A common situation
Mr. P. runs a business household supplying industrial catering in Dong Nai. A large corporate client required him to issue a “red invoice” (VAT invoice) before making payment. Mr. P. was confused: can a business household like mine issue a VAT invoice? With annual revenue over VND 2 billion, is there an exception?
Short answer
No — a business household may not issue value-added tax invoices in any case, even with revenue of VND 1 billion per year or more, and even when a corporate customer requests it. The revenue threshold does not change a business household’s tax calculation method.
Why can a business household not issue VAT invoices?
- Article 11.2 of VAT Law 48/2024/QH15 excludes “business households and individuals” from both categories eligible for the credit (deduction) method. In other words, business households are not eligible for the VAT credit method.
- Article 12 of the VAT Law: business households pay VAT under the direct method — tax calculated directly on revenue.
- Article 8.1 of Decree 123/2020/ND-CP (as amended by Decree 70/2025): VAT invoices (red invoices) are reserved for organizations declaring tax under the credit method.
Because business households must apply the direct method, they can never qualify to use VAT invoices.
Which invoice may a business household use?
A business household may only use sales invoices. The obligation to issue the correct type of invoice belongs to the seller — it does not depend on the buyer’s request. A customer demanding a “red invoice” cannot turn a sales invoice into a VAT invoice, and a business household may not issue a VAT invoice merely because the customer asks for one.
What to do if you need to issue VAT invoices?
If the business needs to issue VAT invoices (for example, to serve large corporate clients), the business household must convert its business form — establish a company and register for the VAT credit method. This is the only lawful path; there is no “high-revenue exception” for business households.
Checklist for business households
- Be clear: business households pay VAT under the direct method and use only sales invoices.
- Never issue a VAT invoice in any case — regardless of revenue level or customer requests.
- Explain to corporate customers: a business household’s sales invoice is a valid document under the regulations.
- If VAT invoices are needed: convert to a company model and register for the credit method.
Contact us
If your business household needs advice on invoicing, taxation, or converting to a company model, FLAT Law Firm is ready to advise. Contact: contact us.
The information in this article is for general reference only and does not replace legal advice for your specific case.
Transparency note: The legal content of this article has been reviewed by the FLAW AI Legal Council and approved by the owner before publication. This article is not the opinion of a human lawyer who has reviewed your case.