Understanding the Impact of Vietnam Tax Reform on Household Businesses

The landscape for household and individual businesses in Vietnam is undergoing a significant transformation. Starting January 1, 2026, the country will officially replace its traditional presumptive taxation regime with a declaration-based system. This shift, which is part of a comprehensive Vietnam tax reform initiative, pivots the focus toward actual revenue as the core determinant for tax obligations, accounting requirements, and calculation methods.

Key Pillars of the New Vietnam Tax Reform

The Ministry of Finance (MoF) reports that Vietnam is currently home to approximately 3.6 million active household businesses, a sector that has seen a 106 per cent increase over the last year. As the fiscal importance of this segment grows, the limitations of the “estimate first, collect later” presumptive model have become more apparent.

This Vietnam tax reform aims to modernize the system, addressing inconsistencies such as unequal tax burdens and the difficulty of reflecting actual revenue in the age of e-commerce and multi-channel sales. By shifting to a declaration-based model, authorities seek to promote transparency, enhance access to credit, and encourage more sustainable business governance.

Managing Compliance and Addressing Challenges

Despite the benefits, the transition has faced resistance. A survey by the Vietnam Chamber of Commerce and Industry (VCCI) revealed that 49 per cent of businesses are concerned about the costs and complexity of managing documentation under the new rules. Critics of the Vietnam tax reform note that limited digital literacy and ingrained manual bookkeeping habits remain significant hurdles.

To ensure compliance, businesses must understand the new thresholds:

• Below VND500 million ($19,230) annual revenue: Exempt from accounting procedures. Declaration is based on actual revenue, with a deadline of January 31 the following year.

• Above VND500 million ($19,230) annual revenue: Requires quarterly declarations (or monthly if revenue exceeds VND50 billion).

• Above VND3 billion ($115,385) annual revenue: Must apply the revenue-minus-expenses method, requiring rigorous documentation of input costs.

For those concerned about legal exposure, experts emphasize that presumptive taxation is no longer the “safe zone” it once was. Under current laws, failing to declare and pay taxes—or failing to adjust for revenue increases—can lead to penalties, back taxes, and even criminal liability if tax evasion is suspected. Successful navigation of this Vietnam tax reform requires proactive classification of revenue and precise record-keeping.

For further reading on official compliance guidelines, you can consult the General Department of Taxation.

Conclusion

The transition toward a declaration-based system is an inevitable step toward modernizing Vietnam’s economic infrastructure. While the shift demands a higher standard of administrative rigor, it ultimately provides a stable foundation for growth. Embracing the Vietnam tax reform by investing in digital record-keeping and accurate revenue reporting will help household businesses minimize legal risks and thrive in an increasingly transparent economy.

Check our this section to find out more about Vietnam economic.