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The Finance Ministry has proposed that the threshold for personal income tax and value-added tax (VAT) exemptions for household businesses be set by the Government, replacing the current fixed cap of 500 million dong per year. The proposal is included in the ministry’s appraisal dossier for amendments to some tax laws.
Under the ministry’s plan, the threshold for revenue not subject to personal income tax and VAT would be determined by the Government rather than being fixed in law. The ministry said the change is needed because domestic economic conditions have fluctuated since the regulation was issued late last year.
It cited that in the early months of this year, input costs increased, purchasing power declined, and household businesses’ operations faced difficulties. The ministry said studying adjustments to tax policy for household businesses is necessary to ensure the policy is “scientific, appropriate,” and aligned with taxpayers’ ability to comply.
The ministry added that adjusting the threshold for revenue not subject to tax aims to support small and medium-sized household businesses, helping them maintain operations—particularly in sectors with low profit margins and those affected by cost fluctuations.
Last year, the National Assembly approved raising the exempt revenue for personal income tax and the VAT value of individual businesses to 500 million dong per year.
According to Finance Ministry data, by the end of 2025 Vietnam had 3–4 million household businesses, of which more than 2 million filed taxes regularly.
Last year, tax revenue from households and individual businesses reached 32.84 trillion dong, up 37.5% year-on-year. For the 2022–2025 period, the ministry said the country had about 3–4 million household businesses, with more than 2 million filing regularly—amounting to about 2% of total state budget revenue.
Alongside the household business proposal, the Finance Ministry also suggested a threshold for exempting corporate income tax to support small and micro enterprises. As with the household business policy, the threshold would be set by the Government rather than fixed in law.
The ministry said the policy is expected to apply from the 2026 tax period. It noted that there is currently no law specifying an exempt income threshold for small enterprises.
Vietnam has about 900,000 operating enterprises, of which nearly 94% are small and micro. The ministry cited international experience indicating that this group is often given tax policy support, such as lower tax rates or exemptions.
The ministry said policy incentives could include a corporate income tax exemption for two years for enterprises transitioning from household businesses, or applying corporate income tax rates of 15–17% for businesses with small revenue.
It also argued that introducing a revenue threshold for exemption—similar to the approach for household businesses—would improve fairness for small businesses and encourage household businesses to upgrade to corporate status.
The Finance Ministry proposed submitting the relevant law to the National Assembly under streamlined procedures, aiming to pass it at the first session scheduled for 6–24 April.
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