Proposal for individual business to pay 17% income tax on profits

The Ministry of Finance proposes that business individuals pay income tax determined on the difference between revenue and expenses, at a tax rate of 17%.

Currently, individuals with annual revenue exceeding 100 million VND are required to pay personal income tax based on a percentage of their revenue. Revenue is defined as the total amount of sales, processing fees, commissions, and service provision generated during the tax period. If revenue cannot be determined, the tax authorities will assess it according to regulations.

However, from January 1, 2026, following the policy of abolishing the lump-sum tax system, the Ministry of Finance proposes adding a tax calculation method based on income instead of revenue. Accordingly, resident individuals with annual revenue exceeding the level stipulated by the Government will have their tax payable determined by multiplying their taxable income by a rate of 17%.

Taxable income is understood as revenue from the sale of goods and services minus expenses related to production and business activities during the period. This calculation is similar to the regulations in the Corporate Income Tax Law, which currently applies a tax rate of 17% to small and medium-sized enterprises with annual revenue from over 3 billion to 50 billion VND.

In cases where individual businesses have annual revenue below the tax threshold, the current method of calculating tax based on a percentage of revenue will remain unchanged.

Currently, there are approximately 5.2 million business households nationwide, contributing over 24% to GDP and considered the "backbone" in many industries and sectors, from agriculture and industry to trade and services. Last year, revenue from business households and individuals reached VND 25,953 billion, equivalent to 120% of the 2023 figure.

In addition to the calculation method, the Ministry of Finance also proposed applying a 5% tax rate to certain income from providing digital content products and services related to entertainment, video games, digital films, digital photos, digital music, and digital advertising.

According to Law No. 71/2014, this type of income is subject to a 1% tax rate, similar to other income sources. However, according to the authorities, these are income sources with unique characteristics. Therefore, the Law needs to stipulate an appropriate tax rate to ensure equality and uniformity, while also promoting the regulatory and redistributive role of the policy.

PV (compiled)

Source: https://baohaiphong.vn/de-xuat-ca-nhan-kinh-doanh-nop-thue-thu-nhap-17-tren-lai-520045.html