Proposal to reduce family deductions for each region
Contributing opinions on the development of the draft Law on Personal Income Tax (replacement), many sectors and localities have proposed reducing family deductions by region to ensure fairness in tax policy.
The Ministry of Information and Communications (before consolidating) suggested: Proposing to build a regional resort to the region to conform to the current government's salary policy, which is stipulating the regional minimum wage (4 regions). The reason for the proposal, according to this ministry is to conform to the regulation of the regional minimum wage in Decree No. 74/2024/ND-CP of the Government, effective from July 1, 2024.
Sharing the same opinion, the People's Committee of Bac Giang province proposed: Regulations on the current family deduction level approach in the direction of leveling, regardless of region. However, this is not in accordance because current law stipulates the minimum monthly salary levels for 4 regions, while the family deduction level does not take into account the income level in each region as different.
Therefore, it is recommended to study and consider comprehensively and overall the regulation on family circumstances and deduction levels to suit practical living conditions in each region and region throughout the country. At the same time, the Ministry of Finance must soon submit to the competent authority to amend the Personal Income Tax Law (instead) because some of the current Law on Personal Income Tax is no longer suitable for the current developed economy and the 2024 Land Law has been in effect.
The document of the Government Portal also expressed the opinion of a citizen: Regulations on family deduction levels should be divided into regions (similar to 4 regions applied to the regional minimum wage). Currently, the cost of living in each region/locality has a huge difference, in which some important factors such as real estate prices (lease/buy), food, consumer goods, services, etc.
Dividing the family deduction levels by region will ensure fairness in tax policy as well as ensure the lives of working people. People also propose that the Government announce and adjust the annual or 2-year family deduction level each time, instead of based on the CPI fluctuations. This will ensure flexible tax policies, changing in accordance with changes in social life.
Regarding the above proposals, the Ministry of Finance said: The regulations on pre-tax deductions ensure the principle that individuals need to have a certain level of income to meet the essential needs of life such as: Eating, staying, traveling, studying, receiving medical examination and treatment..., therefore, income above this threshold must be taxed and only paid for the income above the threshold.
Determining the level of family circumstances is based on many factors, in which the regional minimum wage is only a reference base to determine the level of reducing family circumstances, however, the regional minimum wage is not only meaningful to compensate for price sliding but also the meaning of improving the lives of workers in accordance with the growth of the economy, distinguishing living standards and costs of workers in different regions. At the draft application for law formulation has raised this issue. Specific detail amendments and evaluation will be researched and proposed by the Ministry of Finance when the Law is included in the National Assembly's Law and Ordinance Program.
Regarding the consultation on the draft Law on Personal Income Tax (replacement), the Ministry of Finance of Information: “Agencies and organizations are sent to collect comments according to Official Letter No. 12738/BTC-CST including ministries and agencies attached to the Government, People's Committee (People's Committee) of provinces, cities, central Commission of Vietnam Fatherland Front, Vietnam Trade and Industry Federation on Suppress for the Building of the Law on Put and Instead of Put on the Dossier On the Government's electronic portal and the Ministry of Finance to collect widely opinions of the people.
The Ministry of Finance has received a total of 64 opinions (16/29 ministries and government -attached agencies; 42/63 localities; Central Committee of the Vietnam Fatherland Front and 6 other organizations and individuals), of which: 35 units agreed completely (9 ministries, branches and 25 other provinces and 1 organizations); Some other opinions basically agreed, participating in the structure and words in accordance with the provisions of the Law on Promulgation of Legal Documents; The remaining opinions were explained and absorbed by the Ministry of Finance. "
