Vu Thu, 33, from Hanoi, said her mother has received monthly survivor benefits, or 50 percent of the base salary since her father passed away. In 2023, the base salary was VND1.8 million/month, so the benefit was under VND1 million, which allowed Thu to claim her mother as a dependent. 

However, on July 1, 2024, the base salary increased to VND2.34 million/month, and the benefit then rose to over VND1.1 million, so the mother was no longer eligible to be a dependent.

Thu said her mother is getting older and her healthcare costs are rising, while the VND1.1 million barely helps and Thu now has to pay more tax because she can’t claim her mother as a dependent.

“If the income threshold for dependent eligibility doesn’t change, then even increasing the dependent deduction for taxpayers won’t make things fair,” she said.

Many families with elderly parents face similar issues, as incomes above VND1 million per month disqualify them as dependents. This leaves salaried workers disadvantaged when calculating personal income tax (PIT).

The draft PIT Law (replacement) proposed by the Ministry of Finance (MOF) includes changes like adjusting dependent deductions, progressive tax rates, and tax exemptions or reductions.

However, specifics on revising the income threshold for dependents in such cases remain unclear.

The draft defines dependents as individuals the taxpayer is responsible for supporting, including minors, disabled children unable to work, adult children in university, college, vocational school, or professional training, spouses or parents unable to work, and others with no means of support directly cared for by the taxpayer.

The Ministry of Finance’s Circular 111/2013, guiding the PIT Law implementation, specifies that parents, in-laws, stepparents, or legal adoptive parents qualify as dependents if they meet conditions.

For those beyond working age, their average monthly income from all sources must not exceed VND1 million.

Taxpayers want new dependent income threshold

Nguyen Ngoc Tu, a lecturer at Hanoi University of Business and Technology, told VietNamNet that the VND1 million monthly income cap for dependents, set when the PIT Law took effect nearly 20 years ago, is outdated.

According to him, the CPI has more than doubled in the past 18 years, and GDP and average income per capita have increased 2.5 to 3 times. A calculation suggests the dependent income threshold should increase to VND3.5 million per month. Even this, he argued, is unrealistic and insufficient for support costs.

“The current dependent deduction is VND4.4 million per month, and the threshold may be raised to VND6.2 million. Thus, only those with incomes above VND6.2 million per month should be excluded as dependents; anything below should still qualify,” Tu proposed.

He added that dependents like students or elderly parents with chronic illnesses often incur costs higher than the taxpayer’s own expenses.

Therefore, when revising the PIT Law, the dependent income threshold should be raised to at least match the dependent deduction, as the current VND1 million cap is far too low.

Le Thi Thuy, CEO of Bach Khoa Consulting Services, agreed, suggesting the threshold be adjusted to reflect current living and medical costs, varying by urban or rural area. “The dependent income threshold should be at least VND5 million in cities and VND3 million in rural areas,” Thuy proposed.

Experts all agreed that when tax policy is amended, the state should ensure fairness and share responsibility with taxpayers by aligning income thresholds with real-life expenses. This would encourage public compliance and create a more equitable tax environment.

The finance ministry has designed changes to the new PIT Law, including the family circumstance deductions.

Nguyen Van Duoc, head of the policy committee at the HCM City Tax Consulting and Agency Association and CEO of Trong Tin Accounting and Tax Consulting, noted that among the two options proposed by the ministry, the second option, raising the personal deduction to VND15.5 million/month and the dependent deduction to VND6.2 million/month, is “more reasonable”.

He noted that the new tax calculation method not only relies on the consumer price index (CPI), but also other socio-economic factors to set family circumstance deductions, which is a more reasonable approach.

Tu also pointed out that the finance ministry had reformed the calculation method by considering income per capita growth and GDP growth rates. However, he suggested raising the taxation threshold to VND17-18 million instead of VND15.5 million.

Nguyen Le