At the government's regular press conference on 7/8, Deputy Minister of Finance Nguyen Duc Chi stated that during the drafting of the revised Personal Income Tax Law, experts and officials proposed various methods for determining household deductions, including a regional approach.
This approach was included in the ministry's draft in March, referencing regional minimum wages as a basis for calculating deductions.
However, according to Deputy Minister Chi, the ministry later assessed that regionally divided household deductions presented limitations and practical difficulties. Even within a single province or city, different areas have varying living costs and deduction requirements.
"In Ho Chi Minh City or Hanoi, wards in the city center have very high living costs, while rural communes are different," he explained.
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Deputy Minister of Finance Nguyen Duc Chi at the government press conference on the afternoon of 7/8. Photo: VGP |
Deputy Minister of Finance Nguyen Duc Chi at the government press conference on the afternoon of 7/8. Photo: VGP
Therefore, in the latest draft, the Ministry of Finance proposed two options for calculating household deductions: basing it on the consumer price index (CPI) as currently practiced, or on the growth rate of per capita income.
Mr. Chi stated that after extensive consultation, the majority of feedback "agreed with the second option," which bases deductions on per capita income. Under this proposal, the monthly deduction for taxpayers is expected to be 15.5 million VND, and 6.2 million VND for dependents.
The deputy minister added that the ministry will finalize the draft and report to the government and National Assembly. The revised Personal Income Tax Law is expected to be submitted to the National Assembly during its October session.
The current household deduction is 11 million VND for taxpayers and 4.4 million VND for each dependent, unchanged since July 2020. Individuals can deduct insurance, household allowances, and other benefits; the remaining amount is the taxable income. This level is considered outdated and doesn't reflect current living costs.
Previously, many suggested adjusting household deductions regionally. For example, Bac Giang province proposed that deductions should align with the actual living conditions of each region instead of a uniform national rate.
Others pointed out significant regional disparities in living costs, including factors like real estate prices, food, consumer goods, and services. Therefore, regionalizing household deductions would ensure fairness in tax policy and improve the lives of workers.
Personal income tax is the third-largest revenue source in the tax system, after value-added tax (VAT) and corporate income tax. Last year, total state budget revenue exceeded 2 quadrillion VND for the first time. Personal income tax revenue reached an estimated 189 trillion VND, a 20% increase from the previous year. This tax contributes over 9.3% of the total state budget revenue, up from 5.3% in 2011.
Phuong Dung
