Vietnamese household businesses have recently been alarmed by a viral claim: \”Decree 284/2026 requires household businesses with revenue of VND 100 billion or more to convert into enterprises, with fines of VND 10–20 million from 1 September 2026.\” Is it true? The answer is categorical: this is FAKE NEWS. No legal instrument numbered \”Decree 284/2026\” exists in the Vietnamese legal system — the claim appears only on AI-generated content pages and has been confirmed by no official source.
So what is the real 2026 policy for household businesses? Is conversion mandatory? This article separates fact from rumor and maps the lawful voluntary-conversion path.
1. The fact: no mandatory conversion threshold exists
As of 14 October 2026, Vietnamese law sets no mandatory revenue threshold requiring household businesses to convert into enterprises. Every variant of the \”mandatory conversion at VND 100 billion revenue\”, \”VND 10–20 million fines from 1 September 2026\” claim tied to the \”Decree 284/2026\” number is fake — never cite it, never share it, and never make business decisions based on it.
How to spot fake legal news: genuine legal instruments are always published on official sources (vbpl.vn, thuvienphapluat.vn, chinhphu.vn, the Government web portal). A \”decree\” found only on social media and obscure websites is almost certainly fabricated.
2. The real change: flat-tax abolition from 1 January 2026 — the economic driver of conversion
The rumor is fake, but the real change is substantial: Clause 6, Article 10 of Resolution 198/2025/QH15 abolishes the flat-tax regime for household businesses from 1 January 2026, moving them to the declaration-based method.
This means household businesses must keep accounting books, issue invoices and declare and pay tax periodically — compliance costs rise significantly for a model originally designed for simplicity. The inevitable economic consequence: as household-business compliance costs approach enterprise compliance costs, while enterprises enjoy tax incentives (a two-year CIT exemption for enterprises converted from household businesses under Decree 320/2025, or three years for first-time registered SMEs under Decree 20/2026), voluntary conversion becomes the economically rational choice — even though the law does not require it.
3. Five signs a household business should voluntarily convert
- Revenue has outgrown the household scale: when turnover and transaction volumes are effectively at enterprise level, the household-business model shows its limits in governance and commercial credibility.
- Need to issue VAT invoices: corporate counterparties typically require VAT invoices for input tax credit — declaring household businesses may be at a competitive disadvantage.
- Plans to raise capital and expand: enterprises access bank credit, raise capital and bid for projects more easily than household businesses.
- Need to limit legal liability: a household-business owner bears unlimited liability with all personal assets; converting to a limited liability company separates personal from business assets.
- Want the conversion tax incentive: enterprises established from household businesses enjoy a two-year CIT exemption (revenue of VND 50 billion or less) under Clause 4, Article 21 of Decree 320/2025/ND-CP (effective 1 January 2026).
4. Conversion procedure: six steps under Article 27 of Decree 168/2025
Decree 168/2025/ND-CP (effective 1 July 2025, replacing Decree 01/2021/ND-CP on enterprise registration) provides in Article 27 the procedure for registering an enterprise on the basis of conversion from a household business. The notable reform: authority has moved from the provincial to the commune level, with a processing time of only two working days — far faster than before.
The basic six steps: (1) the household-business owner decides to convert and prepares the dossier; (2) files the enterprise-registration dossier with the commune-level business registration authority; (3) the authority checks dossier validity; (4) issuance of the Enterprise Registration Certificate within two working days; (5) completion of household-business termination procedures; (6) completion of conversion tax obligations (finalizing household-business tax, registering the new enterprise for tax).
5. Conversion tax incentives: clarifying \”two years or three years\”
Two CIT exemption policies are easily confused:
- Two years: Clause 4, Article 21 of Decree 320/2025/ND-CP (effective 1 January 2026) — for enterprises converted from household businesses with revenue of VND 50 billion or less.
- Three years: Clause 3, Article 7 of Decree 20/2026/ND-CP — for first-time registered SMEs.
Which applies to an enterprise that is both converted from a household business and a first-time registered SME? No unified guidance exists yet for this overlap — we present both policies and advise businesses to await official guidance or seek the tax authority view before claiming, to avoid back-tax risk. Likewise, the exact effective date of Decree 20/2026 should be verified against the original text.
Legal basis
- Resolution 198/2025/QH15: Clause 6, Article 10 — abolition of flat tax for household businesses from 1 January 2026 (the economic driver of voluntary conversion).
- Decree 168/2025/ND-CP (effective 1 July 2025): Article 27 — procedure for registering an enterprise converted from a household business (commune level, two working days).
- Decree 320/2025/ND-CP (effective 1 January 2026): Clause 4, Article 21 — two-year CIT exemption for enterprises converted from household businesses (revenue of VND 50 billion or less).
- Decree 20/2026/ND-CP: Clause 3, Article 7 — three-year CIT exemption for first-time registered SMEs.
- \”Decree 284/2026\” does not exist — all information tied to this number is fake.
Conclusion
Three core facts: (1) there is no mandatory conversion rule at any revenue threshold — \”Decree 284/2026\” is fake news; (2) the flat-tax abolition from 1 January 2026 is real, creating strong economic incentives for voluntary conversion; (3) conversion is now fast (commune level, two working days) with a two-year tax incentive. Household businesses should decide based on their own economic analysis — with professional legal support — not on internet rumors.
Considering converting your household business into an enterprise? FLAT Law Firm advises on conversion roadmaps, dossier preparation under Article 27 of Decree 168/2025 and tax-incentive optimization. Contact us at /en/contact/.
Disclaimer: This article provides general legal information and does not constitute legal advice for any specific case. Please consult the original texts and a lawyer before applying.
Transparency label: This content was prepared by the FLAW AI Legal Council; it is reviewed by the QA Council under internal procedures (not reviewed by a human lawyer).