Hoang Hai, a household business owner (name changed), shared that with current cost structures, achieving a profit margin of around 10% on revenue is already challenging after expenses.

“In my view, a threshold of VND1 billion per year is still not truly adequate when compared to salaried workers, especially considering that profit margins are only about 10% of revenue. Household businesses must not only cover personal expenses but also support families, children, and long-term savings,” he said.

Speaking to VietNamNet, lawyer Nguyen Van Duoc, General Director of Trong Tin Accounting and Tax Consulting Co., Ltd., suggested that the tax-exempt revenue threshold should fall between VND1 billion and VND2 billion per year (US$41,000 to US$82,000).

He noted that VND1 billion represents an average level for the economy, while VND2 billion could serve as the upper limit for household businesses, particularly in the commercial sector.

However, raising the threshold beyond VND2 billion may reduce budget revenues and fail to target the right beneficiaries, he warned.

Duoc also emphasized that a uniform threshold may not reflect the diversity of business models, which differ significantly in profit margins. He proposed categorizing thresholds based on profitability levels - high, medium, and very high - aligned with specific revenue bands.

For example, a threshold of around VND2 billion (US$82,000) could apply to trading activities, VND1 billion (US$41,000) to manufacturing with moderate margins, and about VND750 million (US$31,000) to service sectors or production without raw material inputs, where profit margins tend to be higher.

Such an approach, he said, would ensure fairness by aligning tax obligations with income levels, following the principle that higher earners contribute more while lower earners pay less.

On policy design, Duoc suggested setting a minimum “hard” threshold in law while granting the government flexibility to adjust it based on economic conditions.

“It may be necessary to establish clear criteria for adjustments or require the government to seek approval from the National Assembly Standing Committee under a simplified procedure before making decisions. This would preserve legislative oversight while allowing flexibility in policy management,” he said.

He stressed that the key issue is not whether the threshold is set at VND1 billion or VND2 billion, but how the policy is designed to balance interests, reduce burdens on citizens, and ensure fairness.

Raising threshold to VND1 billion could exempt 97% of households

Nguyen Ngoc Tu, a lecturer at Hanoi University of Business and Technology, noted that with the current threshold of VND500 million (US$20,000), most household businesses already pay little to no tax.

If the threshold is raised to VND1 billion (US$41,000), he estimated that 97-98% of household businesses could become tax-exempt, effectively removing most from the tax net.

Although revenue from this sector remains modest - around VND25 trillion in 2024 (US$1 billion) and over VND32 trillion in 2025 (US$1.3 billion), accounting for less than 2% of total state revenue - expanding tax exemptions could have broader implications for fairness across economic sectors.

If nearly all household businesses are exempt, they may not need to issue invoices, creating difficulties for enterprises that rely on documented transactions for accounting. This could also hinder data integration in the digital economy and complicate macroeconomic management.

Furthermore, the policy risks creating inequality with formal businesses, particularly small and medium-sized enterprises, which must fully comply with tax obligations, accounting standards, invoicing requirements, and inspections, even when their revenues are comparable to those of household businesses.

Tu suggested that beyond raising the exemption threshold, policymakers should strengthen incentives for household businesses to transition into formal enterprises. This could include extending corporate income tax exemptions or adopting preferential policies similar to those applied to foreign direct investment.

He also recommended supporting compliance costs - such as software, equipment, and electronic invoices - during the initial transition period.

In the long term, he emphasized the need to control cash flow, promote cashless payments, and enhance invoice management to ensure transparent revenue reporting and reduce the risk of inaccurate declarations.

Nguyen Le