On May 17, 2025, the National Assembly issued Resolution 198/2025/QH15 on special mechanisms and policies for private economic development.
Clause 6, Article 10 of Resolution 198/2025/QH15 specifically stipulates that business households and individuals will not apply the tax contract method from January 1, 2026. Business households and individuals pay taxes according to the law on tax management.
Thus, the tax payment regime for business households when eliminating contract tax will take place through two important stages.
Phase 1: From June 1, 2025, when Decree 70/2025/ND-CP takes effect, amending and supplementing Decree 123/2020/ND-CP.
According to Clause 1, Article 11 of Decree 123/2020/ND-CP amended and supplemented by Clause 8, Article 1 of Decree 70/2025/ND-CP, the form of contract tax payment for business households with revenue of VND 1 billion or more has been officially abolished. At the same time, these businesses must switch to using electronic invoices generated from cash registers with data connection to tax authorities.
From June 1, 2025, business households need to pay attention to:
Revenue from VND1 billion or more currently subject to contract tax will have to be converted to tax payment according to the declaration method.
Revenue under 1 billion VND can still be taxed according to one of two methods: Contract method or declaration method.
Phase 2: From January 1, 2026, implemented according to Resolution 198/2025/QH15.
From January 1, 2026, the contract tax regime for business households and individuals will be officially abolished. At that time, all business households, regardless of revenue, must calculate tax according to the declaration method.
At the same time, the card subject tax collection and payment regime will also be officially abolished for business households and individuals from January 1, 2026.
In addition, after abolishing contract tax, the tax calculation of households and individuals doing business is still based on tax revenue and tax rate calculated on revenue according to Article 10 of Circular 40/2021/TT-BTC stipulating the formula for calculating VAT and personal income tax according to the declaration method, specifically:
Tax payable = VAT revenue x VAT rate
Number of personal income tax payable = Income for personal income tax x Income tax rate
In which:
Revenue for calculating VAT and personal income tax according to the instructions in Clause 1, Article 10 of Circular 40/2021/TT-BTC.
VAT rate and personal income tax rate according to the instructions in Appendix I issued with Circular 40/2021/TT-BTC.
