Status of family circumstance-based deduction policy for personal income tax in Vietnam

Abstract

Personal income tax on salaries and wages makes up a large proportion of the total personal income tax revenue in Vietnam. A resident taxpayer will be allowed the family circumstance-based deduction to decrease his personal income tax. Since 2020, the tax deduction has raised compared to
the previous regulation. The increased bigger deduction amounts ushered in by the policy have been particularly beneficial to lower-income taxpayers. By using the secondary data collected in the reports of Vietnam General Department of Taxation and Vietnam Ministry of Finance, this article analyzes 
the family circumstance-based deduction regulations, the results show that: the proportion of family circumstance-based deduction compared to the amount of average salary per capita are relatively high in the region; the basis of deduction is incomplete. This paper generates recommendations to
aim to finalize the personal income tax deduction policy in Vietnam.