Individual traders and household businesses are both non-enterprise business forms in Vietnam, but their tax obligations differ in important ways — especially after presumptive taxation and the license fee were abolished from 01/01/2026. This article compares them under PIT Law 109/2025/QH15, VAT Law 48/2024, and the currently effective guiding documents.
Quick comparison table
| Criteria | Individual trader | Household business |
|---|---|---|
| Registration | Not required to register as a household business (small-scale activity) | Registered at the commune-level People’s Committee / business registration office |
| Taxable threshold | Revenue above VND 1 billion/year (Decree 141/2026/ND-CP) | Same — above VND 1 billion/year |
| Tax method | Declaration based on actual revenue (no more presumptive tax from 01/01/2026) | Same — actual declaration (Circular 18/2026/TT-BTC replaces Circular 40/2021) |
| License fee | Abolished from 01/01/2026 (Resolution 198/2025/QH15) — no longer payable | |
| Social insurance | Voluntary social insurance | Household head: compulsory social insurance on a roadmap (revenue above VND 1 billion from 01/01/2026; all household heads from 01/7/2029) |
Analysis of each difference
1. Registration: household businesses are “registered,” individual traders are not
A household business must register at the commune-level People’s Committee or the business registration office and is issued a household business registration certificate. Small-scale individual traders are not required to register — but that does not place them “outside the law”: once revenue exceeds the taxable threshold, individual traders must still declare and pay taxes in full.
2. The VND 1 billion threshold — with a note on conflicting texts
Under Decree 141/2026/ND-CP (effective 01/01/2026), household businesses and individual traders with annual revenue above VND 1 billion are subject to VAT and PIT. One conflict must be noted: the original text of Article 7 of PIT Law 109/2025/QH15 (effective 01/7/2026; business income applies for tax year 2026) still states a “VND 500 million” threshold — Law 09/2026/QH16 only amended paragraph 1 of that article. However, Decree 141/2026 is the newer guiding document raising the threshold to VND 1 billion, so the VND 1 billion threshold applies in practice.
3. Presumptive taxation abolished — only actual declaration remains
Resolution 198/2025/QH15 abolished presumptive taxation from 01/01/2026. Both individual traders and household businesses now declare based on actual revenue. For household businesses, Circular 18/2026/TT-BTC (effective 05/3/2026) has replaced Circular 40/2021 on household business taxation — all citations should follow the new circular.
4. License fee: abolished, no longer payable
Along with presumptive tax, Resolution 198/2025/QH15 also abolished the license fee from 01/01/2026. This is a major change: household businesses previously paid an annual license fee by revenue bracket; that obligation no longer exists. Any material still stating that household businesses “must pay the license fee” is outdated.
5. Social insurance: the biggest long-term difference
Individual traders join social insurance voluntarily. Household heads, by contrast, are subject to compulsory social insurance on a roadmap: heads with revenue above VND 1 billion from 01/01/2026, and all household heads from 01/7/2029. This is a long-term obligation household businesses must factor into operating costs.
Practical notes
- Household businesses with revenue approaching VND 1 billion/year should track revenue closely and prepare declaration plans for crossing the threshold.
- Abolishing presumptive tax means better bookkeeping and invoice/record management — household businesses should digitize records early.
- Household heads should check the compulsory social insurance roadmap applicable to them to avoid retroactive collection and penalties.
Conclusion
Individual traders and household businesses share the VND 1 billion/year taxable threshold and the actual-declaration method (no more presumptive tax), and both are freed from the license fee from 01/01/2026. The core differences lie in registration status and the household head’s roadmap-based compulsory social insurance obligation. Knowing these points helps both subjects comply correctly and optimize compliance costs.
Disclaimer: This article was prepared by the AI Legal Council based on research of PIT Law 109/2025/QH15, VAT Law 48/2024, Decree 141/2026/ND-CP, Resolution 198/2025/QH15 and Circular 18/2026/TT-BTC in force at the time of writing, for general reference only. It does not constitute tax advice for any specific case.
Transparency notice: This article was drafted by an artificial intelligence system (AI Legal Council) and has undergone internal quality review; it does not purport to be the opinion of a licensed human lawyer.
Need household business tax advice? Contact FLAT Law Firm for support.
