The Ministry of Finance proposes raising the tax-exempt revenue threshold from 200 million VND/year to 500 million VND/year. This 500 million VND/year threshold also serves as the deductible amount before tax calculation based on revenue.
If implemented, the Ministry estimates that approximately 2.3 million businesses (about 90% of the total) would be exempt from taxation.
With the 500 million VND threshold, an estimated 90% of businesses would be tax-exempt.
For businesses with annual revenue between 500 million VND and 3 billion VND, the Ministry suggests applying income-based taxation (revenue minus expenses) to align with personal income tax principles. A 15% tax rate, similar to the corporate income tax rate for businesses under 3 billion VND/year (as per Law 67/2025/QH15), would be applied.
Under this proposal, all businesses would pay taxes based on actual income. Lower income means lower tax, and no income means no tax. Thus, the tax-exempt revenue threshold would have minimal impact on taxable businesses. Only those unable to determine expenses would pay tax based on revenue percentage.
To ensure consistency, the draft law amends Article 5, Clause 25 of the Value-Added Tax Law (48/2024/QH15), raising the tax-exempt revenue threshold to 500 million VND/year. The government is authorized to adjust this threshold as needed for individual business tax management.
Additionally, individuals leasing property with revenue over 500 million VND/year would use the revenue percentage method, eliminating the need for expense determination, income offsetting, or annual tax settlement.
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Revised Title:
“Vietnam Tax Consultancy Association Chair: Annual Tax-Exempt Revenue Threshold of VND 200 Million is Insufficient”
One of the pressing concerns for small businesses is the upcoming 2026 tax exemption threshold of 200 million VND/year, which many feel is misaligned with current economic realities.
