Cases where business households are exempt from taxes
According to the provisions of Decree 68/2026/ND-CP, business households and individual businesses with production and business activities with annual revenue below 500 million VND are not subject to value-added tax and apply the method of calculating directly based on revenue by percentage of revenue.
Resident individuals with production and business activities, including individuals registering to establish business households or people authorized by household members to be business household representatives (hereinafter referred to as business individuals) with annual revenue of 500 million VND or less are not subject to personal income tax. Business individuals with annual revenue above the revenue level specified in the Law on Personal Income Tax.
Personal income tax calculation method
Regarding the tax calculation method, Decree No. 68 clearly states that the method of calculating personal income tax according to the tax rate multiplied by taxable revenue applies to business individuals with annual revenue over 500 million VND to 3 billion VND. The personal income tax rate applies according to the provisions of Article 7 of the Personal Income Tax Law.
The method of calculating personal income tax is based on taxable income multiplied by the tax rate applied to business individuals with annual revenue over 3 billion VND and cases where business individuals with annual revenue over 500 million VND to 3 billion VND choose this method.
Taxable income is determined by the revenue of goods and services sold minus expenses related to production and business activities in the tax period.
In case business households and individual businesses have revenue over 3 billion VND, or have revenue from over 500 million VND to 3 billion VND and are applying the tax calculation method based on taxable income multiplied by tax rate, the tax calculation method must be stable for 2 consecutive years, from the first year of application.
In case business households and individual businesses with revenue from over 500 million VND to 3 billion VND are applying the revenue-multiplied tax rate method, if at the end of the year the actual revenue is determined to be over 3 billion VND, then from the following year, they must switch to the tax calculation method based on taxable income multiplied by the tax rate.
Revenue determines personal income tax
Decree 68 stipulates that revenue is the entire amount of sales money, processing money, service supply money, including subsidies, surcharges, and surpluses that business households and individual businesses are entitled to, regardless of whether money has been collected or not.
This revenue includes bonuses received, amounts received from sales achievement support, promotions, payment discounts, support received in cash or not in cash, compensation for contract violations, other compensations related to business activities, other revenues that business individuals receive regardless of whether they have received money or not, excluding commercial discounts, discounts on goods sold and the value of returned goods sold.
