On the morning of 10/12, the National Assembly voted to approve the amended Personal Income Tax Law, with over 92% of delegates in favor.
Under this law, the taxable revenue level for business households will be 500 million dong per year. This threshold also exempts business households from VAT and personal income tax when the flat-rate tax collection method ceases and they switch to self-declaration and tax payment from 1/1/2026.
Currently, the taxable threshold applied to business households and individuals is 100 million dong per year. Thus, the taxable threshold will increase fivefold from next year. Previously, the government had proposed a taxable revenue threshold of 200 million dong for business households to the National Assembly, but many delegates deemed it too low, disadvantaging individuals and business households.
In his report explaining and receiving feedback, Minister of Finance Nguyen Van Thang stated that approximately 2,3 million business households are expected to be exempt from tax when the 500 million dong revenue threshold is applied, representing 90% of business households. According to tax authority estimates, the annual tax reduction will be about 11,800 billion dong.
 |
Minister of Finance Nguyen Van Thang presented the government's explanatory and feedback report on the morning of 10/12. *Photo: Dai bieu Nhan dan* |
The law also adds a method for calculating tax on profits (the difference between revenue and expenses) for business households. Specifically, households with annual revenue under 3 billion dong that can determine their input costs will be subject to a 15% tax rate on profits. This rate corresponds to the corporate income tax incentive for micro-enterprises with equivalent revenue.
Business households with annual revenue from 3 billion to 50 billion dong will be subject to a 17% tax rate. A 20% tax rate applies to households with annual revenue exceeding 50 billion dong.
If costs cannot be determined, individuals and business households will continue to pay tax based on a percentage of revenue, as currently, at a rate of 0,5-2% depending on the industry. However, they will be able to deduct the tax-exempt revenue portion before calculation. This means business households will not be taxed on their entire revenue from the first dong.
 |
Tax calculation methods for individuals and business households from 2026. *Illustration: Anh Tu* |
The National Assembly assigned the government to submit to the Standing Committee of the National Assembly adjustments to the personal income tax-exempt revenue threshold to align with the socio-economic situation in each period.
Vietnam currently has over 5,2 million business households. Last year, the total state budget revenue from business households and individuals was approximately 26,000 billion dong. This revenue reached over 17,000 billion dong in the first half of this year.
Anh Tu
