personal income tax cannot be applied to the entire population, so it should be aimed at groups with high average income
In the draft Resolution of the National Assembly Standing Committee on adjusting the family deduction level that has just been sent to the Ministry of Justice for appraisal, the Ministry of Finance proposed to choose option 2 on the family deduction level, raising the deduction for taxpayers to 15.5 million VND/month and for each dependent to 6.2 million VND/month.
The Ministry of Finance said that the basis of this proposal is the consumer price index (CPI) for the period from 2020 to the end of 2025 forecast to increase by more than 21.2%. On that basis, the ministry proposed to choose option 2.
According to calculations, with the new deduction, most taxpayers at level 1 will switch to non-taxable (about over 95%). A part of taxpayers at level 2 will not have to pay or transfer to level 1. The remaining tax rates are all reduced in the amount of tax payable.
It is expected that the budget revenue from personal income tax will be about VND84,477 billion, down about VND21,000 billion/year compared to current regulations. The number of people still paying taxes is about 2.21 million, a decrease of 2.18 million people compared to the present.
The Ministry of Finance also proposed applying a new family deduction level from January 1, 2026.
Regarding the new proposal of the Ministry of Finance, Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance, National Economics University - said that in the context of rapidly changing income and living expenses, the proposed level of 15.5 million VND still does not fully reflect the actual income and living expenses of the people.
Current regulations start from 11 million VND/month, applied from 2020, when the average income per capita reached 3,548 USD. By 2024, this figure will increase to 4,622 USD, an increase of about 30%, while inflation in this period will remain low, ranging from 0.81% to 4.16%" - Mr. Nghi analyzed.
According to Associate Professor, Dr. Phan Huu Nghi, Vietnam is a middle-income country, personal income tax cannot be applied to the entire population but should be targeted towards groups with high average income or higher.
He emphasized: The deduction of personal income tax, in addition to based on per capita income and living expenses, needs to be considered for an additional flash-forward income level - that is, the income level that the majority of people working for salaries have. With an average income per capita of 4,622 USD (equivalent to 118 million VND/year, or 10 million VND/month), it is estimated that the income of the majority of workers is between 8,000-12,000 USD/year (equivalent to 17-23 million VND/month)".
From there, he proposed: "To ensure long-term stability and fairness based on objective grounds, the deduction for people with income should start from 20 million VND".
Adjusting the level of family deduction needs to be consistent with price fluctuations and economic growth rate
At the same level as Associate Professor, Dr. Phan Huu Nghi, who commented on the draft resolution, the National Assembly delegations of Dien Bien province also proposed to increase the family deduction to 20 million VND/month.
Accordingly, the National Assembly delegation of Dien Bien province proposed that the Ministry of Finance consider adjusting the family deduction for taxpayers to 20 million VND/month (equivalent to 240 million VND/year) and adjusting the family deduction for each dependent to 10 million VND/month.
According to the National Assembly delegation of Dien Bien province, the family deduction level is suitable for implementation, ensuring stability, in line with the growth rate of the consumer price index (CPI) in 2025 and the period 2026 - 2030. This adjustment not only ensures the principle of fairness and sustainable revenue nurturing but also contributes to supporting people to overcome the pressure of increasing living expenses, contributing to expanding the voluntary area for transparent and stable tax declaration and payment.
Meanwhile, Dr. Nguyen Ngoc Tu - Lecturer at Hanoi University of Business and Technology - said that the plan to increase the family deduction to 15.5 million VND/month is a positive one, more beneficial for taxpayers, but still not enough compared to reality. He proposed a more reasonable level of raising it to about 18 million VND/month, the deduction for dependents is 9 million VND/month, and should be applied right from the 2025 tax calculation period instead of waiting until 2026.
Mr. Tu believes that from 2025 onwards, the economy will enter a new stage of development with large domestic and foreign capital flows. The growth rate may reach over double digits in the following years, causing the income of workers to increase and the prices of goods and services to continuously increase.
A bowl of pho today certainly wont keep the same price in the years to come. Therefore, the drafting committee needs to consider adjusting the family deduction level in accordance with the economic growth rate for the period of 2026-2030, even until 2035", Mr. Tu proposed.
