During the consultation process on the draft Law on Personal Income Tax (amended), many comments focused on the family deduction level, in which the proposed contents of raising the family deduction level attracted much attention, and at the same time, many proposals were made to expand the items to be calculated for deduction.
Proposal to add compulsory contributions and pension insurance
Commenting on the draft Law on Personal Income Tax (amended), Vietnam Television proposed that the drafting agency add party fees and union fees to the items that are deducted except for personal income tax.
These are fees that employees are required to pay monthly, and the addition will help to more accurately reflect actual taxable income. The Ministry of Finance said it had taken note for research during the process of developing guiding documents for implementation.
For pension insurance contributions, the American Chamber of Commerce in Vietnam (AmCham) and Deloitte Vietnam Tax Consulting Co., Ltd. proposed to increase the deduction from VND 1 million/month to VND 3 million/month for voluntary pension funds, pension insurance or life insurance.
Deloitte also proposed expanding this policy to funds established outside of Vietnam, in accordance with the laws of the host country. Some personal opinions suggested raising this deduction level to the same level as the deduction for dependents.
Responding to this issue, the Ministry of Finance said that the draft law has replaced the term "voluntary pension fund" with "voluntary pension insurance purchase" to unify with products provided by insurance companies. The specific deduction level will be stipulated by the Government in the guiding decree, ensuring consistency with regulations on corporate income tax.
Proposal to increase the family deduction level to a higher level than the proposal in the draft
The content that received the most attention was the adjustment of the family deduction level.
The Ministry of Finance said it has received many consensus comments with option 2: Increase the deduction for taxpayers from 11 million VND/month to 15.5 million VND/month and for each dependent from 4.4 million VND/month to 6.2 million VND/month, equivalent to an increase of about 40.9%. This level is calculated based on the growth rate of per capita income and GDP per capita from 2020 to present.
However, many opinions still say that there needs to be a higher adjustment.
Dong Thap voters proposed raising the tax rate and reducing family deductions to match current prices and income.
The National Assembly Delegation of Dien Bien Province proposed to increase the family deduction for taxpayers to 20 million VND/month and 10 million VND/month for each dependent, to ensure fairness, support people under pressure on living expenses, and at the same time nurture sustainable revenue sources.
The Ho Chi Minh City National Assembly Delegation also proposed to increase the family deduction for taxpayers to 16.5 million VND/month, corresponding to the forecast of an increase in CPI of about 50% by the end of 2025. At the same time, the tax rates in the progressive tax table also need to be adjusted to increase the income at the highest level by 50%, to 120 million VND/month. The deduction for each dependent according to this proposal is 6.6 million VND/month.
Many experts recommend raising the family deduction level higher
Regarding the level proposed by the Ministry of Finance, many experts believe that this level does not fully reflect reality.
Associate Professor, Dr. Phan Huu Nghi - Deputy Director of the Institute of Banking and Finance, National Economics University - analyzed: the deduction of 11 million VND/month has been applied since 2020 when the average income per capita was only 3,548 USD, by 2024 it had increased to 4,622 USD (an increase of about 30%), while living expenses have also changed rapidly. He said: "To ensure long-term stability and fairness, the deduction for income people should start from 20 million VND".
Dr. Nguyen Ngoc Tu - lecturer at Hanoi University of Business and Technology - commented that the 15.5 million VND plan is positive but "not enough compared to reality". He proposed raising the deduction for taxpayers to 18 million VND/month, for dependents to 9 million VND/month, and should apply it right from the 2025 tax calculation period.
