared.
However, Ms. Ha is concerned that proving costs to get deductions may lead to additional procedures. "If too many invoices, documents or complicated settlements are kept, many people will be reluctant to do it. I hope the tax authorities have a simple mechanism, which can connect electronic data from hospitals and schools so that people do not have to declare too much themselves," Ms. Ha said.
Mr. Nguyen Minh Hoang (36 years old, information technology staff in Hanoi) also said that for a family with 2 young children like him, the current spending pressure is very high even though the income is not low.
Each month, my family loses about 10 million VND just for tuition, semi-boarding, English classes and arising expenses for my two children. Not to mention rent, living expenses, electricity and water, travel expenses. There are months when my child is sick and has to go to the hospital or check-ups outside of hours, the cost increases a lot," Mr. Hoang shared.
He believes that currently many people look at a salary of about 30 million VND/month and think it is high, but in reality in Hanoi, for families with young children, this level is no longer abundant.
Nominal income may be higher than before, but the cost of raising children, studying, and healthcare has all increased sharply. If only calculating fixed family deductions as at present, it does not accurately reflect the actual spending capacity of workers," Mr. Hoang said.
However, he is also concerned that the maximum deduction of 24 million VND/year for education may still be quite low for many families in urban areas.
Divided into only about 2 million VND per month, while currently many families have one child's tuition already higher than that level. I think there should be a flexible mechanism according to the number of children or according to the living area to be closer to reality," Mr. Hoang proposed.
Dr. Nguyen Ngoc Tu - Lecturer at Hanoi University of Business and Technology said that with the current cost level, it is necessary to increase the level of health expenditure to about 30 million VND/year. Currently, although health insurance has paid most of the medical examination and treatment costs at a certain level, people still have to pay quite a lot of arising expenses themselves.
As for education, it is necessary to increase the deduction level to 50-60 million VND/year. In addition to studying culture and foreign languages, people also spend on soft skills, sports, art...
