Struggling Household Businesses Face Tax Transition Challenges

These days, Tan Dinh Market (Tan Dinh Ward, Ho Chi Minh City) is bustling with visitors, especially tourists. However, instead of rejoicing, many vendors are anxious as they struggle to transition from lump-sum tax to electronic invoicing by January 1, 2026.

Navigating the Electronic Invoicing Maze

Ms. Nguyen Thi Thoa, a dry food vendor, shared that she started issuing electronic invoices in June but still feels very uncertain. Each time she issues an invoice to a walk-in customer, she must open the app on her phone and cross-reference her handwritten notes. “To issue one electronic invoice, I have to follow 21 steps, taking over 2 minutes.

I hope the regulations can be simplified to suit the current skill level of vendors. Previously, paying lump-sum tax was straightforward. For incoming goods, I just kept the receipts, added fees and taxes, then sold them, with most customers not requesting invoices. I’m extremely worried because many aspects are beyond my understanding. My biggest fear is making a mistake and violating the law,” Ms. Thoa expressed.

Sharing similar concerns, Mr. Tran Binh Nguyen, owner of a children’s clothing stall, mentioned that his family has been operating in the market for 30 years and is accustomed to the lump-sum tax system. Now, switching to self-declaration means higher taxes and more paperwork, making it very challenging for his family and other vendors. He suggested that tax authorities provide detailed guidance on inventory and allow adjacent businesses to file jointly. “My family has three adjacent stalls but must file separately, which is very inconvenient,” he said.

Additionally, traditional market business models differ significantly from online channels but must compete directly on price. Therefore, he proposed that the government reduce the tax rate from the current 1.5% of revenue to 0.8% to ease the burden on vendors. Apart from taxes, businesses also bear costs such as stall fees, employee wages, utilities, waste management, and app fees.

Ms. Doan Thi My Chi, owner of a fabric stall, is also struggling with tax reporting and hopes for further guidance. She also wishes to pay taxes based on profit rather than a percentage of revenue but is hesitant to register as a business due to limited space in the market and the inability to hire an accountant.

Regarding the 1.5% tax rate, Ms. Chi believes it is only suitable for low-value items, not high-value goods. For example, silk fabric for ao dai, typically purchased at VND 150,000 per meter and sold at VND 160,000 per meter, excludes costs like rent, staff, fees, and inventory. A 1.5% tax on revenue is excessive and could lead to losses. Increasing prices to offset taxes is not feasible due to competition from other sellers, especially online.

Finding the Right Approach

In reality, transactions in traditional markets, eateries, and convenience stores often rely on familiarity and verbal agreements, with most incoming goods lacking proper invoices. The few available receipts are usually handwritten notes from wholesale markets or regular suppliers, which do not meet current tax management requirements and could expose businesses to legal risks.

Ms. Nguyen Thi Kieu, owner of a mi Quang stall in Ho Chi Minh City, shared that 95% of her ingredients are purchased from wholesale markets or small vendors without invoices. Essential items like noodles, meat, vegetables, and spices rarely come with invoices; if they do, an additional 8% tax is added.

“During operations, urgent purchases of items like vegetables, rice paper, or noodles often arise, and almost no one provides invoices. Clearer guidance is needed to ensure compliance. Adjusting prices based on new input costs might affect competitiveness. So, what’s the right approach?” Ms. Kieu wondered.

Sharing similar concerns, Ms. Nguyen Hong Thai, a clothing vendor at a traditional market in Ho Chi Minh City, mentioned that wholesale suppliers rarely provide invoices, only for very large orders. For inventory purchased months ago, paper invoices are often lost or only handwritten notes remain, making it difficult to prove origin.

“To issue an outgoing invoice, an incoming invoice is required. But for old inventory, what can be used for verification? Suppliers won’t reissue them. In such cases, I don’t know how to handle it,” she questioned.

Beyond the lack of documentation, many older business owners face significant challenges with electronic invoicing apps. They worry about input errors affecting revenue or how to handle returns. The complexity of digital tools makes the transition to electronic invoicing feel “beyond their capabilities.”

Given these challenges, many vendors suggest maintaining the lump-sum tax system for small businesses and older individuals, reducing paperwork and stabilizing operations. Errors can still be addressed according to regulations without placing excessive pressure on business owners. “The new tax system might be reasonable for small businesses with annual revenues of VND 300–400 million. However, flexible implementation and clear guidance are essential for smooth adaptation,” suggested Mr. Nguyen Thanh Cong, a fashion business owner.

Mr. Do Duy Thanh, an expert in the food and beverage (F&B) industry, noted that the lump-sum tax system has been in place for 40 years. Transitioning to self-declaration and actual revenue-based taxation is a significant change, not just a policy shift. Therefore, providing businesses with time to adapt and the necessary tools for compliance is crucial.

Mr. Thanh proposed extending the support period for businesses by 3–6 months to facilitate adaptation. During this time, errors should be corrected through guidance rather than penalties.

Additionally, applying a family circumstance deduction for business owners is essential. “Currently, salaried employees enjoy this benefit, but business owners, who directly labor and bear risks, do not. This creates a sense of imbalance and reduces compliance motivation,” he said.

(To be continued)