Currently, individual business owners with annual revenue exceeding 100 million VND must pay personal income tax based on a percentage of their revenue. Revenue includes all money from sales, processing, commissions, and service provision generated during the tax period. If revenue cannot be determined, the tax authority will assess it according to regulations.

However, starting 1/1/2026, following the policy of eliminating lump-sum taxes, the Ministry of Finance proposes adding a tax calculation method based on income instead of revenue. Accordingly, resident individuals with annual revenue above a threshold set by the Government will have their tax liability determined by multiplying their taxable income by 17%.

Taxable income is understood as revenue from the sale of goods and services, minus expenses related to production and business activities during the period. This calculation method is similar to the regulations in the Corporate Income Tax Law, which applies a 17% tax rate to small and medium-sized enterprises with annual revenue from 3 to 50 billion VND.

For individual business owners with annual revenue below the tax threshold, the current method of calculating tax based on a percentage of revenue will remain.

Vietnam currently has about 5.2 million business households, contributing over 24% to the GDP and considered the "backbone" of many industries and sectors, from agriculture and industry to commerce and services. Last year, tax revenue from households and individual businesses reached 25,953 billion VND, equal to 120% compared to 2023.

In addition to the calculation method, the Ministry of Finance also proposes a 5% tax rate on certain income from providing digital content products and services related to entertainment, video games, digital movies, digital photos, digital music, and digital advertising.

According to Law No. 71/2014, this individual income is currently subject to a 1% rate like some other types of income. However, according to the ministry, these are special types of income. Therefore, the Law needs to stipulate an appropriate tax rate to ensure equality and consistency, while promoting the regulatory and redistributive role of the policy.

Phuong Dung