Is the 500 Million VND Threshold Adequate?
The Ministry of Finance has proposed adjusting the taxable revenue threshold for business households from 200 million VND/year to 500 million VND/year. This is the amount deducted before tax is applied based on revenue. The new threshold is five times higher than the current one and 2.5 times higher than the previous proposal. Notably, business households can opt for income-based taxation (revenue minus expenses) at a 15% tax rate.
Ms. Hoàng Thị Huế, who runs a small grocery store in Kim Liên, Hanoi, with her family, describes their work as “meticulous and frugal,” earning from a few hundred VND per instant noodle pack to a few tens of thousands VND per milk carton. The store’s annual revenue is around 800 million VND, but the actual profit after expenses is minimal. While the proposed 500 million VND threshold provides some relief, Ms. Huế hopes for a higher tax exemption, as her family relies solely on the grocery store for livelihood.
For small-scale business households, many plan to continue paying tax based on the current percentage for revenue exceeding 500 million VND. Mr. Lê Minh Tùng, owner of a bread and beverage stall in Hai Bà Trưng, explains that income-based taxation would disadvantage him, as he operates from home and cannot substantiate expenses.
Business households in different industries have varying profit margins despite similar revenue levels.
Speaking with Tiền Phong, Mr. Lê Văn Tuấn, Director of Keytas Accounting and Tax Company, considers the 500 million VND threshold “a suitable initial step.” As of October 2025, approximately 2.3 million out of 2.54 million active business households (about 90%) are expected to be tax-exempt.
However, Mr. Tuấn notes that the proposal lacks state support for small businesses, focusing only on obligations. He emphasizes that the tax threshold should account for compliance costs, such as cash registers, accounting software, e-invoices, and digital signatures, which total around 20 million VND in initial investment, excluding annual maintenance fees.
No One-Size-Fits-All: Industry-Specific Tax Thresholds Proposed
Mr. Tuấn compares Vietnam’s tax thresholds with regional peers, suggesting higher thresholds: 750 million VND (Thailand), 1 billion VND (Malaysia), and 1.5 billion VND (China). He stresses that tax policy should foster business growth rather than focus on minor revenue collection.
Mr. Nguyễn Hồ Ngọc, Training Director at ATC Academy, agrees that the 500 million VND threshold is progress but fails to account for industry-specific profit margins. He proposes using average industry profit margins to determine tax thresholds, ensuring fairness. For instance, a 5% margin in trade would require a 3.7 billion VND threshold, while a 20% margin in services would require 930 million VND.
Raising the Tax Threshold for Household Businesses to 500 Million VND: What Do Experts Say?
The Ministry of Finance has proposed raising the tax-exempt revenue threshold for household businesses.
Still Wondering About Taxable Revenue?
Small business owners express concerns that the current tax threshold does not accurately reflect their actual profits. They propose raising the tax-exempt threshold to a more reasonable level, ensuring a fairer representation of their financial situation.
Proposed Business Households Earning Over 500 Million VND/Year to Be Subject to Taxation
The Ministry of Finance has submitted a proposal to the Prime Minister and Deputy Prime Minister Hồ Đức Phớc regarding the draft Law on Personal Income Tax (amended). The proposal suggests raising the tax-exempt revenue threshold for households and individual businesses from 200 million VND to 500 million VND. With this new threshold, it is estimated that 90% of businesses would be exempt from paying taxes.
Tax Experts Warn: Purchases Without Invoices Risk Seizure by Market Authorities if Linked to Counterfeit Goods
Tax experts emphasize that, except for specific cases, all business households are required to have input invoices.
How Much Tax Do Businesses Under 1 Billion VND/Year Pay? A Surprising Figure Revealed!
Small businesses with annual revenue under 200 million VND are exempt from VAT and personal income tax. Those earning between 200 million and under 1 billion VND annually must pay taxes at a percentage rate based on their industry-specific revenue.
