NEW GUIDANCE ON TAX DECLARATION AND PAYMENT FOR INDIVIDUALS AND HOUSEHOLD BUSINESSES FROM 2026

The Tax Department has issued Notice No. 85/TB-CT dated January 29, 2026 to disseminate and guide the implementation of new tax policies for household and individual businesses. Notice 85/TB-CT sets out clear objectives to ensure that taxpayers fully and accurately understand the relevant legal provisions on tax policies, as well as their rights and obligations. This helps improve awareness and responsibility for compliance with tax laws and limits administrative violations caused by a lack of understanding. Below are important points that household and individual businesses need to note.

I. Annual revenue under VND 500 million: No tax payable but notification still required

Pursuant to Clause 25, Article 5 of the 2024 Law on Value-Added Tax (as amended and supplemented by Point b, Clause 1, Article 1 of the 2025 Law amending the VAT Law), goods and services of household businesses with annual revenue of VND 500 million or less are not subject to value-added tax (VAT). At the same time, Clause 1, Article 7 of the 2025 Law on Personal Income Tax (effective from July 1, 2026) also stipulates that resident individuals engaged in production and business activities with annual revenue of VND 500 million or less are not required to pay personal income tax (PIT). Accordingly, household and individual businesses with annual revenue under VND 500 million will not be required to pay VAT and PIT. However, according to Notice 85/TB-CT, for revenue of VND 500 million per year or less, household and individual businesses are not required to pay VAT and PIT but must still notify the tax authority of their actual revenue in accordance with regulations before January 31 each year. For 2026 specifically, this group must submit notifications twice a year, on July 31, 2026 and January 31, 2027. Therefore, household and individual businesses in this category should note that although they are not required to pay tax, they must still carry out tax-related procedures.

II. When annual revenue exceeds VND 500 million

If actual revenue arising during the year exceeds the VND 500 million threshold, household and individual businesses must declare and pay tax from the quarter in which the revenue exceeds the threshold. This group will declare and calculate tax according to each revenue bracket.

Specifically, for PIT, depending on the case, tax will be calculated as follows:

In cases where input expenses can be determined: revenue up to VND 3 billion per year will be subject to a 15% tax rate on profit. Revenue from over VND 3 billion to VND 50 billion per year will be subject to a 17% tax rate, and 20% if revenue exceeds VND 50 billion per year.

In cases where input expenses cannot be determined: revenue under VND 3 billion will continue to be taxed at the deemed rate on revenue as currently applied, at 0.5–2% depending on the business sector. However, the amount within the non-taxable threshold (VND 500 million per year) will be deducted before calculation, meaning tax is only calculated on the portion of revenue exceeding VND 500 million per year. Example: If revenue is VND 800 million, taxable revenue = 800 million – 500 million = 300 million.

Regarding accounting records, whether they fall into the tax-exempt group or are required to pay tax based on revenue, businesses must still keep detailed revenue records. If PIT is paid based on profit, four types of accounting books must be maintained, including: sales revenue book for goods and services; detailed revenue and expense book; materials and goods book (tracking input – output – inventory); and bank cash flow book (tracking cash and deposits). In cases where revenue is under VND 500 million or PIT is paid at a percentage of revenue, only the sales revenue book for goods and services must be maintained.

According to the Tax Department’s notice, determining whether a household business only needs to notify revenue or must declare and pay tax will be based on actual revenue according to the prescribed thresholds (over VND 500 million to VND 3 billion; over VND 3 billion to VND 50 billion; and over VND 50 billion). Household businesses do not need to determine this themselves or worry about policy application. Tax authorities will proactively review data and provide specific guidance for each case.

For VAT, when household businesses switch to tax declaration, they will still pay VAT based on revenue, and the percentage rate table remains unchanged. Household businesses with revenue thresholds from VND 500 million to over VND 50 billion also apply this method.

Tax payable = VAT-calculable revenue × VAT percentage rate by business sector

Accordingly, VAT will be determined using the direct method on revenue. Specifically, the VAT payable is calculated by multiplying the VAT percentage rate by total revenue generated in the tax period. Here, revenue means the total amount earned from business activities involving goods and services before deducting any expenses (note that for individual payments of VND 5 million or more, non-cash payment documents are also required).

An important point is that VAT in this case does not depend on income remaining after expenses but is based solely on revenue. Although divided into different revenue levels (over VND 500 million to VND 3 billion; over VND 3 billion to VND 50 billion; and over VND 50 billion), the VAT calculation method for these levels remains the same.

The specific percentage rate depends on the business field or sector in accordance with tax regulations (which may be 1%, 3%, 5%, etc.). After determining this rate, the taxpayer only needs to multiply it by the corresponding total revenue to determine the VAT payable.