Tax Expert: No Tax Hikes for Registered Businesses—Maintain 1% Sales Revenue and 4.5% Service Rates, but Accurate Reporting is Mandatory

Taxes will be levied on the amount exceeding the threshold, not on the initial revenue.

Recently, the Enterprise Finance Magazine, in collaboration with the Vietnam Tax Consultancy Association, Hanoi Tax Department, and related units, organized a seminar titled “Accompanying Business Households in Transitioning from Presumptive Taxation to Declaration, Towards Enterprises.”

Speaking at the seminar, Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consultancy Association, stated that according to the Value-Added Tax Law No. 48, from January 1, 2026, the revenue threshold for individual business households exempt from value-added tax and personal income tax will increase to 200 million VND. However, this figure has received numerous suggestions for adjustment.

According to Ms. Cuc, raising the threshold too high is challenging due to the required adjustment process. However, there is a possibility that revenues between 300–350 million VND could be tax-exempt. The key change is that taxes will be levied on the amount exceeding the threshold, not on the initial revenue.

For example, currently, a revenue of 100 million VND is tax-exempt, but if it increases to 101 million VND, the entire 101 million VND is subject to a 4.5% tax for food and beverage business households.

If the threshold is adjusted to 300 or 350 million VND, the revenue within this threshold will be entirely tax-exempt; only the exceeding amount will be taxed. For instance, with a revenue of 301 million VND, only the 1 million VND exceeding the threshold will be taxed (1 million VND × 4.5%).

If the threshold is 350 million VND, a revenue of 400 million VND will only be taxed on the 50 million VND exceeding the threshold (50 million VND × 4.5%), instead of the entire 400 million VND as currently applied.

“This is a fundamental change and is considered a positive signal for business households. The management principle is as such,” said Ms. Cuc.

No Tax Increase

Ms. Cuc explained that whether using the presumptive or declaration method, all sectors pay taxes based on a percentage of revenue. Trade and service revenues with capital costs have a lower tax rate, while those with labor costs as the primary expense have a higher tax rate. This results in rates such as: distribution services at 0.5% personal income tax and 1% value-added tax; food and beverage services at 3% value-added tax and 1% personal income tax.

The presumptive method differs in that individual business households must declare their expected revenue. After submitting the expected revenue to the tax authority, the tax authority seeks input from the Ward/Commune Advisory Council, adjusts it based on the surrounding market, and then notifies the presumptive amount. This presumptive amount applies for the entire calendar year. Only when the presumptive tax changes by more than 50% of the presumptive revenue must the individual file form 01 for adjustment. For example, if the revenue increases from 500 million VND to 700–800 million VND.

Thus, it is clear that business households are not proactive and must rely on external factors. If they forget to submit form 01, the tax authority will consider the old revenue, leading to underpayment and potential tax evasion. Additionally, presumptive business households are not required to maintain accounting records. The declaration method requires this, but the presumptive method does not. While not maintaining records is convenient, it also leads to a lack of real management insight.

Despite using the presumptive method, Ms. Cuc noted that entities still need invoices. For example, if a household has a presumptive revenue of 700 million VND annually but wishes to purchase an additional 50 million VND with an invoice, that 50 million VND outside the presumptive tax must be taxed again. This is in addition to the fixed presumptive tax already paid.

“Clearly, this does not accurately reflect actual revenue. Or, in cases where the presumptive tax is applied but the business status changes, such as ceasing operations, reduced revenue, or no revenue without filing a suspension request, the presumptive tax must still be paid as usual. These are the inconsistencies,” Ms. Cuc emphasized.

The Chairwoman of the Tax Consultancy Association also analyzed two inconsistencies in presumptive taxation: one, paying taxes without revenue; and two, higher actual revenue without adjustment leading to tax fraud. Tax evasion is a straightforward offense.

According to Article 200 of the Penal Code, tax arrears of 100 million VND or more result in criminal prosecution. Cases like Hoang Huong, who established 153 individual business households to evade taxes, highlight the gray areas and dark side of presumptive business households.

“A report showed that declared households paid seven times more tax than presumptive households, but we believe neither side accurately reflects reality. Actual revenue is not as reported. Recently, we visited various banks, both domestic and foreign, and tax authorities, who stated that reported revenue for loans is significantly higher. While some inflation occurs to secure loans, some business households report revenues of a few billion VND, but actual revenues can reach 80–100 billion VND. This is quite common,” Ms. Cuc noted.

The expert emphasized that transitioning to the declaration method reduces risks and increases transparency. Under the declaration method, households still pay taxes based on revenue percentages, with no tax increase.

“Sales remain at 1%, food and beverage services at 4.5%, no one is increasing taxes. However, one point is clear: revenue must be declared accurately. Previously, if 100 billion VND in revenue was declared as 5 billion VND, now it must be declared as 100–120 billion VND to ensure legal equality,” she concluded.