Proposal to raise the taxable revenue threshold for household businesses to 3 billion dong

The vice chairman of the Ca Mau Business Association, Nguyen Duy Thanh, proposed raising the taxable revenue threshold for household businesses to 3 billion dong, three times the Finance Ministry’s projection. On the morning of April 23, the National Assembly debated in the plenary about the draft Law amending and supplementing several provisions of the Tax Laws: Personal Income Tax (PIT), Value-Added Tax (VAT), Corporate Income Tax, and Special Consumption Tax. Under the draft law, the threshold for tax-free revenue for household businesses and small enterprises will be set by the Government. Supporters say this approach would enhance administrative autonomy and align with practical realities given the diverse scale of household businesses. However, Thanh said it is not yet clear how the Government would calculate the adjusted thresholds. "The Economic and Financial Committee proposes a taxable-revenue threshold starting from 2 billion dong, but I propose 3 billion dong," he said. Thanh’s analysis shows that 3 billion dong corresponds to about 250 million dong in monthly revenue. After deducting costs such as rent, interest, and labor, household businesses would have profits of around 10%, i.e., about 20 million dong. "20 million for a family of two adults and two children, divided among five people, would be a relatively low income," Thanh added. In addition, he proposed establishing criteria or specifying a minimum and maximum revenue exempt from tax to ensure stability and clarity. He suggested criteria such as per-capita income, living standards, or the consumer price index to give the Government a basis for transparent, predictable adjustments. Similarly, Phan Duc Hieu, a standing member of the National Assembly’s Economic-Finance Committee, said a framework for taxing household businesses is needed from 1 billion to 3 billion dong, after which the Government would determine the specific threshold within this range. Hieu believes this approach could help Parliament set the minimum and maximum taxable thresholds. "If the minimum threshold is too low, it would increase the cost burden on production and business activities. If the maximum threshold is too high, we must balance cost reduction with revenue collection," he said. He noted that a too-high tax-free threshold could lead to businesses choosing not to grow. Meanwhile, Truong Thi Tu Anh, a member of the Science, Technology and Environment Committee, proposed a floor of 1 billion dong and a ceiling of 2 billion. She argued that the current 500 million dong threshold is about four times the per-capita GDP and far below international practice. Tu Anh cited surveys in several countries with economies similar in size to Vietnam’s in Southeast Asia and Asia showing tax-free thresholds for small-economy sectors from 8 to 15 times per-capita GDP. If Vietnam applied this standard, she estimated a taxable threshold of 1–1.9 billion dong. She also urged reducing compliance costs for residents and household businesses, describing it as a mandatory consideration in policy design. She argued the tax authority should simplify procedures and provide truly user-friendly tools to save time for citizens. Nguyen Van Than, chairman of the Small and Medium Enterprises Association, proposed applying a fixed tax regime for household businesses with revenue of 1–3 billion dong. For households with revenue above 3 billion dong per year, he said they should be nurtured into enterprises. Finance Minister Ngo Van Tuan explained the issues during the morning session. Under the Finance Ministry’s plan, the threshold for tax-free revenue for household businesses is expected to start from 1 billion dong, effectively double the current level. Mr. Tuan said the threshold has been carefully considered for its impact on state revenue and taxpayers. According to the Finance Ministry, during 2022-2025 the country had 3-4 million household businesses, of which more than 2 million filed taxes regularly, 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. Anh Tu