Eliminating lump-sum tax - a breakthrough

Data from the Tax Department ( Ministry of Finance ) as of the end of March 2025 shows that more than 1.97 million households and business individuals pay taxes in the form of lump sums and only 6,142 households pay taxes in the form of declaration, accounting for only about 0.3% of the total number of tax-paying households.

Total state budget revenue from households and individual businesses in the first 3 months of this year is estimated at VND 8,695 billion, an increase of 25.7% over the same period in 2024.

The average lump-sum tax payment in March 2025 was more than 672 thousand VND per household/individual. Meanwhile, the average tax payment by declaration method reached 4.6 million VND/household, individual/month. The nearly 7-fold difference between the two forms shows the level of inaccuracy in assessing the actual income of lump-sum households.

Resolution 68 of the Politburo has clearly defined the direction for effective and substantial support for small, micro and household businesses.

Notably, the Politburo aims to eliminate lump-sum tax for business households by 2026 at the latest.

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The goal of eliminating lump-sum tax for business households by 2026 at the latest is considered a breakthrough by experts. Photo: Thach Thao

Speaking to VietNamNet reporter, Mr. Nguyen Van Duoc, member of the Executive Committee of the Vietnam Tax Consulting Association, General Director of Trong Tin Accounting and Tax Consulting Company Limited, said that the nature of lump-sum tax comes from the principle of tax management, which is the key principle, to make tax collection management more convenient. This method has been used for many years.

However, in the context of a developing economy, the lump-sum tax policy has gradually revealed many limitations, creating loopholes for exploitation to avoid tax obligations. Many business households deliberately do not "grow" to take advantage of the policy. Therefore, Resolution 68 will eliminate the lump-sum tax form, which is a breakthrough, something that should have been done a long time ago.

According to Mr. Duoc, eliminating the lump-sum tax will create equality and transparency. Because, with the lump-sum tax policy, large businesses can pay less tax, and no new businesses can pay tax... Therefore, taxation will not reflect the true nature of business activities.

"If we abolish lump-sum tax, we will have to implement invoices, vouchers, and accounting books. Then the picture of the economy will be transparent, and tax collection will be more accurate and sufficient. For business households, there will also be conditions to manage their finances and understand their financial data," he analyzed.

Meanwhile, Mr. Nguyen Van Thuc - senior expert on Tax and Accounting, senior advisor to the General Director of Hanoi Accounting Group Joint Stock Company, also said that the lump-sum tax creates a difference between the lump-sum tax amount and actual annual statistics, with many uncontrolled variables.

Therefore, according to Mr. Thuc, eliminating the lump-sum tax will help reflect the actual revenue of business households more honestly and fully. Because every time a sale is made, an invoice must be issued. When combined with modern technologies such as AI, blockchain, cash register connection systems, accounting software, invoice management, and synchronous storage of input and output data, this will be a fundamental reform, helping to completely resolve existing problems.

There needs to be a method of paying taxes.

Mr. Nguyen Van Thuc assessed that eliminating lump-sum tax would create a breakthrough for the economy by saving time and resources right from the stages before, during and after operation, supervision and explanation. It would ensure more fairness and convenience for everyone.

“The clearer, more connected, more consistent, more effective. The more transparent, the more creative. The more economical the operation, the more real business people will like it. State management agencies and businesses actively and determinedly coordinate and support each other, and we will certainly do well,” Mr. Thuc acknowledged.

Mr. Nguyen Van Duoc said that there are currently 3 methods of tax payment: tax declaration, tax payment upon each occurrence and lump-sum tax. When lump-sum tax is abolished, taxpayers will have to pay according to the declaration method, according to current regulations, they must implement the accounting regime. Therefore, it is necessary to implement full invoices and documents, which can cause legal risks, increase legal compliance costs, and accounting system costs for taxpayers.

Resolution 68 also provides a mechanism to support individuals and business households through legal policies, accounting regimes, invoices and documents... in the simplest and most convenient way for them to proactively transform into enterprises.

However, according to Mr. Duoc, the tax law will have to be amended to provide a tax payment method for business households.

“The Law on Value Added Tax has a direct tax payment method, meaning that only if the revenue is correct, the tax is collected correctly and sufficiently; it is not necessary to have accounting books. It is possible to issue invoices yourself or use electronic invoices generated from cash registers like businesses with revenue of over 1 billion VND.

This does not necessarily require an accounting regime for small and micro households to reduce legal compliance costs, accounting costs, and social costs. Thus, it will be more suitable for the context of Vietnam and the roadmap to eliminate lump-sum tax by 2026 at the latest is more than feasible," Mr. Duoc suggested.

Why are 5 million business households 'afraid to grow'? Playing a significant role in the economy, the rate of business households converting to enterprise models is still very modest. What is the reason that these business households seem to "refuse to grow"?

Source: https://vietnamnet.vn/ho-kinh-doanh-can-duoc-ho-tro-gi-khi-bo-thue-khoan-2400135.html