Raising the threshold of tax-exempt revenue, changing the way of calculating tax on business households
At the seminar "Accompanying business households to convert from contract tax to declaration, towards businesses" organized by the Business Finance Magazine in Hanoi on November 28, Ms. Nguyen Thi Cuc, Chairwoman of the Vietnam Tax Consulting Association said: "Tax-free revenue for business households and individuals may be increased to about 300 - 350 million VND/year".
With current regulations, business households and individuals with annual revenue of VND 100 million or less are exempt from personal income tax and value added tax. According to the Law on Value Added Tax in 2024, from January 1, 2026, this tax-exempt revenue threshold will be adjusted to increase to 200 million VND.
However, many opinions suggest that the tax exemption threshold should be adjusted to suit reality, especially in the context that from next year, when contract tax is abolished, households and individuals doing business will switch to tax declaration.
"We have just attended a meeting with the Department of Tax, Fee and Charge Policy Management and Supervision and the Department of Taxation to discuss this point of view. The very new message is that the tax-exempt revenue threshold for business households will likely increase to about 300 - 350 million VND/year. Raising this threshold to a higher level is very difficult because there must be a process to adjust it," said Ms. Cuc.
The Chairman of the Vietnam Tax Consulting Association especially emphasized that another notable new point is the calculation of tax on the revenue exceeding the tax exemption threshold, not for the entire revenue. Suppose the tax-exempt revenue threshold is increased to VND300 million/year, business households with VND301 million in revenue are subject to tax. However, instead of taking 301 million VND to increase the tax rate, the calculation method will be to take 1 million VND to increase the tax rate. "That is a very basic change, good news for business households and individuals compared to the present," said Ms. Cuc.
Notes on invoices to avoid risks
Regarding invoice regulations, a business household raised the issue that revenue of over VND1 billion/year must be issued with electronic invoices, while a revenue of VND200 million to VND1 billion is not mandatory. The concern is that for this revenue group, how invoices are considered valid, especially when transacting with retail buyers, making it difficult to issue electronic invoices. So what should be done to declare the validity of input invoices?
Responding to the above issue, Mr. Nguyen Van Duoc - General Director of Trong Tin Tax Accounting and Consulting Company Limited - said: Decree 70 affirms the principle: Every organization and individual when selling goods and providing services must prepare and hand over invoices to buyers to ensure revenue transparency.
Some business groups that are required to use electronic invoices from money computers include: contract taxpayers with a revenue of over VND 1 billion/year; households equipped with sales software; and large-scale business households that are declaring taxes. These cases must connect data directly to the tax authority for real-time management.
For contracted households with a revenue of less than 1 billion VND, before 2026, it is not mandatory to use electronic invoices from cash registers. However, declaring households or contracted households in need are still allowed to make invoices.
Regarding tax calculation, Mr. Duoc said that the business household applying the declaration still calculates tax based on the taxable turnover with the same tax rate as the contract household, but must declare full revenue, issue full invoices and comply with accounting books according to Circular 88. If the revenue fluctuates beyond the permitted range compared to the contract level, the household must notify the tax authority to avoid violations.
Current tax laws do not require business households to have input invoices to determine tax obligations, because the calculation method is still based on output revenue multiplied by the contract tax rate. However, buyers are obliged to take invoices to prove the origin of goods in market management, prevention of counterfeit goods or when the authorities check during transportation. Not being able to present invoices on time can lead to confiscation of goods and legal risks," Mr. Duoc emphasized.
