Starting from January 1, 2026, the tax management mechanism for household businesses and individual business owners in Vietnam will officially enter a new phase, with a series of important adjustments according to amended tax laws and resolutions of the National Assembly.
The overarching goal of the policy is to eliminate lump-sum taxation, shifting to a self-declaration, self-calculation, and self-payment system, while classifying tax obligations according to revenue size, in order to ensure fairness, transparency, and suitability to the management capacity of each group of business households.
In this context, a clear understanding of the revenue milestones of 500 million, 1 billion, and 3 billion VND per year, along with the corresponding declaration methods, is crucial for business owners to proactively plan their finances and comply with legal regulations.
VAT and personal income tax exemption for household businesses with annual revenue under 500 million VND.
To concretize the support policy for small-scale business households, tax laws from 2026 will clearly stipulate the revenue threshold for tax exemption, along with corresponding declaration obligations and management requirements.
Tax-free revenue threshold and support policies
According to the revised Value Added Tax Law and Personal Income Tax Law, effective from 2026, business households with total revenue not exceeding 500 million VND/year will be completely exempt from Value Added Tax and Personal Income Tax obligations.
This regulation aims to:
- Reducing the financial burden on small businesses and households;
- Encourage the maintenance and development of legitimate businesses;
- This is consistent with the income and management capabilities of very small-scale households.
The obligation to declare taxes is still in effect, even if tax-exempt.
Although not required to pay taxes, businesses in this group are still required to periodically declare their revenue information (as instructed by the tax authorities, expected 1-2 times per year).
The purpose of this declaration is:
- Monitor changes in business scale;
- This serves as the basis for reassessing tax obligations if revenue exceeds the tax-free threshold in subsequent years.
Invoices and Receipts
Regarding invoices and supporting documents, the 2026 tax law clearly categorizes them according to revenue size, thereby determining the obligation of business households to use electronic invoices and store supporting documents.
- Using electronic invoices is not mandatory;
- Maintaining accounting records according to corporate accounting standards is not mandatory.
This regulation helps reduce compliance costs for traditional businesses, especially in rural areas or regions lacking integrated technological infrastructure.
Household businesses with annual revenue ranging from over 500 million to under 3 billion VND.
This group of household businesses accounts for a large proportion and is subject to a flexible tax mechanism, allowing them to choose a tax calculation method that suits their management capabilities.
For this group, there will be two methods for calculating tax:
- Taxation based on profit (rate 15%)
- Tax is calculated directly on revenue.
Method 1 – Calculating tax based on profit (rate 15%)
Applicable to household businesses:
- There are accounting records;
- There are valid input invoices and supporting documents;
- Determine the actual cost.
How to calculate taxable profit:
|
Taxable profit = Revenue – Reasonable and legitimate expenses |
Determine the tax payable:
|
Tax payable = 15% x Profit |
The profit-based tax calculation method has the following advantages and disadvantages.
Advantage:
- Accurately reflects business performance;
- This is beneficial for households with high revenue but low profit margins;
- Approaching the management model of a small business.
Disadvantages:
- High requirements for accounting documents and records.
- Risk of expenses being disallowed during settlement.
- Inspection pressure
Method 2 – Calculating tax directly on revenue
For household businesses:
- Not tracking expenses properly;
- No accounting department was established.
- Prioritize simple calculation methods.
Taxes are determined at a rate of 1 TP3T on revenue, ranging from 0.51 TP3T to 21 TP3T, depending on the business sector.
This method is suitable for small and medium-sized businesses that are stable but do not yet have the resources to establish a complete accounting system.
Household businesses with annual revenue exceeding 3 billion VND.
For large-scale businesses, the tax policy from 2026 requires comprehensive standardization of accounting and invoicing, aiming to reduce revenue losses and ensure tax fairness.
Personal income tax based on profit with tax rate 17%
How to calculate personal income tax with tax rate 17%:
|
Personal Income Tax = 17% x (Revenue – Eligible Expenses) |
Required:
- Implement a full accounting system;
- Use electronic invoices generated from cash registers, directly connected to the tax authorities;
- Declare and pay taxes on time as prescribed.
Business license fee for household businesses (based on previous year's revenue)
According to current regulations and transitional documents:
- For business households with annual revenue exceeding 1 billion VND: The business license fee is 1,000,000 VND per year.
- Revenue below this threshold: A lower rate or exemption will apply on a case-by-case basis.
Procedures and methods for filing taxes for household businesses from 2026 onwards.
To fulfill their tax obligations under the new regulations, business households need to understand the declaration forms and required documents applicable from 2026, including:
Declaration form
Business owners can choose from:
- Electronic tax declaration: via eTax Mobile or the tax authority's electronic portal;
- Direct declaration: submit the application at the managing Tax Office.
Basic declaration form
Regarding basic declaration documents, business households need to prepare all the required forms to ensure that tax declarations are received and processed on time.
- Tax return form 01/CNKD;
- Invoice and supporting document list form 01-2/BK-HĐKD (for households declaring using the declaration method).
Summary of tax policies for household businesses based on revenue from 2026.
To help businesses easily compare their tax obligations based on their scale of operation, the table below summarizes key revenue milestones from 2026 onwards, along with the corresponding tax calculation methods and requirements for invoices and accounting practices as stipulated by current tax laws.
| Annual revenue | Tax calculation method | Request |
| Under 500 million VND | Exempt from VAT and personal income tax. | Electronic invoices are not mandatory. |
| From over 500 million to under 3 billion VND | Direct tax on revenue or a percentage of profit (15%) | Electronic invoices are mandatory when revenue reaches 1 billion VND. |
| Over 3 billion VND | Ratio of 17% to profit | Complete accounting, invoices from the cash register connected to the tax authorities. |
As can be seen from the summary table above, tax obligations, invoicing regulations, and accounting requirements for household businesses from 2026 onwards are clearly defined according to revenue thresholds. Accurately determining the scale of operations is crucial for household businesses to apply the correct declaration methods and comply with tax laws.
Tax rate framework based on industry specifics
Based on regulations regarding the direct tax calculation method on revenue, the VAT and personal income tax rates for household businesses vary depending on their field of activity. The table below summarizes the applicable tax rate framework for each business sector.
| Occupation | VAT | Personal Income Tax | Total |
| Distribution, trade, and retail | 1% | 0.5% | 1.5% |
| Services, food and accommodation | 5% | 2% | 7% |
| Manufacturing, transportation, and construction with contract work. | 3% | 1.5% | 4.5% |
| Other activities | 2% | 1% | 3% |
Based on the table above, business households need to compare their current business activities with the corresponding industry groups to correctly determine the VAT rate, personal income tax rate, and the total tax payable on generated revenue.
Conclude
The 2026 tax policy for household businesses clearly requires proactive and transparent tax declaration. To minimize the risk of back taxes, penalties, and business disruptions, household business owners need to regularly monitor revenue, determine the correct tax calculation method, and prepare all necessary invoices and documents in accordance with relevant regulations.
Contact information MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
Source:
- Tax Administration Law No. 38/2019/QH14
- Law amending and supplementing the Value Added Tax Law
- Circular 40/2021/TT-BTC, Circular 100/2014/TT-BTC
- Decree 123/2020/ND-CP
- Decision 3389/QD-BTC
