Entering 2026, the legal framework governing the operations of household businesses will undergo significant changes, particularly regarding the taxable revenue threshold. According to the new regulations in the Value Added Tax (VAT) Law and the Personal Income Tax (PIT) Law, household businesses with annual revenue not exceeding 500 million VND will be exempt from VAT and PIT.
However, it should be noted that tax exemption does not mean exemption from obligations. In fact, this group of household businesses still has to comply with a series of requirements regarding bookkeeping, declaration, and revenue transparency as stipulated by tax laws.
Businesses with revenue under 500 million VND are exempt from VAT and personal income tax.
This is considered the most notable reform of the tax policy to be implemented from 2026, clearly demonstrating a direction to support the small business sector.
Regarding VAT
Clause 25, Article 5 of the 2024 Value Added Tax Law (Law No. 48/2024/QH15), as amended and supplemented by Law No. 149/2025/QH15, stipulates that goods and services produced and traded by households and individuals with annual revenue of VND 500 million or less are exempt from Value Added Tax.
Regarding personal income tax
Clause 1, Article 7 of the Personal Income Tax Law of 2025 (Law No. 109/2025/QH15) stipulates that resident individuals engaged in production and business activities with revenue not exceeding VND 500 million per year are not subject to personal income tax obligations.
This policy aims to reduce financial pressure, create room for small businesses to maintain operations, and gradually improve their competitiveness in a volatile economic environment.
Tax-exempt but still requires accounting records.
A common misconception is that "if you don't pay taxes, you don't need to keep accounting records." In reality, the law states the opposite.
According to Article 4 of Circular 152/2025/TT-BTC of the Ministry of Finance, business households, even those exempt from tax, are still required to record revenue through:
- Sales revenue register for goods and services (form S1a-HKD).
- Record all relevant information, including: the date of entry, the details of the transaction, and the revenue amount for each transaction or period.
This revenue register is an important legal basis for:
- Proof that the business household is eligible for tax exemption;
- To serve as a basis for comparison when tax authorities inspect and verify actual revenue.
From 2026, household businesses must report their actual revenue to the tax authorities.
The 2025 Tax Administration Law (Law No. 108/2025/QH15) strongly shifts towards a self-declaration and self-responsibility mechanism.
Specifically, according to Clause 1, Article 13, business households must:
- Determine your own revenue generated during the year;
- Proactively report actual revenue to the tax authorities, even if the revenue falls within the tax-exempt threshold.
For business households using electronic invoices or invoices generated from cash registers, the tax management system will:
- Automatically compile data;
- Assistance in preparing declaration forms significantly reduces administrative procedures.
This mechanism aims to curb the practice of splitting revenue into smaller amounts, concealing revenue to evade taxes, and to enhance transparency in the management of household business taxes.
Revenue under 500 million VND: Using electronic invoices from cash registers is not mandatory.
According to Decree 123/2020/ND-CP, amended and supplemented by Decree 70/2025/ND-CP, the general principle remains:
- When selling goods or providing services, the seller must issue an invoice to the buyer, even for promotional items, gifts, or internal consumption.
However:
- The mandatory requirement to use electronic invoices generated from cash registers connected to the tax authority only applies to business households paying flat-rate taxes with annual revenue of 1 billion VND or more.
Therefore, business households with revenue under 500 million VND are not required to use this type of invoice, although they can still voluntarily use it to increase professionalism.
While not mandatory, input invoices are still "very important".
Current legislation does not provide for direct penalties for small-scale businesses that lack input invoices. However, the resulting legal risks are significant:
- Risk of penalties for goods of unknown origin: Article 17 of Decree 98/2020/ND-CP (amended by Decree 24/2025/ND-CP) stipulates that the fine can be up to VND 100 million if the legal origin of the goods cannot be proven.
- Limitations in management and development: The lack of input invoices makes it difficult to control costs and cash flow, especially when household businesses want to convert to enterprises, participate in large supply chains, and work with partners requiring high transparency.
- Increased risk of tax audits: Frequent transactions without invoices raise suspicions that the business is engaging in tax evasion or trading in illegal goods.
Conclude
From 2026, household businesses with revenue under 500 million VND will benefit greatly from VAT and personal income tax exemptions, but in return, they will face higher requirements for self-management, transparency, and legal compliance.
Maintaining complete accounting records, reporting revenue truthfully, and proactively controlling input invoices not only helps protect tax-exempt rights but also forms a crucial foundation for sustainable business development and minimizes long-term legal risks.
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: Article Vietnam Law
