Before 2026, business households with revenue of 100 million VND or less do not have to pay personal income tax. From January 1, 2026, business households with revenue of 200 million VND/year or more must pay tax, instead of the current threshold of 100 million VND. However, recently, the Ministry of Finance has proposed increasing tax-exempt revenue for business households to 500 Million VND. Below, Viet An Law will update this new regulation for business organizations and individuals to be proactive in declaring and fulfilling tax obligations.
Table of contents
According to Point b, Clause 1, Article 3 of the Law on Personal Income Tax 2007, amended by Clause 1, Article 2 of the Law amending Tax Laws 2014, business income of business individuals with revenue of 100 million VND /year or less is not subject to personal income tax.
At the same time, according to Clause 2, Article 4 of Circular 40/2021/TT-BTC, business households and business individuals with revenue from production and business activities in the calendar year of 100 million VND or less are not required to pay personal income tax according to the law on personal income tax.
However, according to Article 17 of the Law on Value-added Tax 2024:
“Article 17. Amendments to Clause 1 Article 3 of the Law on Personal Income Tax No. 04/2007/QH12, which is amended by Law No. 26/2012/QH13 and Law No. 71/2014/QH13
1. Income from business, including:
..a) Income from manufacture and sale of goods and services;
..b) Income from independent practice of individuals having licenses or practicing certificates as prescribed by law.
Income from business mentioned in this Clause does not include income of household businesses and individual businesses whose revenues are below the level specified in Clause 25 Article 5 of the Law on Value-added Tax.”
According to Clause 25, Article 5 of the Law on Value-added Tax 2024 stipulates:
“25. Goods and services of households and individuals producing and doing business with an annual revenue of 200 million VND or less; assets sold by organizations and individuals not doing business and not paying value added tax; national reserve goods sold by national reserve agencies; fees and charges according to the provisions of law on fees and charges.”
At the same time, Clause 2, Article 18 of the Law on Value-added Tax 2024 stipulates: “Regulations on revenues of household businesses and individual businesses not subject to VAT at Clause 25 Article 5 of this Law and Article 17 of this Law come into force from January 01, 2026”.
Recently, the Ministry of Finance has issued Official Letter No. 18491/BTC-CST reporting to Prime Minister Pham Minh Chinh and Deputy Prime Minister Ho Duc Phoc on receiving and explaining the review opinions and opinions of National Assembly Deputies on the Draft Law on Personal Income Tax (amended). One of the important contents mentioned in the Official Letter is the proposal on tax for business households and individuals.
Pursuant to Official Dispatch 18491/BTC-CST of 2025 as follows:
“Regarding the tax-exempt revenue level: The Ministry of Finance proposes to adjust from 200 million VND/year to 500 million VND/year. At the same time, this 500 million VND/year level is also the level that can be deducted before paying tax according to the rate on revenue.”
As enacted and passed on December 10, 2025, the National Assembly passed the amended Law on Personal Income Tax in 2025, whereby, from January 1, 2026, the tax-free turnover of business households and individuals has been adjusted from 200 million VND/year to 500 million VND/year and this rate is deducted before calculating tax at the rate on revenue. At the same time, the corresponding non-VAT turnover is adjusted to 500 million.
With an estimated figure of more than 2.54 million regular business households by October 2025, if this revenue level is applied, it is expected that about 2.3 million business households will not have to pay tax (accounting for about 90% of the total of more than 2.54 million business households).
Increasing tax-exempt revenue for business households to 500 million VND
Along with the proposal to increase the tax-exempt revenue of business households from 200 to 500 million VND, the Ministry of Finance proposed to supplement the regulation on applying tax calculation based on income (revenue – expenses) for business households and individuals with revenue from over 500 million VND/year to 3 billion VND/year to ensure tax collection in accordance with the nature of personal income tax and apply the tax rate of 15% as for enterprises with revenue under 3 billion VND/year as prescribed in the Law on Corporate Income Tax No. 67/2025/QH15.
Accordingly, all households and individuals doing business must pay taxes based on actual income. If they have little income, they must pay less. If they have no income, they do not have to pay taxes.
Therefore, the tax-exempt revenue will not have much impact on tax-paying households and individuals. In case the business households and individuals cannot determine the costs, they will have to pay tax at a rate on the revenue, depending on the industry, for the revenue over 500 million VND.
In addition, to ensure consistency in the level of revenue not subject to personal income tax, in the draft law amending the Law on Value-added Tax No. 48/2024/QH15, the Ministry of Finance proposed to increase the level of tax-exempt revenue of business households and individuals from 200 million VND/year to 500 million VND/year.
Although not subject to personal income tax, business households are still responsible for accurately and honestly declaring taxes and submitting dossiers on time. Accordingly, tax declaration and submission are carried out according to the instructions in Articles 11 and 13 of Circular No. 40/2021/TT-BTC.
Commonly used declaration forms for business households are specified in the Appendix issued with Circular 40/2021/TT-BTC, including:
Business households and individuals need to pay attention to fully, accurately and honestly declare the above declarations.
Business households with turnover below the personal income tax threshold will declare tax twice a year (beginning/mid-year and end of year) to determine tax obligations.
According to Article 10 of the Law on Personal Income Tax 2007, amended in 2014, Circular 40/2021/TT-BTC, taxable revenue for personal income tax for business households and business individuals is the revenue including tax (in case of taxable cases) of all sales, processing fees, commissions, and service provision fees arising in the tax period from production and business activities of goods and services, including:
If this revenue is below the tax threshold, the business household will not have to pay personal income tax.
Methods for determining taxable personal income revenue for business households
Previously, business households could pay taxes by declaration method and lump sum method. However, the lump sum method also revealed many disadvantages.
On May 4, 2025, the Politburo issued Resolution 68-NQ/TW on private economic development, in which one of the proposed solutions is to “Eliminate the lump-sum tax form for business households by 2026 at the latest”. In order to implement Resolution 68-NQ/TW, Clause 6, Article 10 of Resolution 198/2025/QH15 stipulates as follows: “…6. Business households and business individuals shall not apply the lump-sum tax method from January 1, 2026. Business households and business individuals shall pay taxes according to the law on tax administration.”
Thus, from January 1, 2025, the lump-sum tax regime for business households will be officially abolished. Business households and business individuals will pay taxes according to the declaration method.
Above is the updated new regulation on increasing tax-exempt revenue for business households to 500 million VND. If you have any related questions or need advice on tax and accounting, please contact Tax Agent – Viet An Law for the best advice and support!
