Non-Taxable Revenue Threshold Raised to VND500 Mln for Business Households

The Government has issued Decree 68/2026 on tax policy and tax management for household businesses and individual business operators. The decree takes effect on March 5, 2026 and introduces new provisions related to value-added tax (VAT), personal income tax (PIT), and other taxes, while clarifying tax administration mechanisms for the household and individual business sector, which is playing an increasingly important role in the economy.

Under Decree 68, household and individual businesses with annual revenue of VND500 million or less are exempt from VAT and PIT

Clarifying PIT calculation based on revenue scale

One notable provision of Decree 68 sets a specific revenue threshold used to determine tax obligations for household and individual businesses. Under the regulation, household and individual businesses with annual revenue from production and business activities of VND500 million or less are not subject to VAT and are not required to pay PIT.

By contrast, where annual revenue exceeds VND500 million, household and individual businesses must fulfill tax obligations in accordance with current legal provisions.

For VAT, business individuals whose revenue exceeds the threshold must pay tax using the direct method based on revenue, with percentage rates applied in accordance with the Law on VAT and related guiding documents.

The regulation clarifies the basis for determining tax obligations for household and individual businesses while providing a foundation for tax authorities to apply management measures suited to the characteristics of this type of business.

Alongside the revenue threshold provision, Decree 68 also clarifies how PIT obligations are determined for business individuals.

Under the regulation, business individuals with annual revenue above VND500 million must fulfill PIT obligations under the Law on Personal Income Tax. However, before calculating tax, individuals may deduct VND500 million in annual revenue.

Where an individual conducts business in several sectors or at several locations, this deduction may be allocated to one or more business activities in the manner most beneficial to the taxpayer. However, the total deduction within a year must not exceed VND500 million.

A similar provision applies to individuals leasing real estate. If an individual has several lease contracts during the year, they may choose one or more contracts to apply the VND500 million deduction before calculating tax. However, the total deduction applied to all lease contracts in a year must also not exceed the prescribed limit.

Decree 68 also classifies PIT calculation methods based on revenue scale to suit different groups of business individuals.

Specifically, business individuals with annual revenue above VND500 million and up to VND3 billion will apply the tax calculation method using the tax rate multiplied by taxable revenue.

Meanwhile, individuals with annual revenue exceeding VND3 billion must apply the tax calculation method based on taxable income, meaning revenue after deducting reasonable and valid expenses in accordance with regulations, then applying the tax rate to determine the tax payable.

For individuals with annual revenue from VND500 million to VND3 billion, in addition to the revenue-based method, taxpayers may choose to apply the taxable income method. However, once this method is selected, it must be maintained for at least two consecutive years.

The clear classification of tax calculation methods by revenue scale is expected to improve transparency in fulfilling tax obligations while aligning with the operational characteristics of different groups of business individuals.

Greater revenue transparency and responsibilities for digital platforms

Beyond provisions on revenue thresholds and tax calculation methods, Decree 68 also sets out how taxable revenue for household and individual businesses is determined.

Accordingly, taxable revenue includes all proceeds from the sale of goods, service provision, bonuses, sales incentives, payment discounts, contract compensation, and other income related to business activities.

These revenues are included regardless of whether payment has been received, ensuring that taxable revenue reflects the full scale of an individual’s business operations. For cases applying the taxable income method, Decree 68 also provides clear guidance on deductible expenses when determining taxable income.

Allowable deductions include costs of raw materials, employee wages, purchased services, depreciation of assets used for business activities, loan interest serving business operations, and other reasonable expenses with valid invoices and supporting documents in accordance with regulations.

By contrast, expenses unrelated to business activities, costs without valid documentation, personal expenses, or the business individual’s own salary are not deductible when determining taxable income.

In addition to VAT and PIT, Decree 68 also provides that household and individual businesses operating in sectors subject to special consumption tax, natural resource tax, or environmental protection tax must continue fulfilling tax obligations in accordance with the relevant tax regulations.

Decree 68 also clarifies provisions related to tax declaration, tax calculation, tax payment, and tax finalization, as well as the handling of excess tax payments, late payment interest, and penalties.

Another notable provision concerns the responsibilities of e-commerce platforms and digital platforms in fulfilling tax obligations for household and individual businesses operating in the digital environment.

Accordingly, operators of e-commerce and digital platforms are responsible for withholding, declaring, and remitting the tax amounts withheld from household and individual businesses in accordance with regulations. In addition, Decree 68 sets out the responsibility of organizations to declare and pay tax on behalf of individuals in certain cases such as business cooperation arrangements or agency sales at fixed prices in sectors such as lottery distribution, insurance, and multi-level marketing.

Decree 68 also addresses the use of electronic invoices and the responsibilities of relevant organizations and individuals in the process of fulfilling tax obligations.

The issuance of Decree 68 is expected to further complete the legal framework for tax management of household and individual businesses while improving transparency in determining revenue and fulfilling tax obligations, particularly as business activities on digital platforms and e-commerce continue to expand.

By Huong Hau, Vietnam Business Forum