As part of the feedback on the draft amendment to the PIT Law, the Vietnam National Television has suggested that the drafting agency include party membership fees and trade union dues in the list of deductible expenses when calculating PIT.

The rationale is that these are mandatory monthly contributions imposed on employees. Including them as deductible items would better reflect actual taxable income and contribute to fairness in accounting for compulsory worker expenses.

Meanwhile, several organizations and individuals have also expressed the desire to raise the deduction threshold for retirement insurance contributions before PIT is calculated.

The American Chamber of Commerce in Vietnam has proposed maintaining the current deduction for retirement fund contributions and expanding it to include funds established outside Vietnam, provided they meet the requirements of the host country.

The chamber further recommended increasing the deduction cap from VND1 million/month to VND3 million/month for contributions to voluntary pension funds, supplementary voluntary pension plans, or purchases of voluntary pension or life insurance. This would more accurately reflect current living standards and encourage workers to participate in such plans.

According to the association, this proposed level is consistent with the current regulations on deductions for contributions to voluntary pension funds and life insurance when calculating corporate income tax as stipulated in Article 2 of Decree 146/2017/ND-CP.

Deloitte Vietnam Tax Consulting agrees with adding more deductions related to contributions to supplementary pension insurance under the Social Insurance Law, voluntary pension insurance purchases, and life insurance.

However, the company noted that the deduction mechanism still has some shortcomings, notably the exclusion of contributions to voluntary pension funds. In essence, voluntary pension funds also aim to ensure social security, similar to supplementary pension insurance and voluntary pension insurance. 

The current deduction mechanism for supplementary voluntary pension funds, voluntary pension insurance, and life insurance is still only applied to funds established in accordance with the guidance of the Ministry of Finance.

For foreign experts transferred to work in Vietnam, individuals and their parent companies abroad typically continue contributions to voluntary pension funds and life insurance established abroad.

The current regulations, which limit funds to those established in Vietnam, indirectly reduce the benefits for foreign experts, even though these insurance forms are essentially intended to ensure social welfare for workers.

"The current deduction level for contributions (VND1 million per month) is no longer suitable for the current economic and social situation, making this policy less attractive to encourage workers and businesses to participate," Deloitte Vietnam assessed.

Nguyen Le