Raise the taxable revenue threshold for business households to 1 billion VND

The Government has just issued Decree 141 dated April 29, amending the regulations on tax exemption thresholds for individuals and business households to 1 billion VND a year, double the current level. This group will not have to pay personal income tax or value added tax (VAT).

Similarly, small businesses are also applied for the first time to a tax-free revenue threshold of 1 billion VND per year. This is a new point compared to the current Corporate Income Tax Law – which only stipulates incentives for exemption periods, reductions or tax rates, and does not have an exemption threshold for this subject.

Tax exemption regulations do not apply to subsidiaries or affiliated companies with businesses that do not meet tax exemption conditions.

This Decree takes effect from January 1, 2026. In case households, individual businesses and enterprises with annual revenue of 1 billion VND or less have declared and paid taxes in the first quarter of the year, the paid tax amount will be offset or refunded.

Households and individuals with revenue over 1 billion VND must use electronic invoices with codes or from cash registers connected to tax authorities. New business cases with determined revenue of less than 1 billion VND but in the tax year the revenue exceeds the threshold will have to register to use electronic invoices within 30 days.

Newly established businesses, if expected annual revenue does not exceed 1 billion VND, do not have to temporarily pay corporate income tax. At the end of the period, if actual revenue exceeds this threshold, the enterprise declares and settles it according to regulations and is not charged late payment interest.

Tax authority data shows that about 2.56 million business households and individuals have revenue of less than 1 billion VND. The Ministry of Finance estimates that the state budget will reduce revenue by about 4,850 billion VND compared to the current policy (threshold of 500 million VND), and about 16,650 billion VND compared to 2025 when flat tax and threshold of 100 million VND are still applied.

Previously, the Ministry of Finance explained that raising the threshold was to support the small business sector in the context of rising input costs, especially fuel and logistics, and weakening purchasing power. The policy also aims to design a “scientific and reasonable” tax system, reducing incentives for tax evasion. In addition, tax exemption at a higher threshold will help business households maintain operations, have room to accumulate to expand and transform into businesses, thereby “nurturing revenue sources” in the long term.

For business groups, the policy contributes to encouraging business households to convert to enterprises with professional management, conditions for scale expansion and efficiency. This regulation also aims to realize the target of 2 million businesses by 2030 according to Resolution 68 of the Politburo. It is expected that the amount of corporate income tax exempted is about VND 2,164 billion, equivalent to about 235,800 businesses benefiting.