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From January 1, 2026, the threshold for exempting personal income tax and value-added tax (VAT) for households and individual businesses is set at 500 million dong per year. However, in a draft Law amending some tax laws, the Ministry of Finance proposes not to enshrine this threshold in law, but to allow the Government to determine it in stages to increase policy flexibility.
Commenting on the draft, Le Van Tuan, Director of Keytas Tax Accounting Co., said that any adjustment to the threshold should be considered within the overall policy framework, including the tax calculation method and the coherence among related regulations.
On the threshold for tax-exempt revenue, Mr. Tuan proposed that the tax-exemption threshold for household businesses be applied at 1 billion dong. Under his approach, only the taxes applied to the portion exceeding this amount would be charged, and the same 1 billion dong threshold would apply to the group of household businesses with revenue under 50 billion dong.
Mr. Tuan said this design would align with the invoice threshold currently used, helping clarify the tax policy framework and reduce practical implementation obstacles.
Mr. Tuan also emphasized that when setting the exemption threshold, policymakers should account for the compliance costs household businesses face during the transition to electronic invoicing and greater transparency. He noted that equipping devices and systems such as cash registers, accounting software, electronic invoices, and digital signatures requires a substantial upfront investment.
According to him, a full package for these items currently costs around 15–20 million dong, not including annual maintenance costs.
In addition, he said the high-risk business environment should be considered. He noted that 90–95% of startups face difficulties and exit the market in the early years, while household businesses that pay tax on revenue still must meet tax obligations even when they do not generate profit.
Mr. Tuan argued that the exemption threshold should also ensure fairness between household businesses and employees earning wages, given that the two groups have different income characteristics and risk levels but similar consumer spending needs.
From an enforcement perspective, he said taxing based on the portion exceeding the threshold can reduce disparities in tax obligations among households near the cutoff. He gave an example under the previous 500 million dong threshold: a household with revenue of 499 million dong did not owe VAT, while a household with revenue of 501 million dong would owe VAT corresponding to revenue, creating a significant difference in obligations.
In discussions by the Standing Committee of the National Assembly, the audit body suggested adjusting the threshold for revenue not taxed for household businesses. The Chair of the Economic-Financial Committee, Phan Van Mai, said many opinions proposed raising the threshold to at least around 2 billion dong to ensure “humanity and practicality.”
Responding to the proposal to raise the threshold to 2 billion dong, Mr. Tuan said the issue is not only about changing the number, but about reviewing the policy design comprehensively.
He argued that if multiple thresholds exist simultaneously—such as the invoice threshold, exemption threshold, and the threshold for classifying household businesses—policy implementation can become more complex, potentially affecting management efficiency and increasing compliance costs.
Therefore, Mr. Tuan proposed a unified threshold and tax calculation method to keep the policy simple and effective: apply the tax-exemption threshold of 1 billion dong, but tax only the portion exceeding and apply this approach to both taxes (personal income tax and VAT).
He said this would contribute to consistency in tax policy and support household businesses in complying with tax obligations.
Source: Theo Khánh Huy, Nhịp sống thị trường
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