Finalize tax rates applicable to business households from January 1, 2026

The lump-sum tax will be abolished from January 1, 2026. Business households will be divided into 3 groups for tax management. Photo: Chau Duong.

The Ministry of Finance has issued Decision No. 3389/QD-BTC approving the Project "Converting the model and method of tax management for business households when eliminating lump-sum tax". Accordingly, from January 1, 2026, the lump-sum tax collection method for business households will be completely terminated and will be transferred to the method of self-declaration and self-payment of tax according to the provisions of the law on tax management.

Notably, the Project also clearly stipulates 3 groups of business households and new points in converting tax calculation methods after abolishing lump-sum tax.

Accordingly, Group 1 are business households with revenue under 200 million VND/year. This group is exempt from paying value added tax (VAT) and personal income tax (PIT).

In addition, group 1 will not need to apply complex accounting books but still have to make periodic declarations. You can choose to declare twice a year at the beginning of the year and in the middle/end of the year or choose a time that suits your business.

Group 2 have revenue from 200 million or less 3 billion VND . This group of business households applies the method of calculating direct tax on revenue as currently. The tax rates by industry are clearly defined: 1% for distribution and supply of goods; 5% for services, construction without contracted materials; 3% for production, transportation, services associated with goods, construction with contracted materials, and 2% for other business activities.

The regulations of the Ministry of Finance also create conditions for this group not to comply with complicated accounting regimes, but still have to keep simple books with prescribed forms. Tax declaration must be made 4 times/year (quarterly).

In this group, if a business household has a revenue of over 1 billion/year, and belongs to the retail industry, direct services to consumers according to regulations, it must issue electronic invoices from a cash register connected to the tax authority. Other businesses have a revenue of less than 1 billion VND /year does not require an invoice, but the Ministry of Finance notes that revenue should still be recorded.

For business households with revenue of over 3 billion/year, for 2 consecutive years based on monitoring by tax authorities, the 3rd year will move to group 3.

Group 3 are businesses with revenue of over 3 billion/year. For this group, managers set stricter requirements.

In which, business households are required to apply the VAT deduction method including: Output VAT - Input VAT = VAT payable.

Personal income tax is calculated at 17% of total profit. In which, Profit = Revenue minus Reasonable Expenses.

Regarding the declaration method, business households with revenue over 50 billion/year must declare monthly, and those under 50 billion must declare quarterly.

In addition, this group of business households is required to issue invoices (whether from cash registers or in other forms) and is required to open a separate bank account to serve business activities. At the same time, the use of electronic invoices with codes or invoices generated from cash registers is mandatory for this group.

According to statistics from the Ministry of Finance, by the end of 2024, the country will have about 3.6 million business households and individuals. The number of stable business households (contracting and declaring households) is 2.2 million. The number of households with revenue above the taxable threshold (over 100 million/year) is 1.3 million, accounting for 59% of the total number of households.

In 2024, the total state budget revenue from households and individual businesses will be approximately 26,000 billion VND . In the first 6 months of 2025, expected revenue from households and individuals doing business on 17,000 billion VND .

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