According to the latest information, the Standing Committee of the National Assembly regulates the adjustment on family circumstance deductions for PIT from 9 million VND/month to 11 million VND/month. This information which is of great interest to everyone, especially all persons who are subject to PIT, officially adopted in Resolution 954/2020/UBTVQH14 on June 2, 2020.
1. Increase the family circumstance deductions for PIT to 11 million VND/month from July 1, 2020
Specifically, the Resolution has adjusted the level of family circumstances deductions stipulated in the Law on PIT as follows:
Thus, the deduction level for taxpayers increased to VND 2 million VND/ month and the deduction level for each dependent increased by VND 0.8 million VND/ month compared to the previous regulations.
For cases in which taxpayers have temporarily paid taxes according to family circumstances deductions determined in Clause 1, Article 19 of the Law on PIT 2007 (amended in 2012) shall re-determine their payable PIT amounts according to family circumstances deductions specified in Resolution 954/2020/UBTVQH14 when finalizing the PIT in 2020.
This Resolution takes effect on July 1, 2020 and applies from the tax period 2020.
2. The benefits of the adjustment on family circumstance deductions for PIT
Firstly, for the purpose of ensuring the timely implementation of the provisions in Clause 4, Article 1 of the Law on Personal Income Tax No. 26/2012/QH12, which stipulates: “In case the consumer price index (CPI) fluctuates more than 20% compared to the time when the Law takes effect or the time of adjusting the family circumstances deductions, the Government submits to the Standing Committee of the National Assembly for the adjustment of family circumstances deductions prescribed in this Clause are suitable to the price fluctuations for the subsequent tax period.”
Since the current allowance for family circumstances deductions are applied from July 1, 2013 to the end of 2019, the consumer price index (CPI) has increased by 23.2%. Therefore, the adjustment of family circumstances deductions for taxpayers and their dependents in this difficult period is equivalent to the increase of the CPI, in accordance with the provisions of the Law on PIT.
Secondly, adjusting the family circumstances deductions according to the Government’s regulations will ensure the actual income for taxpayers and their living standards will also increase. If this adjustment is applied, the tax liability of those who pay PIT is reduced. In particular, taxpayers with lower incomes will get more benefits, contributing to a reasonable adjustment of income, implementing social equality.
Thirdly, to ensure the incentive policies in a fair and reasonable manner, contributing to improving the living standards of taxpayers and encouraging employees. In addition, it also aims to stimulate the increase in household spending and social consumption, contributing to promoting economic growth; especially in the difficult period due to the adverse impacts of the Covid-19.
The above article is the latest information on the adjustment on family circumstance deductions for PIT, specified in Resolution 954/2020/UBTVQH14 issued by the Standing Committee of the National Assembly. For further information, kindly contact VNC via Website www.vnc-os.com – Hotline (+84) 902 595 171 – (+84) 8 88 77 66 00 for direct advice and support.