No change to family tax deduction rate for now: finance ministry

An officer processes a local’s tax documents at HCM City Tax Department. — VNA/VNS Photo Hứa Chung

HÀ NỘI — The Ministry of Finance (MoF) maintains that adjusting the family deduction rates in tax payments is not appropriate at the moment, especially as the minimum wage has been raised since July 1, 2024.

The statement was issued in a written response to recommendations from voters in Bình Định, Hà Giang, Thái Nguyên, Trà Vinh, Tuyên Quang and Tây Ninh provinces.

“The specific deduction level requires careful calculations, ensuring that it is higher than the average GDP per capita, the regional minimum wage and the average spending per capita in a certain period of time,” the MoF’s document reads.

The ministry also cited the 2023 living standard survey released by the General Statistics Office, which shows that Việt Nam’s average monthly income per capita stands at VNĐ4.96 million (US$199).

The group of households with the highest income (including the 20 per cent richest) take home a monthly average of VNĐ10.86 million ($437) per person.

Compared to the average income per capita, the current deduction for taxpayers of VNĐ11 million ($442) per person per month is over 2.2 times higher, while the deduction of VNĐ4.4 million ($177) per dependent is almost equal, the MoF said.

With social, health and unemployment insurance deducted, people with an average monthly salary of VNĐ17 million ($683) with one dependent, or VNĐ22 million ($884) with two dependents, are not subjected to personal income tax. 

“The CPI (consumer price index) fluctuates less than 20 per cent since the latest adjustment of family deduction rate in 2020. According to current regulations, it is not possible to adjust the family deduction rate at this point,” said the finance ministry.

The MoF is also conducting a comprehensive evaluation of the current Law on Personal Income Tax, which will review the family deduction rates and progressive tax brackets, and report to the government and National Assembly (NA) Standing Committee for a possible amendment according to the NA’s law-building programme.

The amended personal income tax law is expected to be included in the 2025 law-building programme, submitted to the NA for comments and revisions in October of the same year and slated for approval May 2026.

Multiple NA deputies as well as economic and legal experts have recommended that adjustments can be proposed in the nearest NA session, without having to wait until 2026, to ensure that regulations on personal income tax and related family deductions align with the current pricing and spending level. — VNS