Household Business Tax 2026: flat tax eliminated, switching to self-declaration — what you need to know?

This is the biggest change for millions of Vietnamese household businesses in many years: from January 1, 2026, the flat tax mechanism is officially eliminated, replaced by self-declaration and tax payment based on actual revenue. Along with this, the taxable revenue threshold has been raised significantly. This article helps you understand the nature of the change and the new tax calculation methods.

What's the difference between flat tax and self-declaration?

Fundamentally, the tax calculation methods aren't very different. The core difference lies in the basis for calculating revenue:

• Flat tax (old): uses estimated, fixed revenue determined by the tax authority at the beginning of the year.
• Self-declaration (new): uses actual revenue generated that you declare yourself and take responsibility for.

This requires household businesses to track real revenue, keep records, and file periodic declarations — more transparent, but also requiring more initiative.

From 2026, what taxes do household businesses pay?

Previously there were three items (license fee, personal income tax, VAT). From 2026, the license fee has been eliminated, so household businesses only pay two types of tax:

• Value-added tax (VAT)
• Personal income tax (PIT)

Taxable revenue threshold raised significantly

This is great news for small businesses. The annual revenue threshold for tax exemption has been raised from 100 million to 500 million VND/year under the amended Personal Income Tax and VAT Law 2025 — and continues to be adjusted up to 1 billion VND/year according to newer regulations/guidelines.

• Revenue below the threshold: no need to pay VAT and PIT.
• Revenue above the threshold: tax obligations arise, and the threshold amount is deducted before calculating tax.

Important note: this threshold is currently being adjusted (from 500 million to 1 billion VND/year). Since this content is changing rapidly, please verify the current threshold with the tax authority before filing.

Household businesses are divided into groups by revenue

The tax authority classifies household businesses by annual revenue to apply appropriate tax calculation methods (the thresholds below may be adjusted according to new regulations):

Two methods for calculating PIT for small and medium businesses

For businesses in group 2 (not yet required to calculate based on profit), you typically have two choices:

Method 1 — By percentage rate on revenue (when input costs cannot be determined):

• Pay a certain percentage on revenue (after deducting the threshold), depending on industry. For PIT, the rate typically ranges around 0.5%–2% depending on sector; VAT also follows industry rates.
• Simple, suitable for small businesses with few receipts.

Method 2 — Based on profit (when expenses can be determined):

• PIT is calculated on profit (revenue minus eligible expenses), with prescribed tax rates (the mentioned rate is 15% on profit, similar to small enterprises).
• Advantageous when profit margin is low, but requires complete bookkeeping and input invoices.

Illustrative example

A household with revenue of 1 billion VND/year (assuming deductible threshold is 500 million):

• By revenue rate: PIT ≈ 0.5% × (1,000 − 500) million = 2.5 million, plus VAT according to industry rate.
• By profit (assuming expenses of 800 million → profit 200 million): PIT = 15% × 200 = 30 million.

In this example, a business with high profit margin pays less using the revenue method; a business with low profit margin benefits from the profit method. Choosing the right method can make a significant difference — this is when you should calculate carefully or consult an expert.

What do you need to prepare to avoid penalties?

• Track actual revenue to know which group you belong to.
• Keep records and retain input receipts (required if you want to calculate based on profit).
• File and pay taxes on time (monthly or quarterly depending on regulations).
• Use electronic invoices when required (see separate article).

Note: thresholds, tax rates, grouping methods and procedures are being adjusted through multiple documents; please verify current regulations or consult a tax expert before filing to avoid errors and penalties.

Want to know which group your business belongs to and which tax calculation method is more advantageous? Ask [Sirifin's AI advisor](/vi/ai-advisor), or use [Sirifin's tax calculator](/vi/calculators/tax) to compare the two methods.

Content is for informational and financial education purposes, not tax advice for specific cases.