The Ministry of Finance announced this on 25/11 as it finalizes the draft amended Law on Personal Income Tax.

The ministry plans to report to the Government on applying profit-based taxation for business households. This method calculates tax based on the difference between revenue and expenses.

Specifically, households with annual revenue below 3 billion VND that can determine their input costs would face a 15% tax rate on their profit. This rate aligns with corporate income tax incentives for companies with similar revenue.

For those unable to determine costs, individuals and business households would continue to pay tax as a percentage of revenue, ranging from 0.5-2% depending on their sector. However, they would be able to deduct the amount below the non-taxable threshold before calculation. This means business households would not be taxed on their entire revenue from the first dong, as is currently the case.

This profit-based tax calculation could be applied universally, a shift from the Ministry of Finance's previous proposal in October. That earlier scheme, detailed in the plan for transforming the tax management model and methods for business households, had suggested a group-based approach.

Under the previous scheme, the ministry divided business households into three groups for management. Only business households with revenue above 3 billion VND would be subject to profit-based taxation, at a 17% tax rate. Other households with annual revenue below 3 billion VND would continue to pay lump-sum tax as currently.

Currently, the tax threshold for business households and individuals is 100 million VND per year, projected to increase to 200 million VND from next year. The Ministry of Finance stated it would research further increases to this revenue threshold to align with reality and ensure fairness for taxpayers.

As of late 2024, the country had approximately 3.6 million business households and individuals. Of these, 2.2 million were stable operating households, including both lump-sum and declaration-based taxpayers. The number of households with revenue above the tax threshold (over 100 million VND per year) was 1.3 million, accounting for 59% of the total.

Last year, total state budget revenue from business households and individuals was approximately 26 trillion VND. For the first half of this year, this revenue is estimated to exceed 17 trillion VND.

By Phuong Dung