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Many experts have suggested raising the tax-exemption threshold for household businesses to 1–2 billion dong, potentially differentiated by industry. However, some warn that changing the policy at this stage may be premature.
From January 1, 2026, the exemption threshold for personal income tax, value-added tax for individuals, and household businesses is set at 500 million dong per year. In a draft Law amending several tax laws (personal income tax, value-added tax, corporate income tax, and excise tax), the Ministry of Finance proposes removing the fixed requirement in the law and allowing the Government to set the threshold.
Mr. Le Van Tuan, Director of Keytas Tax Accounting Company, said that giving the Government authority to determine tax-exemption thresholds in stages would improve administrative flexibility and enable timely support for people, households, and enterprises. He added that the global economic and political environment involves many risks, requiring domestic macroeconomic policy to adapt rather than remain “locked in” at a fixed threshold for a long period.
On the specific level, Mr. Tuan proposed raising the threshold to 1 billion dong per year instead of 500 million, aiming to better match current price levels, costs, and living standards. He cited that 90–95% of startups incur losses and exit the market within three years, and noted that household businesses must still bear tax obligations even when not profitable under revenue-based tax rates.
Dr. Nguyen Quoc Viet of Vietnam National University, Hanoi, said that international experience shows China and Singapore apply tax-exemption thresholds around eight to nine times average per-capita income. With Vietnam’s GDP per capita at about 125 million dong per year, he estimated the threshold could be around 1 billion dong. He also emphasized that any adjustment should be based on data, scenarios, and a full impact assessment, while ensuring fairness between household businesses and wage earners and addressing the risk of arbitrage if enterprises shift to household businesses or split operations to benefit from the exemption.
Chairperson of the Vietnam Tax Advisory Association Nguyen Thi Cuc calculated that with annual revenue of 1 billion dong, average profit at about 16% would equal roughly 13.3 million dong per month. She said this corresponds to the income of a wage earner under the 15.5 million dong personal deduction.
The Economic-Financial Committee also believes the tax threshold for household businesses should be at least 2 billion dong to ensure “humanity” and practicality. Phan Van Mai, Head of the Economic-Financial Committee, said during the Standing Committee session on April 20 that tax policy should be substantive and avoid small, piecemeal adjustments that do not fully reflect the intent to support the private sector.
Experts also cautioned against a “one-size-fits-all” approach. Nguyen Quang Huy, CEO of the Department of Finance - Banking at Nguyen Trai University, said the policy should set tax thresholds by industry group and consider regional differences, since living costs vary and thresholds would therefore differ.
Ms. Le Yen, Chairwoman of Hanoi Tax Consulting — HanoiTax, similarly said that in the long term, authorities should study sector-based tax thresholds rather than applying a uniform threshold across all activities. She pointed out that profit margins differ significantly across sectors—for example, trading typically has lower profit margins than services or manufacturing—so using the same revenue threshold would not reflect actual taxable income. She added that later, authorities may consider higher thresholds for commerce and different levels for other sectors.
Dr. Nguyen Ngoc Tu of Business and Technology University said it is too early to revise the revenue threshold, noting that tax policy typically requires 3–5 years of implementation and assessment before adjustments. He also said that about 90% of household businesses do not pay taxes under the 500 million threshold applied since the start of this year. If the threshold is raised further, he warned it could create unfairness between household businesses and enterprises and reduce incentives to shift to a corporate model.
Ms. Le Yen also argued against adjusting the 500 million exemption threshold at this time, saying the regulation has only been in effect for about three months. “Adjusting too soon could make it harder for household businesses to plan and for authorities to assess effectiveness,” she said.
HanoiTax’s chair proposed maintaining the exemption threshold at 500 million dong for at least two years, after which authorities could adjust based on economic fluctuations, inflation, and the consumer price index.
Mr. Nguyen Ngoc Tu further noted that transferring the mandate to the Government could reduce policy predictability. He said that a rigid rule in law helps create stability and trust for household businesses, and that policy changes made too quickly could reduce the law’s effectiveness and erode business confidence, particularly among small traders.
According to the Ministry of Finance, in 2022–2025 Vietnam had 3–4 million household businesses, of which more than 2 million filed taxes consistently, contributing about 2% of total state revenue. Last year, tax revenue from this sector reached 32,840 billion dong, up 37.5% year-on-year.
The Government is expected to present the draft Law to the National Assembly today.
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