Under existing regulations, households and individuals with an annual revenue of VND100 million or less are entirely exempt from all taxes. While this exemption is set to rise to VND200 million starting January 1, 2026, critics argue that even this future threshold is already outdated and obsolete.
For many small business owners, the current tax calculation is overly burdensome. Nguyen Thi Dan, who runs a small grocery store in a Ho Chi Minh City alley, exemplifies the struggle. With a daily revenue of approximately VND1 million translating to roughly VND300-400 million a year, Ms. Dan meticulously pays a 1.5 percent tax on revenue, along with a VND500,000 annual business license fee. Her total annual tax bill comes to about VND6.5 million.
"In reality, this job is based on hard work; the profit isn't high, just enough to get by," Ms. Dan explained. "The tax calculation is simply too tight. If I were exempt from tax, that VND6.5 million would be enough to cover my living expenses for a whole month."
Ms. Dan's sentiment is widely shared by business households with modest revenues.
Amidst this pressure, the Ministry of Finance recently proposed a new tax calculation method for business households and individuals: a 17 percent tax on income (profit), a departure from the current revenue-based system. This shift to an income-based tax calculation, which targets the business household's actual profit, has garnered substantial support.
While the Ministry of Finance’s proposal to switch from a revenue-based to an income-based tax system has drawn broad support, debate grows over proposed 17 percent income tax on business households when many business households argue that the proposed level of tax rate is too high.
Mr. Hung, owner of a decorative goods shop on Xo Viet Nghe Tinh Street in Thanh My Tay Ward of Ho Chi Minh City, welcomed the principle of taxing profit rather than revenue. According to him, under the current system, businesses must pay tax regardless of profit or loss. However, he emphasized that the 17 percent rate needs reconsideration.
On taxable revenue thresholds, Mr. Hung suggested raising the minimum to at least VND500 million per year to reflect reality. “Below this level, business owners are just getting by. Even with a 30 percent profit margin, that’s only VND150 million a year—about VND12–13 million a month, barely enough to live on. At that level, there should be no tax,” he argued.
In response, a representative of the Tax Department under the Ministry of Finance said the agency is considering raising the taxable revenue threshold from the current VND200 million per year to around VND400 million. However, the figure remains under discussion and is open to public feedback.
Chairwoman Nguyen Thi Cuc of the Vietnam Tax Consulting Association has long advocated a higher threshold, proposing at least VND500 million. Recently, she went further, suggesting VND1 billion would be most reasonable. “In developed countries, tax thresholds are set so that those merely making a living and supporting themselves are not subject to tax. VND1 billion per year is only revenue—the actual profit is much lower,” she explained.
She revealed that currently, the National Assembly is considering adjusting the family deduction when calculating personal income tax, from VND11.6 million to VND15.5 million/person/month and the number of dependents will also increase to VND6.2 million/person/month. Therefore, raising the taxable revenue of business households and individuals to VND1 billion a year is appropriate.
Meanwhile, Lawyer Nguyen Duc Nghia of the Ho Chi Minh City Business Association expressed agreement with the need to raise the taxable revenue threshold for business households and individuals.
However, he emphasized that such adjustments must be carefully calculated and grounded in clear, consistent, and interconnected legal frameworks, particularly the Law on Support for Small and Medium Enterprises. This law stipulates different revenue benchmarks depending on the sector. Lawyer Nguyen Duc Nghia takes an example that an annual revenue of VND3 billion may be considered large for a manufacturing unit, while in the commercial sector, even VND10 billion may not be significant. It is essential to examine these distinctions and establish a clear basis before setting a threshold.
According to the Ho Chi Minh City Tax Department, as of mid-September 2025, the city is managing nearly 362,000 business households. Among them, more than 85,000 households—accounting for 23.61 percent—report annual revenues of VND100 million or less and are therefore exempt from taxation. Around 146,000 households earn between VND100 million–VND200 million annually, a group that will also become tax-exempt from 2026. Approximately 84,000 households report revenues between VND200 million and VND1 billion and are currently subject to the lump-sum tax regime.
These figures indicate that raising the taxable revenue threshold would significantly affect the number of tax-liable households but would have limited impact on overall state revenue. In 2024, the total budget revenue collected from business households and individuals exceeded VND8,300 billion, accounting for 1.62 percent of the Ho Chi Minh City Tax Department’s total budget. By September 17, 2025, this figure had reached VND7,625 billion, representing 1.66 percent of total revenue, an increase of 27 percent year-on-year.
Experts note that a contribution rate of just 1.66 percent is relatively modest. The central challenge for the tax sector lies in reallocating collection resources toward groups that contribute substantially to the budget, rather than focusing heavily on groups with a large population but minimal fiscal contribution.
