There will be no hard regulations on tax-free revenue thresholds for business households

Last year, the National Assembly agreed to increase the level of revenue not subject to personal income tax and the increase in value of business individuals to 500 million VND a year.

In the appraisal dossier of the project to amend some tax laws, the Ministry of Finance proposed a plan to amend the regulations on the level of revenue not subject to personal income tax and value added tax (VAT). Accordingly, this threshold will be regulated by the Government, instead of being “hard” fixed in law.

The reason, the Ministry of Finance believes that domestic economic conditions have many changes compared to the time the regulations were issued at the end of last year. In the first months of this year, input costs increased, purchasing power decreased and production and business activities of household businesses remained difficult.

Therefore, according to this agency, studying and adjusting tax policies for business households is necessary. This is to ensure scientific and appropriate policies, taking into account taxpayers’ ability to respond.

“The adjustment of the tax-free revenue threshold is intended to support small and medium-sized business households, helping them maintain operations, especially in industries with low profit margins and greatly affected by cost fluctuations,” the Ministry of Finance stated.

According to data from the Ministry of Finance, by the end of 2025, the country will have 3-4 million business households, of which more than 2 million have stable tax returns. Last year, tax revenue from the household and individual business sectors reached VND 32,840 billion, an increase of 37.5% over the same period. In the period 2022-2025, the whole country will have about 3-4 million business households. Of these, more than 2 million households have stable tax returns, accounting for about 2% of total state budget revenue.

In addition to business households, the Ministry of Finance also proposed a revenue threshold for corporate income tax exemption to support small and micro companies. This threshold is also regulated by the Government, not a fixed level by law. It is expected that this policy will apply from the 2026 tax period.

Currently, the law does not have regulations on tax-exempt income thresholds for small businesses. The country has about 900,000 operating businesses, of which nearly 94% are small and micro companies.

The Ministry of Finance cited international experience showing that this group is often given priority in tax policy support, such as applying lower tax rates or tax exemptions.

The operator has a number of incentives such as corporate income tax exemption for 2 years for businesses converted from household businesses, or applying a tax rate of 15-17% for businesses with small revenue. However, the Ministry of Finance believes that adding a tax-free revenue threshold such as household businesses will ensure fairness with small businesses. At the same time, this policy helps encourage business households to convert to enterprises.

The Ministry also proposed to submit to the National Assembly to promulgate a law according to simplified procedures and procedures, and pass the law at the first session taking place from April 6-24.