Proposed Increase in Taxable Revenue Threshold for Household Businesses to 500 Million: Expert Opinions

“A revenue threshold of 500 million VND per household business per year for tax liability is not considered high. With a 10% profit margin, the taxable income threshold would be only 50 million VND per year, equivalent to 4.17 million VND per month. This is a low-income level, and measures should be taken to increase income for business owners,” stated Dr. Nguyễn Ngọc Tú, a lecturer at the University of Business and Technology in Hanoi and former Director General of the General Department of Taxation.

However, the expert also expressed concern that the state would experience a reduction in revenue, as very few household businesses would fall under the taxable category. If this revenue threshold is implemented, out of the 2.54 million regular household businesses (as of October 2025), approximately 2.3 million households and individuals would be exempt from taxation, accounting for about 90% of the total 2.54 million household businesses.

“Raising the threshold from 200 million VND to 500 million VND in annual revenue will benefit household businesses but will result in significant revenue loss for the state budget. This could also lead to the expansion of the informal economy sector, as business owners may avoid registering as companies to evade taxes,” analyzed Dr. Nguyễn Ngọc Tú.

However, the expert suggested that the Ministry of Finance should conduct a survey to determine which households have revenues of 500 million VND or less and which have revenues above 500 million VND.

Commenting on this issue, Mr. Nguyễn Văn Được, CEO of Trong Tin Accounting and Tax Consulting Company, noted that increasing the tax threshold for household businesses from 200 million VND to 500 million VND per year would, in principle, increase the number of tax-exempt entities and reduce budget revenue.

“However, we must consider specific perspectives. A revenue threshold of 500 million VND per household business per year still does not ensure fairness compared to the tax rates for salaried employees. With a 10% profit margin, the tax threshold for household businesses should be raised to 1 billion VND per year, with an average income of 8.4 million VND per month.”

“Previously, with a tax exemption threshold of 100 million VND per year, a household business only needed to reach 101 million VND in revenue to be taxed on the entire 101 million VND. This meant that exceeding the threshold by just 1 million VND resulted in tax liability for the entire amount, creating significant unfairness.”

“This time, the Ministry of Finance will tax revenue above 500 million VND, meaning that if revenue is 501 million VND, only the additional 1 million VND will be taxed, not the entire 501 million VND,” explained Mr. Được.

However, he also suggested that taxing household businesses should not be uniform but should target specific sectors or products with low-profit margins for support.

Proposal to Raise the First-Tier Personal Income Tax Threshold to 20 Million VND

According to Document No. 18491 submitted to the Prime Minister and Deputy Prime Minister Hồ Đức Phớc regarding the absorption and explanation of opinions from National Assembly delegates on the amended Personal Income Tax Law, the Ministry of Finance adjusted the tax brackets from 7 to 5, widened the gaps between brackets, and revised the tax rates in the tax table. These changes ensure that all individuals currently paying taxes in various brackets will see a reduction compared to the current tax table, while also addressing the abrupt increases between tax brackets.

Specifically, for the first bracket, taxable income up to 10 million VND per month will be taxed at 5%; the second bracket, from 10 million to 30 million VND, will be taxed at 10% (down from 15%, a reduction of 5%); the third bracket, from 30 million to 60 million VND, will be taxed at 20% (down from 25%, a reduction of 5%); the fourth bracket, from 60 million to 100 million VND, will be taxed at 30%; and the fifth bracket, above 100 million VND, will be taxed at 35%.

Mr. Nguyễn Văn Được highly appreciated the Ministry of Finance’s adjustments, reducing the tax brackets from 7 to 5: “The Ministry of Finance’s revision to reduce the number of tax brackets and lower the tax rates is appropriate. However, consideration should be given to raising the taxable income threshold for the first bracket to 20 million VND instead of the current 10 million VND.”

Sharing the same view, expert Nguyễn Ngọc Tú stated that the Ministry of Finance’s adjustment from 7 tax brackets to 5 is a significant step forward, demonstrating the Ministry’s openness to feedback from National Assembly delegates and public opinion.

“However, the highest tax rate of 35% for individuals in the fifth bracket is not suitable. The maximum tax rate should be set at 30% to attract high-quality human resources, especially foreign experts and skilled workers, thereby contributing to the development of science and technology and socio-economic growth,” said Dr. Nguyễn Ngọc Tú.

According to Mr. Tú, the tax rates for the last three brackets (20% for the third bracket, 30% for the fourth bracket, and 35% for the fifth bracket) are still high.

“The first three brackets are for individuals with average incomes, so lower tax rates should be applied: 5% for the first bracket, 10% for the second bracket, 15% for the third bracket, 20% for the fourth bracket, and 25% for the fifth bracket.”

“Additionally, the income thresholds for each bracket should be raised. The threshold for the first bracket should be increased from 10 million VND to 20 million VND, taxed at 5%. For the final bracket, the income threshold should be raised to 180–200 million VND per month, taxed at 25%,” suggested Mr. Tú.