Business Owners Anxious as Deadline Looms

With just a few days left, the lump-sum tax payment method will officially be phased out according to Resolution 198/2025/QH15. Starting January 1, 2026, all business households must switch to self-declaring based on actual revenue. However, as the deadline approaches, numerous concerns from business owners regarding tax exemptions and invoice regulations remain unresolved.

Lingering Confusion

Ms. Lê Thị Thanh, a business owner at Gò Vấp Market (Ho Chi Minh City), shared that despite months of training by tax authorities, she and many others still feel “very confused.” “We’re unsure which households only need to self-declare revenue and which must issue invoices directly linked to tax authorities. How do we determine revenue to know if we’re tax-exempt, and what are the specific tax rates?” Ms. Thanh expressed.

At a tax and customs policy dialogue conference held by the Ministry of Finance and the Vietnam Chamber of Commerce and Industry (VCCI) on December 26, Ms. Lê Thị Trang, a business owner in Hanoi, questioned the 500 million VND/year revenue threshold for taxation. She asked whether, if her annual revenue falls below 500 million VND, she would be eligible for a tax refund and what the refund process would entail.

A representative from the Tax Department stated that the Ministry of Finance is drafting a circular guiding tax management procedures for business households and individuals to submit to competent authorities. According to the draft, business households and individuals with annual revenue of 500 million VND or less must declare actual revenue to tax authorities once, no later than January 31 of the following calendar year.

Not only traditional business households but also e-commerce sellers expressed concerns. Mr. Bùi Xuân Tùng, an individual business owner in Hanoi, noted that while e-commerce platforms currently handle tax deductions and payments, he’s unsure if he’ll be required to issue electronic invoices (e-invoices) through third-party software for revenue exceeding 3 billion VND/year. Additionally, with taxes soon calculated on profit rather than revenue, determining deductible expenses will be challenging, increasing the tax burden.

Addressing invoice issuance concerns, the Tax Department cited Article 4, Clause 7 of Decree 123/2020/NĐ-CP, amended by Decree 70/2025/NĐ-CP. Sellers of goods or services may authorize third parties to issue e-invoices. These invoices must display the seller’s name as the authorizing party, with the authorization established in writing and reported to tax authorities upon e-invoice registration. If e-invoices lack tax authority codes, the authorizing party must still transmit invoice data to tax authorities via service providers.

Regarding tax calculation methods for individual business owners, tax authorities noted that the Ministry of Finance is refining draft decrees and circulars to clarify tax calculation principles, revenue management, and declaration obligations.

Three Major Challenges

At the conference, Ms. Lê Thị Duyên Hải, Deputy Secretary-General of the Vietnam Tax Consultants Association (VTCA), highlighted three major challenges taxpayers face: e-invoicing, tax penalties, and new regulations for business households and individuals as lump-sum tax is phased out.

The first challenge involves e-invoice issuance timing under Article 9 of Decree 123/2020/NĐ-CP (amended by Decree 70/2025/NĐ-CP). Ms. Hải noted that many industries have complex, frequent transactions requiring data reconciliation between sellers and buyers. Mandating immediate invoice issuance upon service provision is impractical and risks penalties despite no tax evasion intent.

She proposed the Ministry of Finance expand regulations to allow invoice issuance based on monthly summaries or upon service completion, provided taxpayers use transparent software enabling tax authority data access and post-audits. Suggested sectors include freight and passenger transport with journey monitoring, residential management services, banking, securities, insurance, and other specific services.

The second challenge concerns administrative tax penalties. Despite Decree 310/2025 reducing penalties, Ms. Hải argued the current approach doesn’t ensure proportionality between violations and their impact on state revenue, especially for business households and individuals. For instance, incorrect or incomplete tax filings without underreporting tax liabilities can still incur 5–8 million VND fines, which is excessive. Similarly, penalties for untimely invoicing are based on invoice quantity, not transaction value or tax impact, potentially penalizing small businesses more than their profits. VTCA suggested distinguishing between administrative violations and tax evasion, linking penalties to actual budget impact.

The third challenge relates to business households and individuals as the amended Tax Administration Law and Personal Income Tax Law take effect, with incomplete guidance. VTCA urged authorities to issue detailed guidelines for uniform implementation. During the transition year, penalty waivers for procedural errors would help businesses adapt.

Proposing 3 Billion VND Threshold for Invoicing

Regarding tax thresholds, Mr. Nguyễn Ngọc Tịnh, Vice Chairman of the Ho Chi Minh City Tax Consultants and Agents Association, noted the amended Personal Income Tax Law raises the exemption threshold for business households to 500 million VND/year from July 1, 2026. Meanwhile, the 2024 VAT Law exempts households with revenue up to 500 million VND from VAT starting January 1, 2026.

Mr. Tịnh explained that during the transition, if new decrees aren’t issued, household tax payments will follow existing laws. Specifically, goods distribution households with 1–3 billion VND/year revenue will deduct 500 million VND, paying 0.5% personal income tax and 1% VAT on the remainder. Other sectors face varying rates based on activities.

A Ho Chi Minh City Tax Department leader stated that the government will soon issue a decree on tax declaration, calculation, deduction, payment, and e-invoice use for business households. This will standardize and digitize management processes. Until then, revenue determination and invoice obligations will follow Decision 3389/QĐ-BTC approving the tax management model transition for households post lump-sum tax abolition. Households with under 1 billion VND/year revenue won’t require e-invoices but must self-declare actual revenue for tax verification. Those with 1 billion VND/year or more must use tax authority-coded e-invoices or cash register-generated invoices.

However, VCCI argued that mandating e-invoices for households with 1 billion VND/year revenue is unreasonable, as it doesn’t align with other tax thresholds. Many such households also lack capital and technological skills. VCCI proposed raising the e-invoice threshold to 3 billion VND/year, emphasizing multi-source data monitoring over blanket application.