Compiled by Hoàng Hà

HÀ NỘI — Lower tax obligations, simpler compliance requirements and a more stable business environment could give household businesses the confidence and financially room to expand, experts say.

The Ministry of Finance has proposed a 30 per cent reduction in personal and corporate income tax for the 2026 and 2027 tax years for individuals, household businesses and enterprises with annual revenues of no more than VNĐ10 billion.

The Government submitted the proposal to the National Assembly, which considered it on August 21 during the first extraordinary session of the 16th legislature.

Alongside the tax cut, the ministry has proposed raising the annual revenue threshold for household and individual businesses eligible to use a tax calculation method based on a percentage of revenue from VNĐ3 billion to VNĐ10 billion. The aim is to simplify tax calculations and reduce the time, cost and compliance burden for businesses.

Another important change has already been introduced, with the annual revenue threshold for household and individual businesses exempt from tax raised to VNĐ1 billion from VNĐ500 million under Decree 141/2026/NĐ-CP.

Cao Thị Thanh Lan, a representative of the Ministry of Finance's Department of Tax, Fee and Charge Policy Administration and Supervision, said the measures were aimed at supporting household and, individual businesses and small and medium-sized enterprises in developing production and business activities, while reducing the time and cost of meeting tax, accounting and invoicing obligations.

For household businesses, the benefit of lower financial obligations goes beyond the amount of tax saved. With profit margins still thin, retained funds can be used as working capital, to replenish inventories, invest in machinery, retain workers or expand operations.

This also reflects a broader fiscal policy approach: rather than focusing solely on immediate budget revenue, a reasonable reduction in tax obligations could free up resources for reinvestment and generate further growth.

Đinh Văn Đoàn, director of H&D Trading and Tourism Transport Co Ltd, described the proposed 30 per cent income tax cut as 'practical and timely support'.

He said the retained funds would help ease pressure from premises, electricity, water and logistics costs, while providing additional working capital. The company plans to maintain employment and invest in management software, digital signatures and online marketing.

Đoàn also called for the tax reduction to be automated through electronic systems to minimise cumbersome verification procedures.

Lê Văn Tuấn, director of Keytas Tax Accounting Co Ltd, said raising the threshold from VNĐ3 billion to VNĐ10 billion was necessary. Compliance costs could become a burden for household businesses with revenue of VNĐ3 billion-VNĐ5 billion or VNĐ5 billion-VNĐ7 billion.

However, tax relief alone would address only part of the challenges facing small businesses. According to the Việt Nam Chamber of Commerce and Industry (VCCI), with some 6.1 million household businesses employing around 10 million workers, the sector remains a significant source of jobs, livelihoods and economic activity, but its resilience has weakened amid rising compliance costs and sluggish business conditions.

The VCCI's 2026 survey of household businesses found that as many as 81.5 per cent of surveyed businesses said their revenue fell in 2025, while 73.7 per cent reported only modest profits and 75.4 per cent saw their customer numbers decline. Only 1.8 per cent planned to expand, while 33 per cent expected to scale down.

The figures show that the challenges facing household businesses go beyond consumer demand and input costs. Pressure from tax, accounting and invoicing regulations, as well as requirements for greater transparency, has also become a significant factor.

The VCCI survey found that 73.3 per cent of household businesses considered legal difficulties to have a major or serious impact on their operations. The time spent on compliance, accounting costs and electronic invoicing expenses also put significant pressure on smaller businesses.

Against this backdrop, tax policy adjustments are expected to provide the sector with additional financial breathing room.

 

Lower compliance costs

Alongside tax policy adjustments, the digitalisation of tax administration is bringing fundamental changes to household businesses.

Decree 70/2025/NĐ-CP expanded the scope of businesses required to use electronic invoices generated from cash registers connected to tax authorities for electronic data transmission, marking a stronger shift towards revenue management and greater transparency in business activities.

In the long term, digital data can give authorities a more complete basis for developing policies that better reflect economic realities. For small household businesses, however, each new requirement can also bring additional costs for equipment, software, staff and adaptation.

Nguyễn Thị Thu Hà, deputy secretary-general of the Vietnam Tax Consultants Association, highlighted this issue. She said most household businesses were not seeking to avoid their tax obligations but wanted to comply with the rules. The main difficulty was that regulations were becoming increasingly extensive and complex, while businesses' ability to access, understand and comply with them remained limited.

The VCCI survey also found that household businesses' awareness of new policies remained relatively low. Nearly half understood new policies only at a basic level, while 33.9 per cent had merely heard of them.

Alongside tax reductions, there is therefore a need to further simplify accounting, invoicing and tax declaration requirements, develop easy-to-use and low-cost digital tools and provide an appropriate transition period for household businesses to adapt.

One notable development is that, from July 1, 2026, Circular 58/2026/TT-BTC allows household and individual businesses, if they wish, to adopt the accounting regime applicable to micro-enterprises. This represents another step towards simplification and gives small businesses greater choice.

Experts say the transition should focus on guidance and support to help businesses understand and comply with the rules, rather than creating anxiety over new requirements.

VCCI Vice Secretary-General Đậu Anh Tuấn said difficulties largely stemmed from differences in how regulations were interpreted and applied by agencies and local authorities.

Reform should move beyond reducing paperwork to improve the stability, consistency and predictability of policies, he said.

Nguyễn Văn Thân, chairman of the Vietnam Association of Small and Medium Enterprises, said small businesses and household businesses often had limited access to technology and had to hire tax services, adding to their costs.

The association has called for simpler tax declaration and payment procedures for small and micro-enterprises and household businesses, alongside stronger support policies.

If lower fiscal and compliance burdens are matched by a more predictable and supportive business environment, millions of small businesses could move from simply weathering challenges to building the capacity for sustained expansion. VNS