From January 1, 2026, the Law on Personal Income Tax (amended) officially raises the tax-free revenue threshold for business households to 500 million VND/year. However, along with this incentive, there is a new tax management mechanism based on electronic data according to the Law on Tax Administration and guiding decrees, causing many business households to face the risk of revenue control when data fluctuates abnormally.
Tax exemption policy of 500 million VND creates a major shift for small business households
The Law on Personal Income Tax (amended), passed by the National Assembly on December 10, 2025, stipulates that business households and individual businesses with revenue up to 500 million VND/year will be fully exempt from VAT and PIT. Compared to the level of 100 million VND previously applied, this is a strong adjustment to reduce the burden of compliance for millions of small business households.
The new policy is especially beneficial for the family-scale business group - small services, eateries, grocery stores, repairs, beauty - groups that face difficulties in costs and market fluctuations. However, to be exempt from tax, revenue must be recorded in accordance with reality, in accordance with regulations on electronic invoices and cash flow control.
Unusual revenue is easily analyzed for tax risk
Along with tax exemptions, the tax management mechanism from 2026 is tightened according to the Law on Tax Administration No. 38/2019/QH14 and guiding decrees. The law allows tax authorities:
- Risk analysis through electronic data (Articles 17, 18),
- Confronting bank transactions related to tax obligations (Article 27),
- Collect data from electronic invoices, payment platforms and e-commerce platforms.
In the context of revenue being determined according to actual arising, household groups with revenue fluctuating around 450-550 million VND, or sudden seasonal increases and decreases, are prone to falling into the category of control. Online sales activities, transactions through personal accounts or using multiple payment channels also create the risk of data mismatch when comparing.
From 2026, according to Decree 117/2025/ND-CP, e-commerce platforms must deduct taxes and provide transaction data. This makes online business households' revenue automatically recorded, making it difficult to avoid risk analysis if data fluctuates abnormally.
Exceeding 500 million does not mean being taxed on total revenue
A common misunderstanding is that "as long as it exceeds 500 million VND, tax must be paid on the entire revenue". Article 10 of the amended PIT Law affirms:
- The first 500 million VND is still tax-free,
- Only the revenue exceeding the threshold must be taxed.
This mechanism ensures fairness for medium-sized business households and limits concerns about "exceeding the threshold of loss of incentives". However, to be applied accurately, revenue data must match between electronic invoices (according to Decree 123/2020/ND-CP), bank cash flow (according to Decree 126/2020/ND-CP) and sales documents. If there are significant errors, the tax authority has the right to determine revenue according to Article 50 of the Law on Tax Administration.
Data transparency is a prerequisite in the 2026 tax mechanism
The new tax mechanism operates on an interconnected electronic data platform, so recording and managing revenue becomes a mandatory requirement. To avoid being reviewed or revenue tracked down, business households need to ensure:
- Separate sales cash flow from personal transactions to avoid incorrect recording.
- Invoices are made on time to provide goods and services, not to postpone or delay the date.
- Documents such as invoices, electronic invoices, and payment receipts must be fully stored.
- Monthly revenue needs to be closely monitored, especially when approaching the 500 million VND mark.
Data standardization not only helps business households enjoy full tax exemptions, but also avoids the risk of being required to explain, adjust or be included in the risk analysis in 2026.
The tax exemption threshold of 500 million VND is a policy that strongly supports the small business household sector, but the real effectiveness of the policy depends on the accuracy and transparency in revenue recording. In the context of increasingly complete electronic tax management, caution and consistency in data will help business households both reduce costs and avoid unnecessary risks.
