Business households self-declare, self-calculate, self-pay taxes
From January 1, 2026, tax policy for business households and individuals officially enters a new phase when the fixed tax mechanism is abolished. According to the provisions of Resolution 198 of the National Assembly on tax and fee support for the private economic sector, business households will declare and pay taxes according to actual revenue and income, instead of applying a fixed fixed tax rate as before.
Accordingly, from the above time, business households and individual businesses no longer have to pay business tax, but only fulfill the obligations of value-added tax and personal income tax according to the provisions of current tax laws.
Taxable threshold increased 5 times, about 2.3 million households are exempt from tax
The Law on Personal Income Tax (amended) stipulates that from January 1, 2026, business households will only have to pay tax when revenue reaches 500 million VND/year or more. This is a new threshold, 5 times higher than the level of 100 million VND/year previously applied.
According to the Ministry of Finance, with this regulation, it is expected that about 2.3 million business households will not have to pay taxes, accounting for about 90% of the total number of business households nationwide. Raising the taxable threshold aims to reduce the burden of financial obligations, support small and micro business household groups, and encourage the individual economic sector to develop more sustainably.
Along with that, fixed tax – which has been applied for many years – officially ended, replaced by a mechanism of self-declaration, self-calculation, and self-payment of taxes according to unified regulations.
Tax calculation based on profit, applying progressive tax rates according to scale
According to the Law on Personal Income Tax (amended), business households with revenue from 500 million VND/year or more will fulfill tax obligations according to the new method, based on actual profits.
Business households with revenue of less than 3 billion VND/year, if a valid cost is determined, will be subject to a tax rate of 15% on the profit. This level is equivalent to the preferential tax rate currently applied to micro-enterprises.
For business households with revenue from 3 billion VND to less than 50 billion VND/year, the applicable tax rate is 17%. In case the revenue is from 50 billion VND/year or more, the tax rate is 20%.
In case business households cannot determine input costs, tax calculation is still carried out according to the revenue-to-earnings ratio method, with a tax rate of 0.5% to 2% depending on the industry, similar to current regulations. However, the new point is that revenue under the non-tax threshold will be excluded before tax calculation, instead of calculated on total revenue as before.
For value-added tax, business households with revenue from 500 million VND or more still declare and pay taxes according to the direct method on revenue, with the tax rate remaining unchanged according to each industry.
Electronic invoices: Classified by revenue threshold
The Law on Tax Administration (amended) also clearly stipulates the obligation to use electronic invoices for business households and individuals.
Accordingly, business households with revenue from 1 billion VND/year or more are required to use electronic invoices with tax authority codes or electronic invoices generated from cash computers connected to tax authorities, according to the provisions of Decree 70.
Conversely, business households with revenue of less than 1 billion VND/year are not required to use electronic invoices, but are still encouraged to apply them for convenience in management, declaration and data comparison.
From January 1, 2026, taxpayers have the right to self-determine revenue, self-declare and pay taxes. In case of using electronic invoices, revenue data will be automatically updated by the system on the tax management system and the National Public Service Portal, helping tax authorities determine the amount of tax to be paid. In case of not using electronic invoices, business households will self-determine tax obligations according to regulations.
Things businesses need to pay attention to when switching to new mechanisms
Along with the abolition of fixed tax, tax management agencies remind business households to proactively prepare to adapt to new management methods.
First, correctly identify the business scale group to accurately apply tax obligations, avoid confusion between tax-exempt and declared areas.
Second, conduct inventory of inventory at the time of conversion, especially for households that choose the method of calculating tax on profit, in order to accurately determine cost, cost and revenue.
Third, register to use electronic invoices according to regulations if they are mandatory, and at the same time get acquainted with the preparation, management and storage of electronic invoices.
Fourth, prepare basic accounting books, including tracking revenue, expenses, and goods purchased and sold to serve tax declaration.
Fifth, review and update business registration information, occupations, locations, representatives, and forms of tax payment to ensure accurate management data.
Sixth, open private bank accounts to serve business activities, separate personal cash flow and business cash flow, limiting risks when tax authorities compare and inspect.
Seventh, fully implement tax declaration and payment on time according to regulations, avoiding administrative violations due to delays or incorrect declarations.
The shift from a fixed tax mechanism to self-declaration is assessed as a major change in tax management for the individual economic sector, towards transparency, fairness and more suitability with modern management practices, while creating a foundation for business households to gradually access a more methodical and professional operating model in the coming period.
