Raising the tax exemption threshold will ease the burden on the people.

VTV.vn - By doubling the tax exemption threshold, 2.5 million individuals and business households with annual revenue under 1 billion VND will no longer have to pay taxes.

Good news for over 2.5 million business households.

At its first session, the National Assembly passed a law amending and supplementing several articles of four laws: the Law on Personal Income Tax, the Law on Value Added Tax, the Law on Corporate Income Tax, and the Law on Special Consumption Tax.

Instead of setting a fixed revenue threshold for individuals and household businesses to be exempt from tax, the National Assembly has now given the Government the power to adjust this threshold.

To concretize this policy, the Government issued Decree 141, officially raising the tax-exempt revenue threshold for household and individual businesses to 1 billion VND per year.

Ms. Vo Thi Ut's family, a business owner in Ho Chi Minh City, relies solely on their small restaurant for income, generating approximately 600-700 million VND per year. Despite this revenue, the actual profit is low due to high raw material costs.

Amidst challenging market conditions, Ms. Ut's family is one of 2.5 million individuals and business households who received good news: they are no longer on the list of those subject to taxation.

According to data from the Tax Department, there are currently about 3.1 million business households nationwide, of which more than 80% have annual revenue of less than 1 billion VND. This means that more than 2.5 million individuals and business households are exempt from paying taxes under the new tax threshold.

The new policy benefits not only the 2.5 million individuals and business households with revenue under 1 billion VND, but also those with revenue above this threshold.

Ms. Lan's shop, a small business owner at Ben Thanh Market in Ho Chi Minh City, generates over 1 billion VND in revenue annually with a profit margin of approximately 10-15%. Given the nature of her agricultural business, which doesn't yield high profits, Ms. Lan believes that tax exemptions up to 1 billion VND, requiring her to pay only the amount exceeding that, would be a significant support for businesses like hers.

"When sales exceed 1 billion VND, paying taxes to the State is reasonable. Sometimes the profit is small, but not having to pay a lot in taxes is a relief," Ms. Lan said.

Benefits are balanced, risks are shared.

Analyzing the 1 billion VND/year threshold, experts assess that raising the tax threshold to a new level is relatively appropriate given the current income and expenses of household businesses. Ms. Le Yen, Director of Hanoi Tax Consulting Company Limited, stated that dividing 1 billion VND in revenue by month would amount to approximately 83 million VND/month, or about 2.7 million VND/day. Households in this revenue range are typically small-scale, self-sufficient businesses.

According to Ms. Yen, the previous tax threshold of 500 million VND per year had somewhat created psychological pressure and a burden for many business households. This tax threshold also indirectly contributed to an increase in consumer prices and living costs.

"Raising the tax exemption threshold to 1 billion VND/year is very appropriate, practical, and timely. Business households feel the support from the Government and the Tax Department. This is not just about tax exemption, but also reflects the mindset of the State and the Government to nurture revenue sources and support social welfare," Ms. Yen assessed.

Regarding the new tax threshold, Mr. Truong Huynh Thang (Deputy Director of the Department of Tax, Fee and Charge Policy Management and Supervision, Ministry of Finance) stated that the revenue level of 1 billion VND/year is appropriate at the present time based on the principle of balanced benefits and shared risks.

"The 1 billion VND threshold was also considered from the perspective of calculating the compliance costs for taxpayers and minimizing the collection costs for tax authorities to ensure the effectiveness of the policy. This revenue level is also similar to the regulations on the use of electronic invoices by household and individual businesses."

"The policy also aims to support the business activities of households and individual businesses, as well as create conditions for them to convert to a business model," Mr. Thang analyzed.

Easing the burden on the people

With approximately 2.5 million business households having revenues under 1 billion VND, the new tax exemption threshold will correspond to a reduction in budget revenue of over 16,000 billion VND compared to 2025. However, this immediate revenue reduction is expected to create room for business households to accumulate capital and expand their operations. Once this sector develops stably, budget revenue will also have a basis for sustainable expansion in the long term.

“Raising the tax exemption threshold to 1 billion VND will help millions of business households avoid paying taxes. This is essentially easing the burden on the people, creating conditions for them to live better and more comfortably. Those with good incomes will pay taxes. The government and the Ministry of Finance's policy in this adjustment is not to focus on tax collection but to improve management,” said Mr. Tran Xoa, Director of Minh Dang Quang Law Firm.

Sharing the same view, Mr. Dau Anh Tuan, Deputy Secretary General of the Vietnam Chamber of Commerce and Industry (VCCI), commented that with the new tax threshold, the number of individuals and business households that are not subject to tax and do not have to file tax returns will expand significantly.

"We believe this is a signal demonstrating leniency and strengthening support policies for the household business sector," said Mr. Dau Anh Tuan.

Notably, the increase in the tax-free threshold for household businesses, effective from January 1, 2026, means that many household businesses that paid taxes in the early months of the year may be considered for refunds or offsets according to regulations.

“Currently, for business households and individual business owners who self-assess their annual revenue to be between 500 million and 1 billion VND and have already declared taxes, the tax authorities will guide them to adjust their tax returns. If by the end of the year the revenue is still less than 1 billion VND, they will follow the refund procedure outlined in the Ministry of Finance's guiding circular,” said Ms. Pham Thi Minh Hien, Deputy Head of the International Tax Policy Department, Tax Department (Ministry of Finance).

Targeting the right people, preventing exploitation.

Raising the tax exemption threshold to 1 billion VND per year will benefit millions of individuals and business households, but one issue is that management and supervision will need to be stricter to ensure that the policy is implemented correctly, targeting the right beneficiaries, and effectively.

These concerns are not unfounded. A business with an annual revenue of approximately 3 billion VND could easily split into three separate businesses, each with a revenue of around 1 billion VND, to avoid tax obligations.

Analyzing these concerns, Ms. Le Thi Duy Hai, Vice President of the Vietnam Tax Consulting Association, said that even at the tax threshold of 500 million VND, business households have already tended to split into smaller units to benefit from tax exemptions and comply with tax regulations. This trend will likely continue when the threshold is raised to 1 billion VND, or even 2-3 billion VND.

"In practice, when providing advice, many cases involve the issue of splitting household businesses even though they continue to operate at the same location, possibly in the same or different industries. There are cases where a husband and wife jointly own property and want to split it into multiple households to benefit from tax exemptions. These situations need to be considered based on the core criterion of business independence," Ms. Hai explained.

According to the expert, a business household is only considered independent when it ensures that elements such as capital, assets, operations, and legal responsibilities are separate. If assets and capital are shared but separated into multiple household businesses, then the independent condition is not met and there are signs of violations.

Tax authorities can identify these cases through administrative data, including the population database, business registration information, business locations, and related data sources. When signs of illegal revenue splitting aimed at concealing or dispersing revenue are detected, authorities can recover the lost revenue and impose penalties.

However, Ms. Hai stated that it is also necessary to recognize that there are cases of household separation that are completely legal. Therefore, it is necessary to review and clarify the legal framework regarding household businesses, especially the criteria for determining independence, in order to clearly distinguish what is legitimate from what is in violation.

Raising the tax-exempt revenue threshold is a necessary and timely policy to alleviate the burden and provide support to household businesses. However, support must be accompanied by strict management; how to effectively control and prevent abuse of the policy... all need careful consideration and supervision during implementation. The ultimate goal is to ease the burden on the people, nurture revenue sources, ensure fairness and transparency, and prevent budget losses.

Source: https://vtv.vn/nang-nguong-mien-thue-khoan-thu-suc-dan-100260513082714899.htm