Key Points on Family Dependent Deductions for Personal Income Tax and Retention of Dependent Records in 2025
To prepare for the 2025 PIT finalization, VINA BOOKKEEPING would like to summarize the key points regarding family dependent deductions for employees, as well as the documentation that income-paying entities need to collect and retain, as follows
1. Timing for Claiming Dependent Deductions in Payroll and Personal Income Tax Calculation
– For monthly/quarterly payroll and tax filing: Dependent deductions can only be applied from the date the tax authority has successfully issued the dependent registration code or approved the dependent registration.
– For annual tax finalization: Dependent deductions can be applied if registration has been completed successfully and on time:
- Parents, spouse and children: Registration must be completed before submitting the annual tax finalization documents.
- Other dependents without support, directly maintained by the taxpayer: Registration deadline is December 31 of the tax year.
2. Documentation the Company Needs to Collect and Retain
– Authorization document (Form 41/UQ-ĐKT) according to Circular 86/2024/TT-BTC (attached form)
– Documentation proving dependents in accordance with Circular 79/2022/TT-BTC, including specific cases such as:
a. Children under 18 years old:
- Copy of Birth Certificate and Citizen ID (CCCD).
b. Children aged 18 or older with disabilities:
- Copy of Birth Certificate and Citizen ID (CCCD).
- Copy of Disability Certificate as prescribed by law.
c. Children aged 18 or older who are studying:
- Copy of Birth Certificate and Citizen ID (CCCD).
- Copy of documents proving current enrollment, such as student ID, school confirmation, or admission notice.
d. Parents:
- Copy of Citizen ID (CCCD).
- Legal documents proving the relationship between the dependent and the taxpayer, such as a copy of Residence Information Confirmation, Notification of Personal Identification Number in the National Population Database, or other documents issued by the Police Authority, Birth Certificate, or Recognition Decision.
- If still of working age: Disability certificate proving inability to work.
e. Other cases:
- Follow the provisions of Circular 79/2022/TT-BTC.
3. Record Retention and Risks of Incorrect or Incomplete Dependent Deductions
– The income-paying organization is responsible for properly retaining all dependent documentation and presenting it during tax inspections or audits.
– If deductions are claimed for ineligible dependents or if documentation is incomplete or lost, the company may face the following issues:
- PIT may be retroactively assessed if the conditions for family dependent deductions are not met.
- Penalty of 20% on the incorrectly declared tax amount.
- Late payment interest at 0.03% per day on the retroactively assessed tax.
- Penalty for incorrect PIT declaration (average amount: VND 6.5 million per violation).
4. Other Notes
– In practice, during tax inspections or audits, the tax authority tends not to accept deductions for dependents classified as “other individuals without support, directly maintained by the taxpayer” (e.g., grandparents, grandchildren, aunts, uncles) if it cannot be proven that these individuals meet the condition of having “no other means of support.” Therefore, the company should pay special attention to clearly explaining this to employees when they choose to apply deductions for such cases.
– Dependents under categories b, c, d, and e in section 2 must have no income or an average monthly income from all sources not exceeding VND 1,000,000. Although current regulations do not require employees to provide a written declaration or local confirmation of this, in practice, the company should request employees to submit a written self-declaration (form attached) to serve as a basis for claiming deductions and to demonstrate compliance to the tax authorities during inspections.
