One of the issues attracting attention from lawmakers is the provision on the taxable income threshold for business activities.

Many NA delegates proposed raising the taxable income threshold for household and individual businesses from VND200 million (as stated in the initial draft) to VND500 million to better reflect real conditions.

In its report responding to comments from National Assembly deputies and the appraisal opinions of the Economic and Financial Committee, the Government affirmed that the revisions ensure a relatively fair correlation between the income of household and individual businesses and other types of taxable income (including salaries and wages).

In the latest draft, the Government has revised provisions on personal income tax applied to business income.

Reporting on this issue, Deputy Minister of Finance Cao Anh Tuan said the draft law raises the revenue threshold exempt from tax for household and individual businesses from VND200 million to VND500 million per year. This threshold will also be regulated to be simultaneously adjusted with the value-added tax (VAT).

For households or individuals distributing or supplying goods with annual revenue of VND1 billion and unable to determine expenses, they will only pay PIT on the portion exceeding VND500 million, at a tax rate of 0.5 percent. This means the tax payable would be (VND1,000 million - VND500 million) x 0.5 percent = VND2.5 million/year.

According to tax authority estimates, the total tax reduction (including both PIT and VAT) would be VND11,800 billion.  ? Not sure what this is referring to??? 

The government also proposed adding a regulation for business households and individuals with revenue from VND500 million to VND3 billion/year to apply tax calculation based on income (revenue minus (-) expenses) to ensure tax collection aligns with the nature of income tax. They propose applying a 15 percent tax rate, similar to the corporate income tax rate for enterprises with revenue under VND3 billion/year.

Accordingly, all business households and individuals will pay tax based on actual income: if the income is high, they pay more tax; if the income is low, they pay less tax; if there is no income, they do not have to pay tax.

The government believes that the non-taxable revenue threshold will no longer have a significant impact on tax-paying business households and individuals. Only those business households and individuals who cannot determine their expenses will pay tax based on the revenue percentage ratio.

The deputy minister of finance stated that with these adjustments, the draft law has created a fair, equal legal framework, suitable for the business conditions of business households and individuals.

No income offsetting if individual has more than 1 rental property

In another matter, presenting an explanation and revisions, Chair of the NA Economic and Financial Committee Phan Van Mai stated that the draft law has been substantially updated.

Under the draft, individuals renting out real estate with annual revenue above VND500 million will apply percentage-based taxation with no need to determine expenses, offset income (if they have more than one rental propertu), or conduct annual tax finalization.

The draft law raises the revenue threshold exempt from tax for household and individual businesses from VND200 million to VND500 million per year. This threshold will also be aligned with VAT adjustments.

A segment of low-income household businesses will be excluded from tax obligations, while reducing the administrative burden on tax authorities.

The draft also allows higher-revenue households to opt for income-based taxation (if expenses can be determined), applying tax rates similar to those for small and micro businesses. This is considered a positive step in encouraging household businesses to adopt simplified accounting and invoicing practices, gradually transitioning toward enterprise-like mechanisms.

The Standing Committee of the NA Economic and Financial Committee recommends that the Government direct relevant agencies to promptly prepare and issue guiding documents to ensure clarity, feasibility, and convenience when the law takes effect, avoiding any unnecessary compliance costs.

Tran Thuong