Starting 1/6, approximately 37,000 households with annual revenue exceeding 1 billion VND in certain sectors (food and beverage, hospitality, retail, passenger transport, cosmetics, entertainment, etc.) must use electronic invoices through cash registers connected to the tax authorities. Instead of paying fixed-rate taxes, according to Mai Son, Deputy Director General of the Taxation Department (Ministry of Finance), the tax rate will remain unchanged. The difference is that households will have to declare their actual revenue.
This shift will require household businesses to implement accounting practices such as keeping accounting records (revenue, expenses, cash funds, bank deposits, tax obligations). They will also have to issue and store invoices, receipts, and expenditure vouchers incurred during the period.
Furthermore, tax declarations will be made monthly or quarterly, instead of annually as with the fixed-rate system.
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Invoices printed from a cash register at a supermarket, 4/6. Photo: Phuong Dung |
Invoices printed from a cash register at a supermarket, 4/6. Photo: Phuong Dung
According to regulations, household businesses must still pay three types of taxes: license tax, personal income tax, and value-added tax (VAT).
The license tax is a mandatory fee that organizations, individuals, and household businesses must pay annually when producing or trading goods or services. This is a fixed annual amount, independent of the business's profit, and determined based on charter capital or revenue.
The following table outlines the annual license tax rates based on annual revenue:
| Annual Revenue | Annual License Tax |
| Over 500 million VND | 1,000,000 VND |
| From 300-500 million VND | 500,000 VND |
| From 100-300 million VND | 300,000 VND |
In addition, sellers will have to pay VAT and personal income tax if their annual revenue is from 100 million VND. The tax amount is calculated based on total revenue, VAT rates for goods and services, and personal income tax rates for each business activity.
For example, for individuals distributing or supplying goods, the tax payable = revenue * (1% VAT + 0.5% personal income tax). Household businesses in the food and beverage sector will be subject to a 4.5% tax rate, including both VAT and personal income tax.
The table below details VAT and personal income tax rates for various sectors:
| Business Sectors | Value-Added Tax (VAT) | Personal Income Tax |
| Wholesale and retail of goods | 1% | 0.5% |
| Food and beverage | 3% | 1.5% |
| Accommodation: Motels, hotels | 5% | 2% |
| Services: Karaoke, tailoring, laundry, haircuts, shampooing, etc. | 5% | 2% |
| Transportation | 3% | 1.5% |
| Rental of houses, land, shops, warehouses | 5% | 5% |
For instance, before 1/6, a restaurant might have had a fixed-rate revenue of 1 billion VND per year, resulting in an annual tax payment of 45 million VND, equivalent to approximately 3.75 million VND per month (VAT and personal income tax).
After 1/6, their revenue will be recorded based on actual sales through invoices issued from cash registers, and taxes will be declared and paid monthly or quarterly. For example, if their actual monthly sales are 200 million VND, the corresponding tax will be 200 million VND × 4.5% = 9 million VND. If their monthly sales are only around 80 million VND, the tax amount will be 3.6 million VND. These amounts do not include the license tax.
According to data from the General Statistics Office (Ministry of Finance), by the end of 2024, there were 3.6 million household businesses under tax management, contributing 25,953 billion VND to the state budget. Of these, nearly two million households paid fixed-rate taxes, averaging 700,000 VND per month. Vietnam plans to abolish the fixed-rate tax system for household businesses by 2026, as per Resolution 68 of the Politburo.
In recent years, fixed-rate taxation has been applied as a supportive measure, suitable for the management conditions and compliance capacity of household businesses. However, according to the Taxation Department, this method has shown limitations and has not provided the necessary incentives for household businesses to expand. Moreover, a developing economy requires greater transparency, fairness, and modernization in tax administration.
"The abolishment of fixed-rate taxation is a revolutionary turning point in tax management for household businesses," said Son, adding that this transition changes not only the calculation method but also the management mindset and the way of working with taxpayers.
However, in reality, many household businesses accustomed to fixed-rate taxation have not focused on record-keeping and transparent revenue reporting. With the abolishment of fixed-rate taxes, they are forced to implement accounting and invoicing practices similar to small and micro-enterprises.
This can be complicated for many household businesses, especially those with annual revenue below 1 billion VND, as they often lack management expertise. Therefore, experts suggest that authorities should adjust tax policies and administrative procedures to facilitate taxpayers and ease their transition.
To support household businesses in complying with the new regulations, Nguyen Van Than, Chairman of the Vietnam Association of Small and Medium Enterprises, proposes that the government provide a free accounting application (app). This app would help household businesses easily declare input, output, and pay taxes, thereby reducing the burden on tax authorities in managing over 5 million household businesses.
He also suggests that the government should offer free training programs on business management, accounting, and digital transformation for household businesses.
From the management perspective, Nguyen Thi Thu, Head of the Tax Practice Department (Taxation Department), stated that the agency will review and revise tax regulations to gradually reduce the differences between household businesses and enterprises. The tax sector will review and provide feedback on amending the Law on Personal Income Tax so that household businesses can apply this tax calculation method similarly to corporate income tax.
The tax sector will also review and contribute to amending the annual revenue threshold for exemption from personal income tax and VAT. This adjustment aims to ensure that household businesses with revenue below a certain threshold continue to be tax-exempt, consistent with the increase in personal deductions when calculating personal income tax, thereby reducing the tax burden on small and micro households.
According to Thu, the tax authorities are also considering revising documents related to personal income tax and license tax exemptions and reductions to support individual businesses in transitioning to becoming enterprises. Additionally, they will review household business registration and tax declaration procedures to make them more convenient and automated, with the goal of reducing compliance costs by at least 30%.
The tax authorities are also increasing the application of information technology and digital transformation, organizing training programs on accounting, taxation, and financial management for household businesses, building a support network for individuals and small businesses, and providing assistance and addressing any difficulties faced by household businesses during the transition and operation.
Phuong Dung
