Tax exemption for small businesses: Even firms with billions in revenue need support.

Even with billions of dong in annual revenue, the profits of small businesses are not high, often just enough to sustain operations and pay a few employees. Proposals to exempt taxes at a certain revenue threshold for this group are expected to create the breathing space needed, rather than forcing them to meet tax obligations while they are still underdeveloped. Will define tax exemption for small enterprises In the project assessment dossier for amendments to the Personal Income Tax Law, the Corporate Income Tax Law, and the Value-Added Tax Law sent to the Ministry of Justice, the Ministry of Finance proposes adding a provision to exempt corporate income tax for enterprises with revenue at the government-defined threshold. The new regulation is expected to apply from the 2026 tax period. Personal Income Tax Law No. 67/2025/QH15 already provides for corporate income tax exemptions for enterprises with a scale not exceeding 50 billion dong, established from business households; applying a lower tax rate for enterprises whose total annual revenue does not exceed 3 billion dong (15%); enterprises with total annual revenue from above 3 billion dong to not more than 50 billion dong (17%). However, to date there has been no exemption for small enterprises such as households or individual business households. Meanwhile, the drafting agency says that small-scale businesses are always the target for supportive policies and growth encouragement, as they are the long-term revenue source for the state budget. Small businesses have always been the central target of development policies in many countries. [Image captions omitted] "Thresholds: What is appropriate?" Currently, households and individual business owners have an exemption threshold of 500 million dong per year. Enterprises and households are two distinct legal entities with differences in legal obligations, transparency, administrative costs, labor, and compliance responsibilities. Hence, Mr. Mac Quoc Anh proposes that the exemption threshold should be from 1.5 to 2 billion dong per year. 'This level creates a gap with the current 15% tax rate, and also avoids policy effects being too narrow if it only ends at 500 million dong,' he said, proposing a trapezoidal policy design: Under 1.5–2 billion dong, tax exemption; from that threshold up to 3 billion dong, apply a 15% tax rate; from above 3 billion to 50 billion, apply 17%. This design helps enterprises grow in steps, avoiding policy shocks. Mr. Quoc Anh also warned that moving the exemption threshold too close to 3 billion could encourage business fragmentation or postponement of expansion to keep the incentive. Therefore, a mechanism to monitor, prevent abuse, and clearly define how revenue is determined is required... "Which threshold is appropriate?" Meanwhile, TS. Tô Hoài Nam (Executive Vice Chairman and Secretary General of Vietnam’s Small and Medium Enterprises Association, Vinasme) proposed an exemption threshold for small enterprises with annual revenue of 3–5 billion. At this level, monthly revenue would be about 250–400 million; with net margins around 10%, monthly profit would be about 30–40 million; with 15% margins, around 50–60 million. This level is practically enough to sustain the business with 2–3 workers. On concerns about the risk of a ‘gray area’ to exploit the policy, he believes those who intentionally abuse will be dealt with under the law. However, not because of a few misuses should hamper a policy that aims to help a broad base of businesses grow sustainably. Read more