Vietnam's government has proposed allowing businesses and household enterprises with revenue of up to VND 10 billion to choose between income-based tax and tax calculated by multiplying taxable revenue by a rate.
The government submitted the proposal to the National Assembly in a draft law on the development of small and medium-sized enterprises.
Under current rules, businesses and household enterprises with revenue from VND 3 billion to VND 10 billion must pay tax based on income and provide input invoices and documents to deduct expenses. Only those with revenue below VND 3 billion can choose a calculation based on revenue or profit. Proposed rates for different sectors range from 0.5% to 5%.
Tax authority data shows that Vietnam had about 2.7 million household enterprises and individual businesses with annual revenue below VND 1 billion in 2025, more than 96% of all taxpayers in this group. Those with revenue from VND 1 billion to VND 3 billion accounted for about 2.84%, while those from VND 3 billion to VND 10 billion accounted for about 0.73%, or more than 20,000 businesses. Those above VND 10 billion accounted for about 0.14%.
If approved, 99.6% of household enterprises would benefit from the simpler calculation method. The government also proposed allowing companies with annual revenue of no more than VND 10 billion to choose income-based tax or tax calculated from revenue multiplied by a percentage set by the government, replacing the current VND 3 billion threshold.
If approved by the National Assembly, the rules would apply from the 2026 tax period.
Proposed rates
The proposed rate is 0.5% for distribution and supply of goods; 2% for services and construction without materials supplied by the contractor; 5% for property rentals, insurance agencies, lottery agencies and multilevel sales agencies; 1.5% for manufacturing, transport, goods-related services and construction with materials supplied by the contractor; 5% for digital information products and services, including entertainment, electronic games, digital films, digital photos, digital music and digital advertising; and 1% for other business activities.
According to earlier guidance from the tax authority, while the new policy is pending, businesses and individual businesses required to pay personal income tax under the taxable-income method will temporarily pay under the simpler method. Temporary tax is calculated by multiplying taxable revenue for the month or quarter by the relevant rate.
Taxable revenue is revenue generated during the period from manufacturing, trading goods or providing services. The rate depends on the sector. Businesses and individual businesses file temporary personal income tax monthly or quarterly with the same return as value-added tax. Temporary payment based on revenue does not constitute a final determination of the annual tax obligation.
At the end of the tax year, those required to file a final return must submit it no later than the last day of the third month after the end of the tax period. If temporary tax is lower than the final amount, the difference must be paid without late-payment charges. If it is higher, the overpayment will be offset or refunded under the rules.
Businesses operating in several locations declare and pay value-added tax separately for each location. Personal income tax is paid at the head office.
Sources: Dân Trí
