I. Legal basis 

• Amended Personal Income Tax Law 2025
• Resolution No. 198/2025/QH15

II. Some important notes under the amended Personal Income Tax Law, effective from 1 July 2026

1. Increase of the personal income tax and VAT thresholds for household businesses and individual business operators to VND 500 million per year

Pursuant to Article 10 of Resolution No. 198/2025/QH15, the presumptive tax regime and the business license fee applicable to household businesses and individual business operators shall be abolished as from 1 January 2026. Accordingly, from 2026, household businesses and individual business operators will be subject to only two taxes, namely value-added tax (VAT) and personal income tax (PIT). At the same time, the tax payment regime will be converted from the presumptive method to the self-declaration and self-payment method.

Accordingly, the revenue threshold exempt from personal income tax for household businesses and individual business operators is adjusted from VND 200 million per year to VND 500 million per year, and this amount is deductible before applying the presumptive tax rate on revenue. The VAT-exempt revenue threshold is likewise adjusted to VND 500 million per year.

2. Household businesses and individual business operators are permitted to calculate personal income tax on their profits (i.e., the difference between revenue and expenses)

For household businesses and individual business operators with annual revenue exceeding VND 500 million and up to VND 3 billion: 

• Where input costs can be determined: personal income tax shall be imposed at 15% on the profit, i.e. the difference between revenue and expenses, similar to the tax rate applicable to small enterprises.
• Where input costs cannot be determined: tax shall continue to be calculated as a percentage of revenue, at a rate of 0.5% to 2% depending on the line of business; however, the VAT/PIT-exempt revenue threshold (VND 500 million per year) shall be deducted before the tax base is calculated.

Household businesses and individual business operators in this category may choose to apply either the revenue-based method or the income-based (profit-based) method for tax calculation.

Annual revenue from VND 3 billion to VND 50 billion: 17%;

Annual revenue exceeding VND 50 billion: 20%.

3. Amendment of the progressive tax schedule applicable to personal income derived from salaries and wages

Under the new law, the progressive tax schedule has been reduced from seven brackets to five. The law widens the income ranges between brackets and revises the two intermediate tax rates, under which the 15% rate in the second bracket is reduced to 10% and the 25% rate in the third bracket is reduced to 20%.

III. Conclusion

The Law Amending the Personal Income Tax Law, effective from 1 July 2026, marks an important reform in tax policy toward greater fairness, transparency, and closer alignment with socio-economic development realities. The new provisions not only help reduce the tax burden on low- and middle-income taxpayers, but also facilitate the transition of household businesses and individual business operators to a modern tax administration model based on self-declaration and self-assessment.

The increase of the personal income tax and VAT exemption thresholds to VND 500 million per year, the abolition of the presumptive tax regime, and the permission to calculate tax based on actual profits clearly reflect a policy orientation toward encouraging sustainable production and business activities, while moving closer to the principle of taxation according to ability to pay. In addition, the adjustment of the progressive tax schedule applicable to income from salaries and wages—by reducing the number of brackets and lowering the intermediate tax rates—contributes to greater rationality, ease of application, and closer alignment with the current income landscape.

In light of the new regulations having direct and far-reaching impacts on the rights and obligations of taxpayers, the timely study, updating, and preparation of compliance measures are essential for individuals, household businesses, and relevant organizations alike. This will help ensure the consistent and effective implementation of the Law, while enhancing tax compliance awareness in the new phase.

IV. 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:

Website: http://hankuklawfirm.com/en/  FB: https://www.facebook.com/hankuk.lawfirm  Tiktok: https://www.tiktok.com/@hankuklawfirm Youtube: https://www.youtube.com/@hankuklawfirm6375 Email:  info@hankuklawfirm.com   SĐT: 0942.339.063