Household businesses move to self-declaration, the tax-free revenue threshold rises to VND 1 billion, and the business licence fee is abolished.
About this article
The content is for reference purposes only and does not replace legal advice for each specific case.
In 2026, Vietnam makes one of the most fundamental changes ever to tax administration for household and individual businesses. It abolishes presumptive tax, moves all such businesses to self-declaration, abolishes the business licence fee and raises the tax-free revenue threshold fivefold.
The tax-free threshold is now VND 1 billion, not VND 500 million
The tax-free revenue threshold has changed twice in a short period. When you cite it, check which period applies:
| Period | Revenue threshold below which no tax is payable | Legal basis |
|---|---|---|
| Before 2026 | VND 100 million per year, later raised to VND 200 million per year | Law on Personal Income Tax 2007; Law on Value Added Tax No. 48/2024/QH15 |
| Law No. 109/2025/QH15 as passed | VND 500 million per year | Law No. 109/2025/QH15; Decree No. 68/2026/ND-CP |
| Currently in force, applicable from 1 January 2026 | VND 1 billion per year | Decree No. 141/2026/ND-CP amending Decree No. 68/2026/ND-CP |
The VND 1 billion threshold applies to both value added tax and personal income tax. By estimate, about 2,556,042 household and individual businesses fall below this new threshold and pay no tax.
The new threshold applies retroactively. Decree No. 141/2026/ND-CP was issued on 29 April 2026 but applies retroactively from 1 January 2026. Household businesses that paid tax on the basis of the VND 500 million threshold in the first months of the year should review their payments to determine how much tax they overpaid.
Households above the threshold use one of two calculation methods
Method 1: tax on income, mandatory when revenue exceeds VND 3 billion
This new method is designed to follow the way corporate income tax is calculated:
Assessable income = Revenue from the sale of goods and services less expenses related to production and business activities during the period
| Revenue per year | Tax rate on income | Mandatory or optional |
|---|---|---|
| Up to VND 1 billion | Exempt from tax | |
| Over VND 1 billion to VND 3 billion | 15% | May choose between this method and calculation as a percentage of revenue |
| Over VND 3 billion to VND 50 billion | 17% | Mandatory |
| Over VND 50 billion | 20% | Mandatory |
A household business whose revenue exceeds VND 3 billion must switch to the method based on assessable income from the following year. Under that method, the household must keep accounting books and retain full supporting documents for its expenses.
Method 2: a percentage of revenue, for revenue of over VND 1 billion up to VND 3 billion
This method applies to household businesses with revenue of over VND 1 billion up to VND 3 billion that choose the percentage-based calculation. The tax is calculated as follows (Decree No. 68/2026/ND-CP):
Personal income tax payable = Percentage rate × (Revenue less the tax exemption threshold)
| Business line group | Personal income tax rate | Value added tax rate |
|---|---|---|
| Distribution and supply of goods | 0.5% | 1% |
| Production, transport, services associated with goods, and construction inclusive of the supply of materials | 1.5% | 3% |
| Services and construction exclusive of the supply of materials | 2% | 5% |
| Leasing of assets; digital content and video games | 5% | 5% |
| Insurance agency, lottery agency and multi-level marketing | 5% | Not applicable |
| Other business activities | 1% | 2% |
Digital content and video games are taxed at a higher rate. Digital content and video games now form a separate group, with a personal income tax rate of 5%. This rate is much higher than the 2% rate for ordinary services, the group under which these activities were often classified before. The change directly affects individuals and household businesses that create digital content or publish video games. Real estate leasing is also taxed at 5% on the revenue above the threshold.
The business licence fee is abolished for all businesses
The business licence fee is formally abolished from 1 January 2026 under Resolution No. 198/2025/QH15 dated 17 May 2025. The abolition applies to all enterprises, household businesses and individual businesses, not only to household businesses.
From that date, household businesses owe the state budget only two taxes: value added tax and personal income tax. As a result, they have far fewer procedures to complete, especially small household businesses.
Household businesses move to self-declaration and self-payment
The presumptive tax mechanism is abolished from 1 January 2026. The mechanism had existed for several decades and was often criticised as lacking transparency and as encouraging an ask-and-grant culture. Household businesses now declare, pay and take responsibility for their tax themselves.
This change brings several new requirements for household businesses:
- Household businesses must record all revenue, including revenue from online sales and from non-cash payments.
- Household businesses must use electronic invoices in accordance with the law.
- Household businesses need to keep supporting documents for expenses. This matters most for households that use the income-based method, because an expense without a valid supporting document is not deductible.
- Household businesses must declare periodically as guided by the Ministry of Finance's circular.
Key dates in the household business tax reform
| Date | Content |
|---|---|
| 1 January 2026 | Presumptive tax abolished and replaced by declaration; the VND 1 billion threshold takes effect (applied retroactively under Decree No. 141/2026/ND-CP); the business licence fee is abolished under Resolution No. 198/2025/QH15 |
| 5 March 2026 | Decree No. 68/2026/ND-CP on tax policy and tax administration for household businesses takes effect |
| 1 July 2026 | The Law on Personal Income Tax No. 109/2025/QH15 and Decree No. 253/2026/ND-CP take general effect |
What household businesses should do now
- Re-check their revenue group to know whether they are exempt from tax, may choose the calculation method, or must calculate tax on assessable income.
- If revenue is between VND 1 billion and VND 3 billion: compare the tax payable under the two methods before choosing. A household with a low profit margin usually pays less under the income-based method. A household with a high profit margin and few expense documents usually pays less under the percentage-of-revenue method.
- Review the tax paid since the beginning of 2026 on the basis of the VND 500 million threshold, and complete the procedures to recover the overpaid tax.
- Set up record-keeping and electronic invoicing from the start, without waiting until revenue exceeds the threshold, because expense documents cannot be created after the event.
- If revenue is approaching VND 3 billion: consider converting into an enterprise early. Once the income-based method becomes mandatory, the household carries the same compliance burden as an enterprise but does not receive the incentives available to enterprises.