Vietnam Proposes Raising Tax Exemption Threshold to 1 Billion VND for Businesses

Hanoi, Vietnam – In a significant move to alleviate the pressures on small and medium-sized enterprises, Vietnam's Ministry of Finance has put forth a proposal to raise the tax-exempt revenue threshold for household and individual businesses to a substantial 1 billion VND annually. This initiative comes at a critical juncture, as the nation's economic landscape continues to be shaped by global uncertainties, escalating fuel prices, and a noticeable dip in consumer spending.

The Ministry's rationale behind this proposed change is clear: to provide much-needed relief to the backbone of Vietnam's economy – its numerous small businesses. Currently, businesses with revenues up to 100 million VND are exempt, with a recent adjustment to 500 million VND. The proposed increase to 1 billion VND is expected to bring over 2.5 million household and individual businesses under the tax-exempt umbrella. This would mean they would not be subject to personal income tax or value-added tax, aligning with the current regulations on electronic invoices which mandate their use for businesses earning 1 billion VND or more.

Beyond individual businesses, the proposal extends to corporate entities as well. Enterprises with revenues not exceeding 1 billion VND per year would also be exempt from corporate income tax. This move aims to create a more equitable business environment, encouraging smaller, informal household businesses to formalize and adopt more structured management practices. The Ministry estimates that this would benefit approximately 235,800 enterprises, representing a significant portion of the business community.

The potential impact on state revenue is considerable, with estimates suggesting a decrease of around 16.65 trillion VND compared to 2025 if the 1 billion VND threshold is applied. However, the government appears to prioritize supporting economic recovery and fostering business growth over immediate revenue gains. The Ministry of Finance has also addressed potential overpayments for businesses that have already filed taxes under the current regulations, proposing mechanisms for offsets or refunds. As the National Assembly is set to discuss amendments to tax laws, this proposal signals a proactive approach by the Vietnamese government to adapt its fiscal policies to the prevailing economic realities and support its vibrant entrepreneurial sector.