A grocery store in Sóc Trăng Province. The Ministry of Finance is drafting a decree to provide free digital platforms and shared accounting software for small and micro sized enterprises, household businesses and self-employed individuals. — VNA/VNS Photo Trần Việt

HÀ NỘI — Việt Nam will provide support for small enterprises, household businesses and self-employed individuals during the transition from lump-sum to revenue-based taxation, the General Department of Taxation said.

This move comes in response to calls from the Vietnam Banking Association to issue a formal document guaranteeing that household businesses would not face retroactive collection of tax for the period before the shift.

Although tax officials have said that there is no policy of retroactive collection, some small traders reported being charged tax arrears and late-payment interest recently.

A recent survey by the Việt Nam Chamber of Commerce and Industry (VCCI) on 1,400 household businesses showed that most are aware of the Government’s Decree 70 on invoices and records, but their understanding remains limited and they need clearer guidance.

The survey also found that cost of compliance is the top concern. About 63 per cent said they had scaled down operations, 21 per cent suspended operation, 11 per cent changed their models and 2 per cent shut down completely.

The association has now asked for an official confirmation for no retroactive collection of tax on household businesses for the period before the change.

It also calls for at least a one-year transition period for household businesses adopting e-invoice, no penalties for filing errors, tax breaks in the first one or two years to help them adapt together with simplified bookkeeping suited to small-scale operations.

The rollout should be implemented in large urban areas before expanding to rural areas. Communication, training and support should be promoted together with the free provision of software and e-invoices, the association said.

In response, the General Department of Taxation said that household businesses with annual revenue from VNĐ1 billion (US$37,900) must issue e-invoices from cash registers connected to the tax authority, starting from June 1. Invoice data will be stored on the tax authority’s system, allowing checks without paper copies.

The tax watchdog also confirmed that under established regulations, household businesses who are subject to lump-sum tax are not required to keep purchase invoices.

Households must refile tax declarations if their business scale changes in terms of area, employees or revenue.

The Ministry of Finance is also drafting a decree to implement the National Assembly’s resolution on promoting private sector development, including measures to provide free digital platforms and shared accounting software for small and micro sized enterprises, household businesses and self-employed individuals.

This is seen as a key step to help household businesses cut costs while gradually adapting to a more transparent and modern business environment.

Call for an encouraging environment

Lawyer Trần Xoa, director of Minh Đăng Quang Law Firm, said that a clear legal document about the retroactive collection was needed to prevent inequality and ambiguity in implementation.

According to Đỗ Thiên Anh Tuấn from the Fulbright School of Public Policy and Management, Việt Nam is gradually amending and adjusting to have a fairer, more reasonable and modern tax system.

Retroactive collection should not be applied to household businesses during the transition, he said. Without an official document against retroactive collection, it would create opportunities for tax officials to cause difficulties for household businesses.

Tax was not only a budgetary tool but also tied to livelihoods and psychology, he said, stressing that the purpose of taxation was to create a transparent and fair business environment and encourage the private sector to grow and develop.

He urged the transition toward revenue-based taxation should be made as simple as possible, adding that it was necessary to strengthen on-site tax guidance and provide consultation for small businesses and traders.

There should be a reasonable roadmap for the transition with no penalties in the first phase, he said.

Nguyễn Thường Lạng from the National Economics University said Việt Nam aimed to encourage the development of the private economy, promoting households to develop into enterprises with a goal of having 2 million firms by 2030.

He pointed out that household businesses were most worried about compliance cost, red tape and penalties when converting into enterprises. There must be a flexible way to achieve the highest efficiency.

Retroactive collection of taxes on household businesses was not advisable, he said, adding that it was necessary to have clear regulations in writing to consolidate trust of household businesses in complying with the laws.

Lump-sum taxation was set to be abolished nationwide by the beginning of 2026, meaning that only three months would be left for the conversion, Xoa said. It would be difficult to implement the change nationwide at one time because there are more than 5 million business households while the tax staff is limited.

The focus should be first on providing hands-on training to business households, he said, urging coordination among accounting firms, software providers and tax watchdog in implementation.

Still, the rollout of the new tax regime from January 2026 would still be a major challenge, Xoa said. — VNS