From 1 January 2026, the lump-sum (presumptive) tax regime that applied to household businesses for many years is officially abolished. Millions of household businesses across Vietnam are shifting to self-declaration, self-assessment and self-payment based on actual revenue — the biggest turning point in tax administration for the individual business sector to date.
This article systematizes the roadmap, the new calculation method and what household businesses should prepare now, based on current law.
1. Timeline: lump-sum tax ends on 1 January 2026
National Assembly Resolution 198/2025/QH15 provides that household businesses and individual businesses no longer apply the lump-sum tax method from 1 January 2026, and instead pay tax under tax administration law.
At the same time, Article 51 of the 2019 Law on Tax Administration (on determining tax amounts for lump-sum household businesses) ceases to be effective from 1 January 2026, under Article 52.3 of the Law on Tax Administration 108/2025/QH15. This implements Resolution 68-NQ/TW of the Politburo on private-sector development.
2. Three core changes to understand
- No more fixed presumptive assessments: tax authorities no longer set a fixed annual lump-sum amount per household; businesses declare actual revenue, self-assess and self-pay;
- Tax-free threshold raised to VND 1 billion per year: under Decree 141/2026/ND-CP (issued 29 April 2026, applicable to the 2026 tax year), household and individual businesses with annual revenue of VND 1 billion or less are exempt from VAT and PIT — double the previous VND 500 million level;
- No more license tax: from 1 January 2026, household businesses no longer pay the license fee (lệ phí môn bài); only VAT and PIT obligations remain.
3. New PIT calculation under Law 109/2025/QH15
Taxable income equals revenue from goods sold and services rendered minus related business expenses in the tax period. Tax payable = taxable income × tax rate, with rates by annual revenue band:
- Annual revenue above VND 1 billion up to VND 3 billion: 15%;
- Annual revenue above VND 3 billion up to VND 50 billion: 17%;
- Annual revenue above VND 50 billion: 20%.
Individual businesses with annual revenue above VND 1 billion up to VND 3 billion may choose this method or pay tax at a rate applied to taxable revenue. Note: the business-income provisions apply from the 2026 tax year.
4. “No retroactivity” — a key commitment from the tax authority
The biggest concern: if declared actual revenue is higher than the old lump-sum base, will past years be reassessed? The answer is no, under three principles stated by the Tax Department in Official Letter 307/CT-PC dated 19 January 2026 and Article 17.5 of Decree 68/2026/ND-CP:
- No re-examination of tax records from the lump-sum period where the assessment complied with regulations;
- 2026 declared revenue will not be used to infer or re-impose revenue for prior years;
- No retroactive treatment of tax obligations already fulfilled under the lump-sum method.
The sole exception: cases where the tax authority discovers concealment of revenue leading to underpaid tax.
5. What household businesses should prepare now
- E-invoices: use e-invoices, including e-invoices generated from cash registers connected to the tax authority (Article 26 of Law 108/2025, effective 1 January 2026);
- E-filing: get familiar with the eTax Mobile app and file periodically as guided by the directly managing tax office;
- Books and records: keep full revenue and expense records, because PIT is now calculated on income (revenue minus expenses) — households that can substantiate reasonable expenses will significantly reduce tax payable;
- Separate bank account: segregate business cash flows to ease declaration and reconciliation.
6. Frequently asked questions
Q: Must a household business with revenue below VND 1 billion per year still file and pay tax?
A: VND 1 billion is the VAT and PIT payment threshold. Businesses with annual revenue of VND 1 billion or less do not file quarterly returns; they only notify actual annual revenue to the tax authority by 31 January of the following year. Invoicing rules still apply when selling goods or services.
Q: Currently paying lump-sum tax for 2025 — any conversion procedure needed for 2026?
A: The shift is automatic under the legal roadmap; household businesses should proactively register for and use e-invoices and file under the new method from the 2026 tax year. Tax offices are running training and direct support.
Q: Can a household business get a VAT refund?
A: Household businesses filing under the declaration method perform VAT obligations under VAT law; VAT deduction and refunds follow the general conditions (VAT invoices, cashless payment).
Running a household business and need to review your 2026 tax obligations for your specific situation? Contact us for advice.
This article was prepared by the FLAW AI Legal Council. The content is pending QA Council review before submission for approval; it is for reference only and does not replace legal advice for your specific situation.
