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On April 20, Phan Văn Mãi, head of the National Assembly’s Economic and Financial Committees, said the reviewing agency basically agrees with draft amendments to several laws, including the Personal Income Tax Law, the Value-Added Tax Law, the Corporate Income Tax Law, and the Special Consumption Tax Law. He emphasized, however, that the specific revenue levels used to determine tax exemption for household businesses and small and medium-sized enterprises (SMEs) require further careful consideration.
According to Phan Văn Mãi, the previous tax-exemption revenue threshold was 100 million dong per year. The draft proposes raising it to 300 million dong and then to 500 million dong. However, many opinions argue that these levels remain low compared with current business realities.
The Small and Medium Enterprise Association proposed raising the threshold to 3 billion dong. Meanwhile, the examining agency suggested researching a minimum level of around 2 billion dong per year to better align with business conditions.
Le Thanh Tam, owner of a household retail business in Ho Chi Minh City, said the current tax calculation does not reflect the true nature of profits. She gave an example: with annual revenue of 2 billion dong, after a tax exemption of 500 million dong, the remaining 1.5 billion dong would be taxed at 0.5%, equivalent to about 750,000 dong. Yet retail profit margins typically range from 3% to 5%, meaning maximum typical profit is only about 50 million dong per year.
After paying taxes, Tam said her take-home income is about 49 million dong, or more than 4 million dong per month, which does not reach the personal income tax threshold for salaried workers. “Taxing in this case is not reasonable,” she commented.
Nguyen The Dung, owner of a household furniture business in Ho Chi Minh City, said profit margins in that sector are even lower. He noted that for wholesale goods, profits range from 0.5% to 1%, while retail can be about 5% to 10%. “There are large lots such as 1,000 boxes of ceramic tiles; profit is only about 1 million dong. With this level of profitability, applying tax by revenue is not realistic,” Dung said.
Dung proposed that authorities calculate tax-exemption thresholds based on actual profits and reference the current deduction for dependents of around 15.5 million dong per month (equivalent to 186 million dong per year).
In an interview with the Người Lao Động reporter, some base tax officers in Ho Chi Minh City said most household businesses are essentially self-created workers who take on risks and support their families. While revenues vary across industries, if average profit is assumed at about 10% of revenue for a 2 billion dong annual figure, each household would earn about 200 million dong.
They said this level is not significantly higher than the deduction threshold for salaried workers. As a result, the proposal to raise the tax-free revenue threshold to 2 billion dong is viewed as more practical.
Nguyen Ngoc Tinh, Vice Chairman of the Ho Chi Minh City Tax Advisory and Agency Association, agreed that raising the threshold to 2 billion dong could encourage household businesses to declare truthfully and comply more fully with tax obligations. He added that budget revenue could be maintained and potentially increased through broader compliance.
To ensure fairness across economic components, Tinh said authorities should move toward requiring all household businesses to issue invoices. He argued this would provide a basis to determine revenue, value-added tax, and taxable income more precisely, supporting a more transparent and sound tax policy.
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