Government tax agencies detail strategies for comprehensive and comprehensive taxation policy
In a significant move towards fostering private sector growth and ensuring fairer taxation, the Vietnamese government has unveiled a proposal to overhaul the tax structure and implementation plan for business households. The draft Law on Tax Administration, set to be submitted to the National Assembly in October, aims to abolish the presumptive tax method for business households starting from January 1, 2026 [1].
Under this new proposal, business households with annual revenue below a raised threshold, proposed to be up to $16,000 (approx. VND 368 million), will be exempt from paying Value-Added Tax (VAT) and Personal Income Tax (PIT) [2]. This change effectively supports small business households by reducing their tax burden and encouraging compliance.
The current presumptive tax calculation method for business households will be abolished from 2026, shifting towards more accurate and potentially less burdensome tax assessment methods [2]. The threshold for exemption from VAT and PIT for business households is proposed to increase from $8,000 to $16,000 annual revenue, so those earning less than $16,000 annually will not be taxed under these categories.
The proposal also includes simplified and clear taxation policies to support small business households. All business households will have to fill in seven types of accounting books regardless of their revenue [1]. The Tax Department is considering a rise in the threshold for businesses not subject to VAT and personal income tax (PIT) of $8,000-16,000, meaning business households with annual revenue less than $16,000 will not have to pay tax [1].
The Vietnam Academy of Social Sciences (VASS) comments that changing the tax management policy for micro-enterprises requires a suitable implementation roadmap. The VASS believes that transitioning from lump-sum tax to tax declaration contributes to the transparency of the tax system and creates stronger conditions for business households to develop sustainably and integrate into the formal economy [1].
Mai Son, deputy director of the Tax Department, suggests simplifying the implementation process by classifying business households based on scale, location, and industry. Nguyen Thi Cuc, chair of the Vietnam Consultancy Tax Association, supports this approach, emphasizing that the current $8,000 threshold for business households' tax exemption is unreasonable, as it applies to revenue, not profit [1].
Nguyen Van Phung, a former director, suggests a flexible tax system for households with poorer records, allowing them to calculate taxes based on revenue. Selling directly to consumers, e-invoices must be used from cash registers for all groups [1]. The tax authority encourages groups 1 and 2 to use e-invoices, while groups 3 and 4 are required to use e-invoices with codes from the tax authority [1].
In summary, the proposal aims to abolish the presumptive tax on business households starting 2026, raise the tax exemption threshold for VAT and PIT to annual revenues under $16,000, and introduce simplified and clear taxation policies to support small business households. This framework reflects government efforts to stimulate the private sector through tax relief and improved tax administration compliance for small-scale business households in Vietnam.
[1] Nguyen, T. (2023). Draft Law on Tax Administration in Vietnam: A New Era for Small Businesses. Vietnam News. [2] Vietnam News Agency. (2023). New Tax Proposal Aims to Support Small Businesses. Vietnam News Agency.
The new tax proposal in Vietnam, aimed at small business households, plans to exempt those with annual revenue below $16,000 from paying Value-Added Tax (VAT) and Personal Income Tax (PIT), thus providing financial relief and incentivizing compliance.
This overhaul of the tax structure for business households is part of the Vietnamese government's strategy to boost the private sector and ensure fairer taxation, which aligns with their broader business objectives.
