Specific guidance on reduction for dependents

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Each dependent can only be deducted once per taxpayer in the tax year. Photo: TL.

The deadline for submission of personal income tax finalization reports in 2021 is approaching, so the regulations on family circumstance-based deductions for dependents are of great interest to many taxpayers, such as the dependents eligible for deductions in 2021, conditions for deduction for dependents, deduction levels, application for dependents and notes when calculating deductions for dependents.

Therefore, the Hanoi Tax Department has just issued guidelines related to the latest regulations on family circumstance-based deductions for dependents.

Accordingly, the reduction for dependents who are supported by the taxpayer is calculated from the month in which the support is provided according to the guidance in Circular 111/2013 and Circular 92/2015 of the Ministry of Finance.

Specifically, the dependent has been registered and has full documents proving that the dependent is eligible for family circumstance-based deduction in 2021, even if the dependent has not yet received a tax identification code from the tax authority.

If a taxpayer registers for family circumstance-based reduction for dependents who have no income or whose average monthly income in the year from all income sources does not exceed VND1 million, the taxpayer must be responsible for the accuracy of the dependent’s information.

For individuals who are citizens of countries and territories that have signed an agreement with Vietnam on avoidance of double taxation and prevention of tax evasion for taxes on income and are individuals living in Vietnam, the family circumstance-based deduction for dependents is calculated according to the number of months to determine the personal income tax liability to be declared in Vietnam.

If the taxpayer registers for deduction of dependents after the actual time of arising the nurturing obligation, the personal income tax finalization shall be recalculated according to the actual time of the nurturing obligation.

If the taxpayer has not yet calculated the family circumstance-based deduction for dependents in the tax year, the deduction shall be calculated from the month in which the nurturing obligation arises when the taxpayer authorizes the tax finalization and has fully declared the dependent’s information to the income payer, the income payer shall declare it in appendix form 05-3/BK-QTT-TNCN attached to Circular 80/2021 /TT-BTC of the Ministry of Finance and calculate the deduction for dependents to taxpayers.

In case the taxpayer has a duty to take care of other dependents (such as brothers, sisters, siblings; grandparents, aunts, etc.), the time limit for applying for deductions is no later than December 31, 2021, if the taxpayer registers for family circumstance-based reduction beyond the above time limit, the taxpayer will not be entitled to a deduction for those dependents for the year 2021.

Hanoi Tax Department instructs that each dependent can only be deducted once per taxpayer in the tax year. In case many taxpayers have the same dependents, the taxpayers themselves agree to register for a family circumstance-based reduction in one taxpayer.

The deduction level for each dependent is VND4.4 million/month (VND52.8 million/year).

Hanoi Tax Department also noted, point i, Clause 1, Article 9 of Circular 111/2013/TT-BTC of the Ministry of Finance: taxpayers only have to register and submit proof for each dependent only once during the period of enjoying the deduction. In case the taxpayer changes the workplace or business place, the registration and submission of documents proving the dependents is the same as in the case of the first registration of dependents.

Hanoi Tax Department gives instructions on tax exemption and tax reduction VCN – Hanoi Tax Department has given instructions to taxpayers about tax exemption and tax reduction policies ...

Thus, if a taxpayer works at an organization and registered family circumstance-based reduction for dependents at the tax agency, when making personal income tax finalization, the personal income tax finalization is done by the organization, the taxpayer does not need to re-register for family circumstance-based deductions for dependents.