Ministry of Finance again proposes new threshold for taxable turnover of household businesses

The Ministry of Finance has proposed changes to regulations governing the taxable turnover threshold for resident individuals and household businesses. The proposal follows public attention around amendments to the Personal Income Tax Law discussed at the 10th session of the 15th National Assembly in late 2025.

Background: current non-taxable turnover threshold

When the amended Personal Income Tax Law was enacted, it set the amount of turnover not subject to tax for households and individuals engaged in business at 500 million dong per year. This amount is deducted before calculating personal income tax using the turnover-based rate. The law also adjusted the corresponding non-taxable turnover for value-added tax to 500 million dong. The regulation took effect from January 1, 2026.

After the law took effect, the Government and the Ministry of Finance issued decrees and circulars to guide implementation. However, in the dossier submitted to the Ministry of Justice, the Ministry of Finance proposed changing the approach from a fixed threshold in the law to one where the Government sets the threshold.

Proposed change: Government-set threshold

Under the draft law, a resident individual engaged in production and business with annual turnover below the Government-determined threshold would be not subject to personal income tax.

According to the Ministry of Finance, after nearly four months of the regulation taking effect, it is again proposing adjustments to ensure the tax policy remains scientifically sound in light of domestic economic fluctuations since the Personal Income Tax Law was enacted (late 2025). The Ministry also cited the need for tax policy to align with the development trend of the digital economy and to consider taxpayers’ ability to meet a reasonable incentive rate—aiming to help taxpayers avoid evasion and remain compliant.

Rationale: administration, economic conditions, and policy flexibility

The Ministry said it is seeking to strengthen tax administration to ensure transparency and full compliance. It also pointed to the global environment as “highly complex and unpredictable,” with negative impacts on trade and international investment and direct effects on achieving domestic socio-economic development goals.

It noted that input costs are rising and purchasing power is weakening, while household and individual business operations continue to face difficulties.

To support individuals in expanding production and business—especially small-scale and vulnerable groups—while encouraging a shift from household businesses to formal enterprises as promoted by Resolution 68 of the Politburo, the Ministry proposes not to specify a concrete turnover threshold in the law and instead assign the Government the authority to determine it.

The Ministry said this would provide a legal basis for the Government to flexibly manage fiscal policy, including tax policy, and to institutionalize the Government’s prerogative to adjust taxes and fees in emergencies under Conclusion 18-KL/TW.

Legislative timeline and current threshold

The Ministry proposes submitting the draft to the Government for approval to forward to the National Assembly for expedited consideration, with the aim of enacting the law at the first session of the 16th National Assembly (the second session scheduled for April 20–23).

Regarding the existing threshold of 500 million dong, the Ministry stated it was carefully calculated when the Government proposed it to the National Assembly and received support from relevant agencies and National Assembly delegates.

Implementation direction: shift from lump-sum to declaration

In addition, to institutionalize Resolution 68 on private sector development, the tax administration policy for household businesses and individuals is oriented toward replacing the lump-sum method with the declaration-based method, effective from January 1, 2026.

In the initial phase, the Ministry said some household businesses have tended to limit non-cash payments and favor cash transactions to hide revenue. It also cited psychology of concealing revenue to evade taxes and fear of detection.

The Ministry noted that although Decree 68 states that the tax authority will not use declared revenue in 2026 to reassess tax obligations for previous years, and will not penalize compliance with the lump-sum method, the observed behavior could be a short-term trend driven by caution toward the new policy.