The Ministry of Finance's Tax Department is driving a comprehensive tax system reform. This initiative aims to curb bottlenecks in the present tax policy while pursuing a dual long-term objective including securing the state budget revenue structure in the evolving economic landscape and fostering resources and momentum for the private sector's growth, in alignment with the Politburo’s Resolution No. 68-NQ/TW on private economic development.
The initial key step in tax reform is the elimination of the lump-sum tax for business households. Starting June 1, Decree 70/2025/ND-CP, which amends and supplements Decree 123/2020/ND-CP on invoices and documents, takes effect.
As a result, approximately 37,000 business households and individuals with annual revenue of VND1 billion across various sectors have transitioned to issuing electronic invoices generated from cash registers linked to tax authority data, reflecting actual revenue rather than the traditional lump-sum tax method.
According to the new overhaul of the tax system, from 2026, around 6 million business households will fully phase out the lump-sum tax system, adopting self-declaration and tax payment based on actual revenue.
The abolition of lump-sum tax for business households can be considered a turning point for the tax industry as simultaneously, this policy has successfully fulfilled three key objectives. It has concretized Resolution 68 by creating pathways for business households to transition into formal enterprises; plus, it has laid the groundwork for a fair, transparent, and effective tax policy applicable to all entities. Moreover, it has addressed long-standing issues in the management of lump-sum taxes for business households, helping to curb revenue losses to the state budget.
Recently, the Ministry of Finance has conducted a thorough review of Vietnam’s tax legislation to propose comprehensive, coordinated revisions. As of now, the Ministry has submitted its findings and proposals to the Government and the National Assembly. These include amendments to several major tax laws including the Law on Value Added Tax which was approved by the National Assembly in November 2024, the revised Law on Special Consumption Tax, and the amended Law on Corporate Income Tax which was presented to the National Assembly for feedback in May.
The completion of tax policies is expected to contribute to reasonably mobilizing resources for the state budget to perform tasks set out in the process of socio-economic development in the new period.
Furthermore, the policy includes incentives to foster and develop sustainable revenue sources for the state budget, particularly supporting business households and small to medium enterprises.
Comprehensive reform of the tax system also helps ensure that tax policies are applied equally, without discrimination between economic sectors, as well as promoting administrative procedure reform in addition to creating a favorable environment for people to comply with tax laws and ensuring correct and sufficient collection for the state budget.
These reforms lay the foundation for Vietnam to integrate more deeply into the global economy, as the tax policy system increasingly aligns with international standards. Back in 2000, when Vietnam and the United States signed the Bilateral Trade Agreement (BTA) which covers trade in goods, protection of intellectual property rights, trade in services, investment protection, business facilitation, and transparency. Many agreements were signed, excluding the tax content, as the US side deemed Vietnam's tax policy at the time to be "lacking transparency" and "not in line with international practices."
Thus, the current comprehensive overhaul of Vietnam’s tax framework holds particular significance that it helps fulfill key criteria for the United States to recognize Vietnam as a market economy.
