I. Legal basis

• Resolution No. 198/2025/QH15
• Decree No. 91/2022/ND-CP
• Decree No. 70/2025/ND-CP

II. Official abolition of the presumptive taxation regime for household businesses and individual business operators from 01 January 2026

Article 10 of Resolution No. 198/2025/QH15 provides for policies on tax, fee, and charge incentives in support of the private sector, with the following contents:

• Exemption from corporate income tax for a period of two (02) years and a 50% reduction of the payable tax amount for the subsequent four (04) years with respect to income derived from innovative startup activities of innovative startup enterprises, innovative startup investment fund management companies, and intermediary organizations providing support for innovative startups.
• The determination of the tax exemption and reduction periods shall be carried out in accordance with the provisions of the law on corporate income tax.
• Personal income tax and corporate income tax shall be exempted with respect to income derived from the transfer of shares, capital contributions, capital contribution rights, rights to purchase shares, and rights to purchase capital contributions in innovative startup enterprises.
• Exemption from personal income tax for a period of two (02) years and a 50% reduction of the payable tax amount for the subsequent four (04) years with respect to income from salaries and wages received by experts and scientists from innovative startup enterprises, research and development centers, innovation centers, and intermediary organizations providing support for innovative startups.
• Exemption from corporate income tax for small and medium-sized enterprises for a period of three (03) years from the date of issuance of the initial Enterprise Registration Certificate.
• Training and retraining expenses incurred by large enterprises for small and medium-sized enterprises participating in the supply chain shall be treated as deductible expenses for the purpose of determining taxable income when calculating corporate income tax.
• Household businesses and individual business operators shall no longer apply the presumptive taxation method from 01 January 2026. Household businesses and individual business operators shall pay taxes in accordance with the law on tax administration.
• The collection and payment of the license tax shall be terminated from 01 January 2026.
• Exemption from fees and charges for organizations, individuals, and enterprises in respect of documents required to be re-issued or replaced in the course of the rearrangement and reorganization of the state administrative apparatus in accordance with the provisions of law.

Accordingly, based on the foregoing provisions, one of the policies on tax, fee, and charge incentives aimed at promoting the development of the private sector is the abolition of the presumptive taxation regime for household businesses and individual business operators from 01 January 2026.

III. Household businesses with annual revenue exceeding VND 500 million shall be subject to tax obligations

From 2026, household businesses and individual business operators shall only be subject to value-added tax (VAT) and personal income tax if their annual revenue exceeds VND 500 million, pursuant to the amended Law on Personal Income Tax.

With respect to personal income tax, the regulatory authority introduces a method of tax calculation based on profit (being the difference between revenue and expenses) applicable to household businesses. Specifically, household businesses with annual revenue of less than VND 3 billion that are able to determine their input costs shall be subject to a tax rate of 15% on taxable profit. This rate corresponds to the preferential corporate income tax rate applicable to micro-enterprises with comparable revenue levels.

Household businesses with annual revenue ranging from VND 3 billion to VND 50 billion shall be subject to a tax rate of 17%, while those with annual revenue exceeding VND 50 billion shall be subject to a tax rate of 20%.

In cases where household businesses with annual revenue of less than VND 3 billion are unable to determine their expenses, they shall continue to pay tax based on a percentage of revenue, as currently applied, ranging from 0.5% to 2% depending on the business sector. However, the portion of revenue falling within the non-taxable threshold (VND 500 million per year) shall be deducted prior to tax calculation.

With respect to VAT, household businesses that switch to the declaration method shall continue to pay VAT based on revenue, and the applicable percentage table remains unchanged from the current regime. Household businesses with revenue thresholds ranging from VND 500 million to over VND 50 billion shall also apply this method.

Tax payable = VAT taxable revenue × the applicable tax rate by business sector.

IV. Sales tax on e-commerce platforms applicable to household businesses shall be declared and paid on their behalf

For individuals and household businesses selling goods on e-commerce platforms, pursuant to Decree No. 91/2022/ND-CP, the platforms are responsible for declaring and paying taxes on behalf of the sellers. Accordingly, in the event of incorrect tax declarations or failure to fully fulfill tax obligations, the responsibility shall lie with the platform operators rather than the household businesses.

V. Household businesses with annual revenue of less than VND 1 billion are not required to use electronic invoices

Pursuant to the amended Law on Tax Administration, individual business operators with annual revenue of VND 1 billion or more are required to apply electronic invoices bearing the tax authority’s code or electronic invoices generated from cash registers connected to the tax authority’s data system, in accordance with the provisions of Decree No. 70.

Household businesses and individual business operators with annual revenue of less than VND 1 billion are not required to use electronic invoices bearing the tax authority’s code or electronic invoices generated from cash registers connected to the tax authority’s data system.

VI. Conclusion

The official abolition of the presumptive taxation method for household businesses and individual business operators as from 01 January 2026 pursuant to Resolution No. 198/2025/QH15 marks a significant transition in tax administration policy, clearly reflecting the orientation toward greater transparency in financial obligations, gradual alignment with modern tax administration practices, and conformity with the actual scale and capacity of each business entity. Instead of an average-based assessment mechanism, the new approach places emphasis on actual revenue, expenses, and business performance, thereby ensuring the principles of fairness and equality in the fulfillment of tax obligations.

In addition to the termination of the presumptive taxation regime, the new regulatory framework concurrently establishes reasonable revenue thresholds, tax exemption and reduction mechanisms, and flexible tax calculation methods to support small and micro household businesses, encourage the transition in management approaches, and progressively enhance compliance with tax laws without creating sudden cost pressures. Regulations concerning tax declaration and payment on behalf of sellers on e-commerce platforms, as well as the application of electronic invoices based on revenue thresholds, further contribute to reducing administrative burdens while strengthening the effectiveness of state management.

However, in the context of fundamental changes in tax policy, household businesses and individual business operators should proactively review their production and business activities, prepare accounting books and supporting documents, update tax registration information, and select appropriate tax declaration methods in order to ensure full compliance with legal requirements. Timely adaptation to the new tax administration regime will not only help mitigate legal risks, tax arrears assessments, and administrative penalties, but also establish a solid foundation for stable, transparent, and sustainable business operations in the period from 2026 onwards.

VII. About Us, Hankuk Law Firm

■ Hankuk Law Firm – Introduction

The goal of the legal services provided by HANKUK LAW FIRM is to support businesses, investors, and people. Our organization employs skilled Korean lawyers, partners, and professionals to provide legal services to businesses related to corporations and litigation.

To support the startup process, our lawyers and staff provide a wide range of services, including business law consulting, tax and immigration law consulting, real estate services, business consulting, marketing and communications, human resources, product distribution, franchise options, etc. We provide expert advice on every aspect of your business needs.

To protect the legitimate rights and interests of our clients and achieve the best results, we provide legal advice and participate in civil lawsuits related to business, labor, marriage, family, and inheritance.

■ Contact us now

For reliable and effective legal advice, please contact HANKUK LAW FIRM now. We are committed to providing you with the best possible answers and our team of experienced lawyers has extensive knowledge in many legal fields. We are always here to provide the most competent and dedicated support, whether you are dealing with contractual issues, commercial disputes or need guidance on foreign investment. HANKUK LAW FIRM is honored to have assisted hundreds of domestic and international clients in skillfully resolving complex legal issues as their trusted legal partner. Do not let legal issues hinder your success. Let us accompany you towards legal achievement and comfort. For prompt guidance and support to ensure your rights are always maintained at the highest standards, contact HANKUK LAW FIRM now.

■ Contact Hankuk Law Firm:

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