A nationwide survey of 1,001 household businesses conducted by the Vietnam Confederation of Commerce and Industry (VCCI) between February and April 2026 points to a marked decline in the sector’s overall health.
The survey found that 73.7 percent of household businesses reported low profits, while just 1.9 percent said earnings met expectations. Demand has sharply declined, with 81.5 percent recording falling revenue and 75.4 percent reporting fewer customers in 2025. Notably, 93.8 percent of respondents said they have no plans to expand operations over the next two years. When such a large segment of the economy opts to stand still, it sends a signal that is difficult to ignore.
The primary bottleneck is neither capital nor markets; instead, 73.3 percent of household businesses identified the legal system as their greatest obstacle. Furthermore, tax and accounting compliance costs (39.5 percent) are nearly on par with raw material costs (43.8 percent), indicating that institutional expenses have become a heavy burden. When compliance costs outpace absorption capacity, the natural reaction for household businesses is to scale back operations to mitigate risk.
Implementation data shows that the challenge for household businesses lies not in the tax obligation itself, but in the execution process. The adoption of e-invoices and new regulations has caused widespread confusion. The survey highlights that 71.2 percent of household businesses struggle to collect customer information, and 67.6 percent find expense accounting difficult. For many older owners who are not tech-savvy, these new rules act as a barrier.
Consequently, anxiety is spreading, with 68.3 percent fearing penalties and 71.2 percent finding procedures overly complex. This directly hinders the transition to formal enterprises, as 84.4 percent of household businesses have no plans to "scale up." While policies aim for standardization, their design has inadvertently created apprehension among those they affect.
Raising the taxable revenue threshold to VND1 billion (US$38,068) is a notable adjustment, but experts argue it is not the core solution.
According to Le Thi Duyen Hai, Vice President and General Secretary of the Vietnam Tax Consultants’ Association (VTCA), household businesses are not seeking to evade taxes but instead need a compliance system that is simple, transparent, and easy to follow, particularly in relation to penalty thresholds. Many fear a rigid penalty boundary, where exceeding the limit by even one dong is treated as a violation.
Against this backdrop, calls for reform are growing, with a proposed shift in approach from strict enforcement to facilitating compliance. Analysts and stakeholders are urging meaningful simplification of tax, accounting, and e-invoice regulations tailored to micro-enterprises.
Clear guidelines and streamlined processes would significantly reduce compliance costs. Additionally, providing low-cost support tools, such as free accounting and e-invoice software, is essential. Another crucial point is designing tiered policies: the "livelihood group" needs support for resilience; the "micro-group" requires enhanced management capacity; and the "potential group" should be encouraged to transition.
Specifically, the transition process must involve a gradual escalation of obligations, accompanied by tax and insurance incentives and reduced inspection pressures.
Vietnam currently has over 6.1 million household businesses, providing livelihoods for nearly 10 million workers and serving as the foundation of the private economy. Empowering this sector to grow will be a vital resource for sustainable national growth.
