On June 02, 2020, National Assembly Standing Committee issued Resolution no. 954/2020/UBTVQH14 regarding adjustment in personal and family circumstance deduction level for personal income tax.
Personal and family circumstance deduction level are prescribed in Law on Personal Income Tax:
- Now, taxpayer’s personal deduction level is VND 9 million/month (equivalent to VND 108 million/year).
- Now, family circumstance deduction level per a taxpayer’s dependent is VND 3.6 million/month.
Recently, based on the fluctuation of the consumer price index (CPI) in reality, the National Assembly Standing Committee has considered to pass resolution deduction adjustment, whereby:
- Taxpayer’s personal deduction level will be VND 11 million/month (equivalent to VND 132 million/year).
- Family circumstance deduction level per a taxpayer’s dependent will be VND 4.4 million/month.
The Resolution is set to take effect on July 1, 2020, applying from the tax term of 2020. Tax amounts already paid at the current personal and family circumstance deduction level will be re-determined at the new level stipulated in the Resolution when carrying out the 2020 PIT finalization procedures.
The adjustment of personal and family circumstance deduction level will reduce difficulties for taxpayers in the context of rising prices and inflation compared to the time of issuing the previous deduction (in 2013). The payable tax amount will be reduced for all taxpayers from the tax finalization period in 2020, which creates incentives for labor, at the same time, stimulates the increase of household spending, increases social consumption, promotes economic growth after the Covid-19 pandemic.