The Ministry of Finance has approved the "Scheme for transforming the model and method of tax management for business households upon abolition of presumptive tax," effective from January 1, 2026.
Accordingly, the ministry will apply a new tax management model replacing the current presumptive tax, classifying business households into three groups based on revenue. Households with large revenues, exceeding VND3 billion (nearly $114,000) per year for two consecutive years, will be subject to a personal income tax rate of 17%.
Group 1 includes individuals and business households with annual revenue not exceeding VND200 million (about $7,600). These households and individuals are completely exempt from value-added tax (VAT) and personal income tax (PIT). Instead of regular declarations, they only need to declare their revenue twice a year to determine their tax obligations. Additionally, this group is not required to open a separate bank account for business activities.
Group 2 applies to individuals and business households with annual revenue from over VND200 million (about $7,600) to under VND3 billion (nearly $114,000). For VAT, these entities will pay using the direct method, calculated as a percentage of revenue, or can voluntarily register for the deduction method if they meet required conditions. Similarly, PIT will also be calculated as a percentage of revenue depending on the industry, with quarterly tax declarations (four times a year) and tax finalization at the end of the year. Group 2 is required to open a separate bank account for business activities. Notably, if annual revenue exceeds 3 billion for two consecutive years, the individual will be reclassified into Group 3 from the following year.
Group 3 comprises individuals and business households recording annual revenue over VND3 billion. This group is mandatorily subject to the deduction method when calculating VAT. For personal income tax, business households in this group will calculate tax on their taxable income at a tax rate of 17%.
According to the Scheme's regulations, households with annual revenue exceeding VND50 billion (nearly $1.9 million) must file monthly declarations; those with revenue from VND3 billion to VND50 billion can file quarterly declarations and finalize tax at the end of the year. Simultaneously, the use of electronic invoices with codes or invoices generated from cash registers is mandatory for this group.