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| A household business selling phở in Hanoi, The Ministry of Finance has proposed household and individual businesses to be required to declare all bank accounts used for production and business to tax authorities __ Photo: VNA |
The proposal is raised in a draft decree on tax declaration, calculation, withholding, payment and the use of e-invoices for household and individual businesses which was recently made public for comment. The decree is expected to take effect from the beginning of 2026.
Under the current regulations, household businesses are only required to notify tax authorities of bank accounts used for electronic tax payments.
The draft also stipulated that household and individual businesses must fully and accurately declare revenues to determine tax liabilities, and are required to use and provide accounting records, invoices, sales management software and related documents upon request by tax authorities.
Under the draft decree, household and individual businesses with annual revenue of VND 500 million (USD 19,000) or less would be exempt from personal income tax.
Those earning more than VND 500 million a year would be subject to personal income tax based on taxable income multiplied by applicable tax rates.
Taxable income would be calculated as total revenue from goods sold and services provided minus expenses related to production and business activities during the tax period.
The tax rates are proposed at 15 percent for annual revenue from VND 500 million to VND 3 billion, 17 percent for revenue from VND 3 billion to VND 50 billion, and 20 per cent for revenue exceeding VND 50 billion.
Household and individual businesses with annual revenue between VND 500 million and VND 3 billion would be allowed to choose between income-based taxation or a revenue-based method. The tax rates are proposed between 0.5 percent and 5 percent for different business sectors.
Income from real estate leasing, excluding accommodation services, would be taxed at a rate of 5 percent on revenue exceeding VND 500 million.
The tax calculation method would remain fixed for two consecutive years.
This means that for household businesses with revenue from VND 3 billion for two consecutive years, who are subject to switch from revenue-based to income-based taxation, the switch would be required from the third year.- (VNS/VLLF)
