The taxable revenue threshold for business households is proposed to be increased to 1 billion VND

The new Law on Personal Income Tax and VAT (amended) was passed by the National Assembly at the December 2025 session. But according to Prime Minister Le Minh Hung’s assessment at the afternoon discussion session on April 21, the taxable revenue threshold of 500 million VND is no longer appropriate when the impact of gasoline prices and regional developments directly affects individuals, business households, and small and medium-sized enterprises.

Therefore, the Ministry of Finance is consulting and 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).

The taxable level of 1 billion VND is expected to be effective for business households, small and medium enterprises, as well as encourage business households to convert to enterprises.

Currently, the level of 1 billion VND is also the threshold that requires business households and individuals to use electronic invoices created from cash registers connected to tax authorities. The Ministry of Finance said that raising the tax exemption threshold is to be consistent with the regulations on using this invoice.

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

The Ministry of Finance explains that raising the threshold is 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.

The drafting agency also believes that tax exemption at a higher threshold will help business households maintain operations, have accumulated room to expand and transform into businesses, thereby “nourishing revenue sources” in the long term.

In addition, the draft also proposes for the first time a tax-free revenue threshold of 1 billion VND per year for small businesses. 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.

Currently, the country has about 900,000 operating businesses, of which small and micro enterprises account for nearly 94%. According to the Ministry of Finance, this group is strongly affected by economic fluctuations due to limited capital and resilience capacity. In fact, recently, many businesses of this type have fallen into difficulty, needing policy support from the state due to increased fuel costs and logistics costs.

The operator considers that the tax exemption policy for small businesses also ensures fairness, helping taxpayers choose a suitable business model. From there, 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.

If applied, the amount of corporate income tax exempted is estimated at about 2,164 billion VND, equivalent to about 235,800 businesses benefiting.