Enterprises and business households receive a 30% tax reduction for each declaration period

The Government has just issued Decree 398 on October 30 guiding the reduction of personal and corporate income taxes in 2026 and 2027. The condition is that the annual revenue of business households and enterprises does not exceed 10 billion VND.

For households and individuals doing businessthe reduction is calculated on the amount of personal income tax payable from all business activities, whether tax is calculated based on revenue or income.

If the expected annual revenue is up to 10 billion VND, the business person declares the reduced amount with tax records submitted quarterly, 6 months or annually. Organizations and individuals who deduct and pay taxes on their behalf are also entitled to a 30% reduction in personal income tax monthly, quarterly or each time it arises, calculated on the portion of revenue subject to declaration on behalf of them.

However, to determine whether or not to receive a tax reduction, the business person must add up the actual revenue from all activities during the year. If it exceeds 10 billion VND, they must pay back the entire reduced amount.

The adjusted declaration is made immediately in the period when the accumulated revenue from the beginning of the year exceeds the threshold. The additional tax paid will not be charged late payment interest until the tax declaration deadline of that period.

People who have declared but have not yet calculated the reduction can make an additional declaration or recalculate it when finalizing the year. In case they pay taxes according to the ratio of revenue and have excess money, they will be compensated or refunded at the end of the year.

With businessthe 30% reduction is calculated automatically when temporarily paying quarterly corporate income tax, if annual revenue does not exceed 10 billion VND. The policy also applies to cooperatives, public service units or other organizations with income from business.

Enterprises enjoying tax incentives will receive a further 30% reduction on the remaining tax payable after the incentives. For example, after incentives, businesses still have to pay 100 million VND in income tax, then they will receive an additional reduction of 30 million VND, and pay 70 million VND.

Revenue to consider conditions includes sales, service provision, financial revenue and other income. If there are branches, dependent units or business locations, the enterprise must include the revenue of these units.

Enterprises divided or separated after August 24 (when Resolution 43 of the National Assembly takes effect) will not be entitled to tax reduction if the total revenue of these new legal entities exceeds 10 billion VND a year.

If actual revenue exceeds the threshold, the business must pay the remaining tax in full. Late payment interest is handled according to tax administration regulations.

Enterprises and business households eligible for incentives will still receive a 30% reduction on the additional tax arising after additional declaration or inspection, if revenue does not exceed 10 billion VND. On the contrary, when the tax amount payable is reduced, the reduced amount must also be recalculated accordingly.

The Decree takes effect from October 29, applicable to the 2026 and 2027 tax periods. The policy only reduces income tax, excluding value added tax (VAT).

Previously, the Ministry of Finance estimated that the tax reduction policy would cause a loss in budget revenue of about VND 6,700 billion in two years. About 99.86% of individuals, business households and 81.1% of businesses will enjoy tax reduction policies with a revenue threshold of 10 billion VND.