Small traders "struggling" between escalating costs and tax pressure
In the latest document sent to Prime Minister Pham Minh Chinh, Deputy Prime Minister Ho Duc Phoc reported on the reception and explanation of the review opinions and opinions of delegates on the draft Law on Personal Income Tax (amended). The Ministry of Finance proposed raising the taxable revenue threshold for business households and individuals to 500 million.
According to the Ministry of Finance, applying this revenue level, according to data as of October 2025, there are more than 2.54 million regular business households, it is expected that about 2.3 million business households will not have to pay tax (accounting for about 90% of the total 2.54 million business households). This is considered a step in line with management practice and helps reduce tax obligations for the majority of small businesses.
Small businesses are struggling between rising costs and new tax pressure.
However, in recent years, running a small business such as a snack bar, fashion store or coffee shop is no longer as easy as before.
Operating costs (from premises, raw materials to labor) are constantly pushed up, while the market's purchasing power is becoming more cautious. Consumers are increasingly demanding and only spend on truly necessary needs, instead of shopping on impulse.
The emergence of large brand chains along with technology platforms has created a more competitive environment than ever. Moreover, tax pressure is making many businesses "restless" when high revenue but low actual profit makes tax payment a burden and unfair.
Ms. Le Thi Thuy, who opened a small noodle shop in Van Mieu - Quoc Tu Giam ward, Hanoi, said that she sells about 60 bowls a day, earning 2.4 million VND/day, equivalent to 72 million VND/month, 864 million VND/year. After deducting the cost of rent, ingredients, electricity, water, and assistants, the remaining income is only about 10-11 million VND/month.
“ With this income, I still have to raise two small children. If we look at the revenue, my restaurant is far beyond the threshold, but in reality the profit is not much, ” Ms. Thuy shared.
According to her, the revenue threshold of 500 million VND/year to start paying tax is still low and does not accurately reflect business reality.
Similarly, Ms. Nguyen Thi H., a dried seafood trader at Dong Xuan market (Hanoi) also expressed concern that although revenue is high but actual profit is low, it would be unfair to calculate tax based on revenue. Ms. H. shared that her store's revenue far exceeds the threshold of 500 million VND/year, but due to large capital and high import prices, the profit is not much.
“ My whole family depends on this stall. My husband and I work 30 days a month without a day off. Now that the economy is difficult, after deducting all expenses, the profit is only enough to cover the expenses of a family of four. Simply calculating, 1kg of dried shrimp or dried squid is worth a million dong, but how much profit is there? Not to mention the unsold goods that have to be discounted, or the moldy or spoiled goods that have to be thrown away, which means a total loss. If we tax based on revenue, it is too unreasonable. We must calculate based on profit to truly reflect the nature of the business ,” said Ms. H.
Need to nurture revenue and create momentum for long-term growth
Mr. Le Van Tuan, Director of Keytas Tax Accounting Company Limited, said that raising the tax-free revenue threshold to 500 million VND has ensured a certain fairness and appropriateness among subjects with income from salaries and wages, and is also fair in the principle of implementing VAT and personal income tax obligations of business households. However, it is necessary to consider another important aspect: the state's support for business subjects.
According to Mr. Tuan, the State is promoting electronic invoices and economic transparency, and above all, the business households themselves must bear the cost of complying with this tax policy. Therefore, the tax threshold must consider this factor, to help business households have more resources to comply with tax policy.
“ The cost of equipping cash registers, accounting software, electronic invoices, digital signatures, etc. is a not small initial investment compared to the scale of the business households. Currently, the full package of these items is about 20 million VND, not including annual maintenance costs ,” said Mr. Tuan.
In addition, business is very risky, with statistics showing that 90-95% of startups lose money and disappear after three years. Business households face a harsh business environment and have to bear all tax obligations, even if the business results are unprofitable.
Therefore, the expert believes that raising the tax-free revenue threshold to 500 million VND/year may not necessarily create after-tax income for business households equivalent to the after-tax income of people with income from salaries and wages. However, living expenses are the same between subjects, this is also something to consider.
To get a more comprehensive view, the expert compared with neighboring countries with similar economic conditions and average income. The tax-free revenue of these countries is significantly higher than Vietnam's proposal of 500 million VND.
Specifically, if compared with Thailand, the tax-free revenue threshold that Vietnam should consider is 750 million VND. Or compared with Malaysia, the revenue threshold that should be considered is 1 billion VND. If compared with China, the revenue threshold that should be considered is 1.5 billion VND.
Mr. Tuan emphasized that the ultimate goal of tax policy is not only to collect enough tax but also to nurture revenue sources and create momentum for long-term development. Stronger support for business households in the start-up phase will help them expand their operations and contribute more tax to the budget in the future.
“ It is advisable to consider raising the tax-free revenue threshold to over VND750 million, equivalent to Thailand, or VND1 billion would be better to encourage business and build a sustainable "startup nation" vision ,” Mr. Tuan suggested.
Source: https://vtcnews.vn/nang-nguong-mien-thue-len-500-trieu-dong-da-du-nhe-ganh-cho-ho-kinh-doanh-ar990196.html
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