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According to the Vietnamese Government’s official portal, the Ministry of Finance has proposed raising the tax-exempt revenue threshold for household businesses to VND 500 million per year, up from the previous proposal of VND 200 million. This adjustment is expected to exempt approximately 2.3 million household businesses from tax obligations.
In its dispatch No. 18491/BTC-CST, the Ministry of Finance reported to the Prime Minister on the absorption and explanation of feedback from the National Assembly’s review and opinions of delegates regarding the draft Law on Personal Income Tax (amended).
One of the key points addressed in the dispatch is the tax proposal for household and individual businesses.
Applying a tax-exempt revenue threshold of VND 500 million per year: 90% of household businesses will be tax-exempt
Based on research and feedback from National Assembly delegates, the Ministry of Finance aims to align personal income tax regulations for household and individual businesses with practical realities (considering the number of businesses managed by the tax authority). This ensures relative fairness compared to personal income tax on other income types (including wages and salaries) and between taxable and non-taxable individual businesses, including value-added tax. The Ministry proposes increasing the tax-exempt revenue threshold to VND 500 million per year, five times higher than the current level under the Personal Income Tax Law.
This VND 500 million threshold also serves as the deductible amount before tax calculation. With an estimated 2.54 million active household businesses as of October 2025, approximately 2.3 million (about 90% of the total) are expected to be tax-exempt under this threshold.
Maintaining the proposed tax calculation method based on income
The Ministry of Finance proposes adding regulations to calculate tax based on income (revenue minus expenses) for household and individual businesses with annual revenue between VND 500 million and VND 3 billion. This ensures personal income tax aligns with its true nature and applies a 15% tax rate, consistent with enterprises earning under VND 3 billion annually, as per the Corporate Income Tax Law No. 67/2025/QH15.
Under this proposal, all household and individual businesses will pay tax based on actual income. Those with lower income will pay less, and those without income will be exempt.
Thus, the tax-exempt revenue threshold will have minimal impact on taxable household and individual businesses. Only those unable to determine expenses will pay tax based on a revenue ratio, applicable to revenue above VND 500 million, depending on the industry.
To ensure consistency in the tax-exempt revenue threshold, the Ministry of Finance also proposes raising the threshold for household and individual businesses under the amended Value-Added Tax Law No. 48/2024/QH15 from VND 200 million to VND 500 million per year.
To simplify tax compliance, the Ministry proposes that individuals renting real estate non-regularly (excluding accommodation businesses) with annual revenue over VND 500 million will only be taxed based on a revenue ratio. This eliminates the need to determine expenses, offset income (for multiple properties), or file annual returns.
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