From 1/1/2026, the lump-sum tax method will be abolished, requiring over 5 million business households and individuals to transition to a self-declaration tax system. Le Thi Duyen Hai, Deputy Secretary General of the Tax Consulting Association, recommends seven preparatory steps for business households and individuals making this change.
Step 1: Determine business group and scale
Individuals and business households need to review their actual revenue for 2025 and projected revenue for 2026 to determine their applicable group. This classification will dictate the tax calculation method, accounting system, and software solutions they will use when switching to self-declaration.
Tax authorities plan to categorize business households into four groups based on annual revenue:
- Group 1: Households with revenue under 500 million VND per year – the new tax threshold effective from 2026.
- Group 2: Households with revenue from 500 million VND to under 3 billion VND per year.
- Group 3: Households with annual revenue from 3 billion VND to under 50 billion VND.
- Group 4: Households with revenue over 50 billion VND.
The following table compares the four projected business household groups under the new tax management system from 1/1/2026:
| Criteria | Under 500 million VND (Group 1) | From 500 million VND to under 3 billion VND (Group 2) | From 3 billion VND to under 50 billion VND (Group 3) | Over 50 billion VND (Group 4) |
| VAT | Not subject to tax | Revenue (x) industry VAT rate | ||
| Personal Income Tax (PIT) | Fully exempt | Choose calculation method: - Method 1: (Revenue - 500 million VND) x industry PIT rate - Method 2: (Revenue - expenses) x 15% | (Revenue - expenses) x 17% | (Revenue - expenses) x 20% |
| VAT Declaration | No declaration | Quarterly | Monthly | |
| PIT Declaration | Quarterly or annual settlement (31/1 next year) | |||
| E-invoicing | Not mandatory | Mandatory (if revenue > one billion VND) | Mandatory | Mandatory |
| Accounting Books | Mandatory | |||
For households with revenue exceeding 500 million VND, tax declaration follows two scenarios. In the first scenario, if revenue surpasses this threshold by year-end, they will declare the actual amount and pay any arising liabilities by 31/1/2027. In the second scenario, if revenue exceeds 500 million VND within the first half of the year, the declaration deadline will be 30/6 or 30/7/2026, similar to how new businesses are handled.
Households with revenue from 500 million VND to under 3 billion VND can still opt for the tax calculation method based on revenue. They are eligible for a deduction of 500 million VND (the tax-exempt revenue threshold) before tax calculation.
Households recording revenue of 3 billion VND or more can only choose to calculate PIT based on profit (revenue minus expenses). In December, they should prepare documents related to purchased goods and business expenses, such as rent and labor costs.
For new businesses starting in 2026, the declaration period is flexible. If operations begin early in the year, households declare by July 2026; if they start later in the year, the deadline is extended to January 2027.
A grocery store operated by a business household. Photo: Hoang Anh |
A grocery store operated by a business household. Photo: Hoang Anh
Step 2: Inventory check at the time of transition
For groups with revenue of 3 billion VND or more (where tax is calculated on profit), inventory is crucial for determining input costs.
For groups with lower revenue, where tax is calculated on total revenue, inventory does not directly determine the tax payable. However, business households still need to conduct an inventory check to prove the legality of goods sold.
A representative from the Tax Consulting Association notes that inventory without input invoices is still permitted to be issued with sales invoices at the time of transition. Concurrently, business households must declare VAT and personal income tax as regulated.
Step 3: Register for e-invoicing
Business households with projected revenue of one billion VND or more are mandated to use e-invoicing. Experts recommend that all households, including those currently using the lump-sum tax method, register for e-invoicing early to familiarize themselves with the process before the regulation officially takes effect.
Step 4: Prepare accounting books
Households subject to tax (with revenue of 500 million VND or more) must establish an accounting system to record revenue and expenses transparently from the start of the new tax period.
Step 5: Amend business and tax registration information
Business households need to review and update their tax and business registration information with the tax authorities or through the National Public Service Portal.
According to experts, business households that do not register their operations risk administrative penalties. They also face the risk of being taxed at the progressive rate for wages and salaries, which can be as high as 35%, instead of the lower rate applicable to business households.
For example, a tutor receiving remuneration would have their income classified as wages, subject to a progressive tax of up to 35%. However, if they register as a business household, they would benefit from the specific tax mechanism for business individuals.
"For substantial income, paying tax as a business is often more advantageous than under the progressive tax schedule", Le Thi Duyen Hai stated.
Step 6: Register a separate bank account
Individuals and business households must open or designate a separate bank account for business operations and declare it to the tax authorities from early 2026. This account can be in the name of the household owner or members listed on the business license. This step needs to be completed in December.
Experts warn that mixing personal and business expenses in the same account poses two risks: first, the tax authority may estimate the household's revenue; second, they could be taxed on the entire cash flow into the account, at a rate similar to income from wages, or even be deemed to have undeclared income with signs of tax evasion.
Step 7: Declare taxes for business activities
Business households need to declare taxes using the eTax Mobile application. To register for e-invoicing and declare taxes via eTax Mobile, the household owner must standardize their tax code with their personal identification. They are also required to use a digital signature to issue e-invoices.
For households with revenue under 50 billion VND, the first declaration period will be Q1 2026, with the declaration due by 30/4/2026. Even though the declaration deadline is later, business households must prepare accounting books and invoices from 1/1/2026.
"January-April 2026 is a crucial period for business households to review documents, revenue, and expenses. This is when they can make adjustments to ensure declared tax figures align with actual revenue", Hai explained.
Phuong Dung
