Tax officials provide consultancies to a shop-owner in Phú Thọ Province. Many experts said that the VNĐ200 million threshold for tax exemption is too low, calling for it to be raised to better reflect business conditions and ensure fairness between household businesses and salaried workers. — VNA/VNS Photo Nguyễn Thảo

HÀ NỘI — While Minister of Finance Nguyễn Văn Thắng said the ministry will continue to study an appropriate revenue threshold for taxation on household businesses to ensure fairness, opinions remain divided over what level would be suitable.

Việt Nam is preparing to end the long-standing lump-sum tax regime in 2026 and shift to a declaration-based taxation system under the Ministry of Finance’s Decision 3389/QĐ-BTC.

Accordingly, business households will fall into three groups based on their revenue for taxation.

Those earning under VNĐ200 million (US$7,900) per year will be exempt. Those earning VNĐ200 million to under VNĐ3 billion will pay tax directly as a percentage of revenue, depending on their sectors, while those with revenues above VNĐ3 billion will pay a 17 per cent tax rate on profits.

Many experts said the VNĐ200 million threshold for tax exemption is too low, calling for it to be raised to better reflect business conditions and ensure fairness between household businesses and salaried workers.

Trần Xoa, director of Minh Đăng Quang Law Firm, said that with a margin assumed at around 10 per cent, a household earning VNĐ201 million annually, or an average of VNĐ16.7 million per month, would earn around VNĐ1.6 million in profit per month, which is insufficient for basic living needs.

To cover the living needs of a typical household, the profit should be around VNĐ20 million per month, meaning that the revenue threshold for tax exemption should be raised to VNĐ2 billion, he said.

According to Nguyễn Thị Cúc, President of the Việt Nam Tax Consultants Association, the current tax-exemption threshold of VNĐ200 million a year is outdated, noting that it translates to less than VNĐ600,000 in daily revenue. A small eatery could exceed the threshold by selling just 15 bowls of phở a day.

The threshold should be raised to VNĐ1 billion, she said, estimating that with an average profit margin of 16 per cent, the profit is VNĐ160 million a year, or VNĐ13.3 million per month, roughly the same as the personal income tax deduction of VNĐ15.5 million applicable to salaried workers.

Tax authorities’ report showed that with the threshold of VNĐ200 million, 44.4 per cent of household businesses would be exempt. However, Cúc said that many households under-declare their revenue in practice.

“Transparency in declarations is the key to setting an appropriate threshold and policymakers must choose a level that encourages households to report their true income,” Cúc stressed.

Nguyễn Ngọc Tịnh, Vice President of the HCM City Tax Consultants and Agents Association, stressed that the threshold must be calculated based on reliable data and should be adjusted periodically in line with CPI or income per capita.

“A well-designed tax policy would motivate household businesses and allow them to fully play their role in the economy as key job creators and incubators for future entrepreneurs,” Tịnh said.

A household business in Vĩnh Long Province. A well-designed tax policy, they said, would motivate household businesses and allow them to fully play their role in the economy.  — VNA/VNS Photo Thanh Hoà

Nguyễn Quang Huy from Nguyễn Trãi University said household businesses differ fundamentally from enterprises because they operate as family units, making it difficult to separate revenue, labour and living costs.

Relying solely on gross revenue to determine tax obligations would risk misjudging the ability to pay, especially in low-margin sectors or households with multiple family workers.

Defining taxable thresholds should be based on net profit after reasonable expenses, divided by the number of family members directly involved in the business, and compared with personal income tax thresholds, he said.

In addition, tax policy cannot be uniform across all sectors, given wide variations in profit margins — from 3–8 per cent in retail trade to higher but more volatile margins in services and craft production.

Tax policy should also take into account differences in costs across regions, he said, adding that household businesses in major cities such as Hà Nội and HCM City face much higher operating costs than those in rural or mountainous areas.

According to National Assembly Deputy Trần Hoàng Ngân, taxes on household businesses should be calculated only after deducting essential living expenses and family dependents, as with the personal income tax (PIT) on salaried workers.

With a monthly deduction of VNĐ15.5 million, plus VNĐ6.2 million for each dependent under PIT from 2026, a typical household business with two spouses and two children would therefore receive a total reduction of VNĐ43.4 million per month, or around VNĐ520.8 million per year. The tax-exemption threshold for household businesses should be set higher than that level, he said.

Ngân added that it is necessary to impose tax only on the portion of revenue exceeding the threshold rather than on the entire revenue, to ensure consistency with the fundamental principle of PIT.

The Politburo’s Resolution 68 on private sector development sets a target of 2 million enterprises by 2030 and at least 3 million operating enterprises contributing more than 60 per cent of GDP by 2045.

Currently, there are nearly 1 million enterprises, 5.2 million household enterprises, and hundreds of thousands of cooperatives, which together contribute over 50 per cent of GDP and more than 30 per cent of total state revenue each year.

Việt Nam is considering policies to encourage household businesses to develop into companies, in which a well-designed tax policy on household businesses is regarded as important factor to facilitate the transition. — VNS