Deputy Prime Minister Nguyen Van Thang has signed Decree No. 398, detailing Resolution No. 43 on reducing personal income tax and corporate income tax for individuals and businesses. The decree took effect on October 29 and applies to the 2026 and 2027 tax periods.
The reduction applies to resident individuals engaged in production or business, including people who register a household business or are appointed by household members to represent it. If their annual revenue does not exceed VND 10 billion, they can reduce personal income tax by 30% for the 2026 and 2027 tax periods.
The reduction is calculated on the individual's entire income from production and business, regardless of the tax calculation method. Revenue used to determine eligibility follows Decree No. 68/2026.
Business individuals who expect annual revenue of no more than VND 10 billion must claim the reduction using the form issued with the decree and submit it with their quarterly, six-month or annual tax return.
If an organization or individual withholds, declares and pays tax on behalf of a business individual, that party can also reduce the amount withheld by 30% if the revenue condition is met and the required form is submitted.
If actual total revenue for the year exceeds VND 10 billion, the individual will no longer qualify for the reduction and must pay back the tax that was reduced. However, late-payment interest will not apply to this additional tax until the filing deadline for the tax period in which cumulative revenue exceeded the threshold.
If tax has already been declared without claiming the reduction, the individual can amend or supplement the filing, or determine the reduction when completing the annual tax finalization. If tax calculated on revenue has been overpaid, the amount can be offset or refunded under the rules.
Decree No. 398 also reduces corporate income tax payable for the 2026 and 2027 tax periods by 30% for companies and organizations established under Vietnamese law with annual revenue of no more than VND 10 billion.
Eligible entities include companies, cooperatives, cooperative unions, public-service units and other organizations established under Vietnamese law that conduct production or business activities and earn income.
The policy does not apply to companies created through a split or separation after Resolution No. 43/2026 took effect if the combined revenue of the companies created through the split or separation exceeds VND 10 billion.
The reduction is calculated on all of an organization's income, regardless of the tax calculation method. If a company is already receiving another tax incentive, the 30% reduction is calculated on the tax payable after those incentives have been deducted.
Revenue used to assess eligibility includes revenue from selling goods, providing services, financial activities and other income. For a company with dependent units or business locations, revenue from those units is included as well.
A company expecting revenue of no more than VND 10 billion may determine the reduction itself when making quarterly corporate income tax payments. If actual revenue exceeds the threshold, the company must declare and pay the outstanding tax under the rules.
Sources: Dân Trí
