The Ministry of Finance has submitted appraisal documents to the Ministry of Justice regarding a draft Decree on tax management for business households and individual businesses.
The draft aims to clarify taxable subjects, calculation methods, and applicable tax rates to create a more transparent and convenient legal framework for managing these entities. A key highlight of the proposal is the updated regulation on Value-Added Tax (VAT) and Personal Income Tax (PIT).
According to the draft, starting in 2026, business households and individuals with an annual revenue of VND500 million ($19,000) or less will be exempt from VAT. For those with annual revenue exceeding VND500 million, the VAT will be calculated using the direct method based on revenue, with percentage rates as prescribed by the Law on Value-Added Tax No. 48/2024/QH15.
Article 5 of the draft Decree specifies that taxable revenue includes all proceeds from sales, processing fees, and service provision, including subsidies and surcharges, regardless of whether the payment has been collected. This figure excludes VAT but includes bonuses, sales incentives, promotions, commercial or payment discounts (provided in cash or non-cash form), and compensation for contract violations or other business-related activities.
Regarding PIT, business households and individuals with an annual revenue of VND500 million or less will also be exempt from payment. However, if revenue exceeds this threshold, the PIT will be determined based on taxable income, calculated as revenue minus valid expenses, multiplied by tiered tax rates of 15%, 17%, or 20%, depending on the revenue level.
Accordingly, business households with revenue between VND500 million and VND3 billion ($19,000 - 114,000) will be subject to a 15% tax rate; revenue from over 3 billion to VND50 billion ($1.9 million) will be taxed at 17%; and revenue exceeding VND50 billion will face a 20% rate.
However, the group with revenue between VND500 million and VND3 billion has the option to pay tax either based on taxable income or via a fixed percentage (ranging from 0.5% to 5% depending on the industry) applied to the portion of revenue exceeding VND500 million.
For real estate rental activities (excluding accommodation services), a flat 5% tax rate will apply to the revenue portion exceeding VND500 million, with no option to use the income-based calculation method.
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