Raising the tax-free threshold: A new boost for the household economy.
In the context of an economy facing numerous challenges, the official increase in the tax-exempt revenue threshold for household businesses to VND 1 billion/year under Decree 141/2026/ND-CP is considered a "dual" policy decision: it both supports household businesses in stabilizing their livelihoods and clarifies the business environment, promoting the transition to the corporate model.
Supporting household businesses
At its first session, the 16th National Assembly passed the Law amending tax laws, which adjusted the taxable revenue threshold to align with the changing realities of the market economy and inflation trends. Specifically, Decree 141/2026/ND-CP officially raised the threshold for exemption from value-added tax and personal income tax for business households to 1 billion VND per year.
This policy is not simply about reducing taxes for 2.5 million business households nationwide, but also a strong message from the Government about supporting and resolving difficulties for the individual economic sector.
Sharing his thoughts on the policy's significance, Mr. Phan Van Hoa, a small trader selling rice in Truong Vinh ward, said: “In the context of rising costs of premises, labor, and raw materials, adjusting the tax-exempt revenue threshold significantly reduces the financial burden for businesses like ours. Being exempt from taxes provides me with additional working capital to maintain inventory and balance product pricing, ensuring competitiveness in a volatile market.”
A notable aspect of the implementation of Decree 141 is its timeliness and decisiveness. Although the decree was issued on April 29, 2026, its effective date is January 1, 2026. The Tax Department has proactively reviewed and implemented procedures for offsetting or refunding taxes paid in the first quarter of 2026 for eligible cases. This not only ensures the legitimate rights of citizens but also creates high consensus and strengthens the confidence of the business community in the policies of the Party and the State.
Towards a transparent business environment
Raising the tax exemption threshold to 1 billion VND is also seen as a solution to change the method of managing taxes for household businesses. Previously, the lump-sum tax mechanism made many household businesses hesitant to expand their scale or disclose their actual revenue, leading to the practice of splitting businesses into smaller ones to evade taxes.
The new policy has removed this barrier, encouraging households to voluntarily declare their taxes and gradually switch to using electronic invoices. When tax obligations are appropriately designed, businesses will be more open to fulfilling their invoice and documentation obligations. This helps tax authorities access more accurate and transparent data, while creating a level playing field for businesses that comply with the law, where those who comply are protected and supported.
From the perspective of balancing the local budget, raising the tax exemption threshold will temporarily reduce revenue. According to preliminary calculations, Nghe An's budget could see a revenue decrease of approximately 30 billion VND compared to current regulations and about 160 billion VND compared to 2025. However, from a macroeconomic perspective, this is an investment to "nurture" a sustainable source of revenue.
Currently, the province has approximately 1,600 business households with revenues exceeding 1 billion VND. Focusing on managing this group through an electronic invoicing system directly connected to the tax authorities will bring stable revenue and ensure the long-term sustainability of the budget.
Furthermore, Decree 141 creates a more favorable mechanism for newly converted businesses. Units with projected revenue under 1 billion VND will not have to make provisional corporate income tax payments in the first period. This regulation alleviates concerns about accounting procedures for household businesses wishing to convert to a corporate model.
Mr. Ngo Tuan Anh, Director of Truong Vinh 68 Co., Ltd., affirmed: “The policy has removed procedural barriers and financial burdens during the initial transition period. This is the driving force that gives us more confidence in expanding our scale, improving our management capabilities according to business standards, and increasing our competitive position in the market.”
Looking back at the history of tax regulation, it can be seen that the tax-exempt revenue threshold has undergone a long journey: from 100 million VND to 200 million, 500 million, and now 1 billion VND. Each stage reflects the flexible adjustment of policy to suit the evolving realities.
Tax expert Nguyen Van Duoc, from the Vietnam Tax Consulting Association, emphasized: “Raising the tax exemption threshold is a strategic step in modernizing tax management. For the policy to truly take effect, in addition to the reform efforts of the tax authorities, the cooperation of the business community is essential in complying with the law, promoting digital transformation, and improving governance capacity. We believe that with these systemic changes, the individual economic sector in Nghe An will not only remain small-scale but will become dynamic economic ‘cells,’ making significant contributions to the sustainable development of our homeland.”
