News about household businesses

Deputy Prime Minister Nguyen Van Thang signed Decree No. 398/2026/NĐ-CP detailing Resolution No. 43/2026/QH16 on cutting personal income tax (PIT) and corporate income tax (CIT). Resident individuals running businesses, including household businesses, with annual revenue of up to VND 10 billion in 2026 and 2027 will get a 30% reduction in PIT payable on business income. Individuals expecting revenue within this threshold declare the cut with their periodic tax filings, while entities that withhold or pay tax on behalf of individuals apply the 30% reduction to the tax they withhold or pay. If actual annual revenue exceeds VND 10 billion, the individual loses the reduction and must pay back the amount reduced, though this supplementary tax is not subject to late-payment interest up to the filing deadline of the period in which revenue exceeded the threshold. The decree also covers a 30% cut in CIT payable for 2026 and 2027, but this part of the article is cut short.

A draft Law on Small and Medium-sized Enterprise Development would let individual businesses with annual revenue of up to 10 billion VND choose to pay tax based on a percentage of revenue or on taxable income. The option is slated to apply from the 2026 tax period, although the law is expected to take effect on July 1, 2027. Household businesses welcome the change as it could ease pressure from bookkeeping, invoices and accounting costs, but many remain unsure how to determine deductible expenses. Ms. Lê Yến of Hanoitax proposes extending the option to businesses with revenue above 1 billion VND and below 10 billion VND, while Mr. Lê Văn Tuấn of Keytas asks for the new threshold to apply from 2026. According to the Ministry of Finance, over 2.69 million household businesses nationwide have annual revenue of no more than 10 billion VND, accounting for 99.98% of all household businesses.

Ms. Thúy Xuân's household business in Hanoi, operating since August 2026 with estimated 2026 revenue under 1 billion VND, asked whether it still needs to apply the 20% VAT reduction once it is exempt from VAT and issues sales invoices. The Hanoi Tax Department said that under Decree 68/2026/NĐ-CP, as amended by Decree 141/2026/NĐ-CP, household businesses with annual revenue of up to 1 billion VND are not subject to VAT. However, under Resolution 204/2025/QH15, businesses whose main industries fall under codes 4620 and 4722 (the 10% VAT group) remain eligible for the 20% reduction in the VAT rate if they use invoices and meet the conditions.