Tax Exemption for Household Businesses with Annual Revenue Below 200 Million VND
According to Clause 25, Article 5 of the 2024 Value Added Tax Law, effective from January 1, 2026:
Goods and services provided by households or individuals with an annual revenue of 200 million VND or less; assets of non-business organizations or individuals selling assets are not subject to value-added tax.
Based on Clause 1, Article 3 of the 2007 Personal Income Tax Law, amended by Article 17 of the 2024 Value Added Tax Law, effective from January 1, 2026: Income from households or individuals with annual revenue below 200 million VND is not subject to personal income tax.
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Therefore, household businesses with annual revenue below 200 million VND are exempt from personal income tax and value-added tax.
Tax Rates for Household Businesses with Annual Revenue from 200 Million VND to Below 1 Billion VND
Personal Income Tax
According to Article 10 of the 2007 Personal Income Tax Law, amended in 2014, individuals engaged in business pay personal income tax based on the revenue ratio for each industry or business activity.
Formula for calculating personal income tax
Where:
– Revenue is the total amount received from selling goods, processing services, commissions, and providing services during the tax period from production and business activities. If the individual cannot determine the revenue, the tax authority will determine it according to the provisions of the tax administration law.
– Tax Rate:
|
Business Activity |
Tax Rate |
|
Distribution, supply of goods |
0.5% |
|
Services, construction without material contracts |
2% |
|
Rental of assets, insurance agents, lottery agents, multi-level sales agents |
5% |
|
Production, transportation, services with goods, construction with material contracts |
1.5% |
|
Other business activities |
1% |
Value Added Tax
According to the Ministry of Finance’s guidelines in Decision 3389/QĐ-BTC, household businesses with annual revenue from 200 million VND to below 3 billion VND must calculate tax directly as a percentage of revenue:
Where:
– Revenue for VAT calculation is the total amount from selling goods and services recorded on invoices.
– The percentage rate for VAT is specified in Point b, Clause 2, Article 12 of the 2024 Value Added Tax Law as follows:
|
Activity |
Tax Rate |
|
Distribution, supply of goods |
1% |
|
Services, construction without material contracts |
5% |
|
Production, transportation, services with goods, construction with material contracts |
3% |
|
Other business activities |
2% |
Note: Household businesses may voluntarily register for the deduction method if they meet the conditions applicable to businesses or household businesses with annual revenue above 3 billion VND.
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