Household businesses may be taxed based on stable revenue for two years.

The Ministry of Finance is seeking feedback for the second time on the draft Decree regulating the declaration, calculation, deduction, payment of taxes, and use of electronic invoices for household businesses and individual businesses. Compared to the previous draft, this version has been refined and includes more detailed regulations after incorporating feedback from relevant ministries, agencies, and units.

The proposal suggests that household businesses be taxed based on stable revenue for two years.

According to the draft, household businesses and individual businesses with annual revenue of 500 million VND or less will not have to pay personal income tax. If revenue exceeds this amount, personal income tax will be determined using two methods, depending on the scale of revenue and the taxpayer's choice.

Specifically, for business households with revenue exceeding 500 million VND, the tax can be calculated based on taxable income, which is revenue minus reasonable expenses serving production and business activities, then multiplied by the corresponding tax rate.

The proposed tax rates are 15% for revenue between VND 500 million and VND 3 billion; 17% for revenue between VND 3 billion and VND 50 billion; and 20% for revenue exceeding VND 50 billion. Income from real estate rentals is not subject to this calculation method.

For household businesses with revenue ranging from 500 million VND to 3 billion VND, the draft allows them to choose between paying tax based on income or paying tax as a percentage of revenue.

In the case of revenue-based taxation, the taxable portion of revenue is the revenue exceeding 500 million VND per year. If a business has multiple locations or multiple business lines, the taxpayer is allowed to deduct up to 500 million VND from the total revenue before calculating tax and has the right to choose which location or business line to apply this deduction to.

Tax rates on revenue are regulated according to each sector. Specifically, the rate is 0.5% for goods distribution and supply; 2% for services and construction without material procurement; 5% for property leasing, insurance agency, lottery agency, and multi-level marketing; 1.5% for manufacturing, transportation, and services related to goods or construction with material procurement; 5% for providing digital content products and services such as video games, films, music, and digital advertising; and 1% for other business activities.

Specifically for households and individuals renting out real estate (excluding accommodation services), personal income tax is calculated at 5% on the portion of revenue exceeding 500 million VND per year.

Hộ kinh doanh có thể được tính thuế trên doanh thu ổn định trong 2 năm - 1 — People in Hanoi's Old Quarter (Photo: Toan Vu).

According to the draft, the method of calculating personal income tax chosen by the business household will be applied consistently for two consecutive years starting from the first year of implementation. If a business household has revenue between 500 million VND and 3 billion VND, but in two consecutive years its actual revenue exceeds 3 billion VND, from the following year onwards it will have to switch to the income-based tax calculation method.

Which businesses are not required to use electronic invoices?

Regarding invoices, the draft regulations stipulate that business households with annual revenue of 1 billion VND or more must use electronic invoices with tax authority codes or electronic invoices generated from cash registers connected to and transmitting data with the tax authority as prescribed in Decree No. 70/2025.

In cases where a business household has multiple business locations and uses the same tax identification number, the invoice must clearly show the address of each location where the transaction takes place.

For household businesses with annual revenue between 500 million and 1 billion VND, the draft regulations do not mandate the use of electronic invoices with tax authority codes or electronic invoices generated from cash registers. However, household businesses that meet the requirements regarding information technology infrastructure and have the need will be encouraged and supported by the tax authorities to register for the use of electronic invoices.

In cases where a business household has not registered to use electronic invoices but needs to issue invoices, the taxpayer must declare and pay taxes first, after which the tax authority will issue an electronic invoice with a code for each transaction.

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