Personal income tax: Proposal to 'loosen' tax exemption threshold for business households

(Chinhphu.vn) - The Government and the Ministry of Finance proposed raising the tax-free revenue threshold for business households to 500 million VND/year, amending the progressive tax schedule, and adjusting it to reduce the number of tax rates from 7 to 5.

Personal income tax: Proposal to 'loosen' tax exemption threshold for business households

Proposal to sharply increase tax-free revenue threshold for business households

Based on the opinions of National Assembly deputies, experts and scientists, the Ministry of Finance has coordinated with relevant agencies to complete regulations on personal income tax for business households and individuals in the draft Law on Personal Income Tax (amended), currently being submitted to the National Assembly at the 10th Session of the 15th National Assembly.

According to the Ministry of Finance, during the process of drafting the law, the revised contents were carefully studied and their impacts were fully assessed in order to advise and propose to the Government appropriate solutions in accordance with reality, ensuring fairness among taxpayers, including between households and individuals doing business with salaried employees, as well as between households and small-scale enterprises.

On that basis, on December 1, 2025, the Government issued Report No. 1112/BC-CP to the National Assembly Standing Committee on the reception and explanation of the review opinions and the opinions of National Assembly deputies. In the report, the Government proposed to adjust the regulations on personal income tax on the income of business households and individuals by changing both the tax exemption threshold and the tax calculation method.

Specifically, regarding the tax-free revenue, the Government proposed to adjust from 200 million VND/year to 500 million VND/year. At the same time, this 500 million VND/year is determined as a deductible amount before calculating tax for business households and individuals.

According to the tax authority's estimate, with this adjustment, the total tax liability for households and individuals doing business will be reduced by about VND11,800 billion/year. The increase in threshold is expected to significantly reduce tax pressure on the household economic sector, which accounts for a large proportion of the economy.

In addition to adjusting the revenue threshold, the Government also proposed to supplement the tax calculation method for business households and individuals to ensure the true nature of income tax. For business households and individuals with revenue of over VND500 million/year, the tax calculation method based on income, i.e. revenue minus expenses, will be applied.

For the group with revenue from 500 million VND/year to 3 billion VND/year, both the method of calculating tax based on the revenue rate and the deduction of 500 million VND from the revenue before calculating tax are applied in parallel.

In parallel with the Law on Personal Income Tax, to ensure consistency in tax policy, in the draft Law amending the Law on Value Added Tax No. 48/2024/QH15, the Ministry of Finance also proposed to increase the non-VAT revenue for business households and individuals from VND 200 million/year to VND 500 million/year.

Progressive tax rate reduced to 5 levels, tax rate reduced to two intermediate levels

Regarding the progressive tax schedule applied to people with income from salaries and wages, the Ministry of Finance said it has received comments and reviewed and adjusted it to reduce the number of tax rates from 7 to 5.

The Government and the Ministry of Finance have simultaneously proposed widening the gap between the levels and readjusting the two intermediate tax rates. In particular, the 15% tax rate at level 2 is reduced to 10%, and the 25% tax rate at level 3 is reduced to 20%.

Specifically the new tax schedule:

Level 1: Up to 10 million VND/month - tax rate 5%.

Level 2: Over 10 to 30 million VND/month - tax rate 10%.

Level 3: Over 30 to 60 million VND/month - tax rate 20%.

Level 4: Over 60 to 100 million VND/month - tax rate 30%.

Level 5: Over 100 million VND/month - tax rate 35%.

With the new tax schedule, the Ministry of Finance affirms that all individuals who are performing tax obligations according to the current tax schedule will have their tax reduced compared to before, while overcoming the situation of sudden tax increases between levels.

Along with the adjustment of the tax schedule, the family deduction level is also included in the draft law. Previously, the National Assembly Standing Committee passed Resolution No. 110/2025/UBTVQH15 dated October 17, 2025 on adjusting the family deduction level.

Compared with current regulations, the increase in family deductions is estimated to reduce personal income tax payable on income from salaries and wages by about VND21,000 billion per year.

To ensure the National Assembly's authority according to the Constitution, the Ministry of Finance said it has revised the draft law to include the family deduction level in the law, and at the same time assigned the Government to submit to the National Assembly Standing Committee to adjust this level based on fluctuations in prices and income, in accordance with the socio-economic situation in each period.

Mr. Minh

Source: https://baochinhphu.vn/thue-thu-nhap-ca-nhan-de-xuat-noi-nguong-mien-thue-cho-ho-kinh-doanh-102251205155848185.htm