Personal income tax for household businesses is a mandatory financial obligation for individuals conducting business when they reach the revenue threshold stipulated by law. Circular 40/2021/TT-BTC, Tax management for individual business households is being tightened to ensure transparency and fairness nationwide.
In 2025, the personal income tax policy for household businesses will play a key role in regulating the budget and supporting small businesses. For individuals with annual revenue exceeding 100 million VND, mastering the calculation formula and declaration methods is a prerequisite to avoid legal risks related to late payment. Let's explore the tax roadmap in detail below.
Overview of regulations on personal income tax for household businesses in 2025
The tax policy for 2025 remains stable based on the Tax Administration Law No. 38/2019/QH14. However, accounting professionals need to pay attention to the implementing guidelines to accurately apply the personal income tax rate for household businesses based on each specific type of service.
Taxable income threshold for individual business households
Revenue thresholds are the most important basis for determining tax liability. personal income tax For household businesses, if the total revenue in the calendar year is 100 million VND or less, they will be exempt from personal income tax on business activities and value-added tax according to current regulations.
Conversely, individuals with annual revenue exceeding 100 million VND are required to register, declare, and pay personal income tax as a household business. This revenue includes sales, processing fees, commissions, and service fees generated during the individual's tax period.
Important legal basis to understand.
The implementation of personal income tax for household businesses is based on the following key legal documents:
- Current Personal Income Tax Law.
- Circular 40/2021/TT-BTC provides guidance on VAT and personal income tax for business households.
- Decree 126/2020/ND-CP provides detailed regulations on a number of articles of the Law on Tax Administration.
How to calculate personal income tax for individual business owners with revenue exceeding 100 million VND.
To accurately calculate the amount of tax payable, taxpayers need to clearly identify two factors: taxable revenue and the tax rate corresponding to each specific business sector.
Formula for determining personal income tax payable.
Individuals with revenue exceeding 100 million VND are required to pay taxes using the direct method based on revenue. This is a common method that simplifies administrative procedures when settling personal income tax for household businesses.
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Personal income tax payable = Taxable income x Personal income tax rate |
In this context, taxable revenue is the total revenue, including tax, from goods and services actually generated. For businesses operating under the lump-sum tax system, the revenue subject to personal income tax is determined by the tax authorities based on the results of on-site surveys in the locality.
Table of personal income tax rates for household businesses by industry in 2025
Below is a summary table of personal income tax rates for household businesses applicable in 2025:
| Business lines | VAT rate | Personal income tax rate | Total |
| Distribution and supply of goods | 1,0% | 0,5% | 1,5% |
| Services, construction without materials contract | 5,0% | 2,0% | 7,0% |
| Production, transportation, and services related to goods. | 3,0% | 1,5% | 4,5% |
| Other business activities | 2,0% | 1,0% | 3,0% |
Applying the wrong tax rate is a common mistake in practice. personal income tax settlement Household businesses. Therefore, household owners need to clearly separate revenue from different sources to optimize their personal income tax obligations from business activities.
Roadmap for changes to personal income tax for household businesses in 2026
Accountants and auditors are particularly interested in the changes to the tax-exempt revenue threshold. The National Assembly has approved adjustments aimed at reducing the personal income tax burden for small-scale business households.
Raising the tax-exempt revenue threshold to 500 million VND.
From January 1st, 2026, individuals with business revenue exceeding 100 million VND but below 500 million VND will no longer be required to pay personal income tax on their household businesses. This is a major change that will encourage entrepreneurship and reduce the administrative burden on local tax authorities.
This regulation reflects the fluctuations in the consumer price index (CPI) and current income levels. However, until the end of 2025, the VND 100 million threshold for personal income tax for household businesses will remain strictly enforced, requiring absolute compliance.
Impact on the management of personal income tax for household businesses.
This adjustment requires accounting software systems and eTax Mobile applications to be updated promptly. For MAN – Master Accountant Network, supporting clients in transitioning to the personal income tax schedule for household businesses from 2025 to 2026 is a priority to ensure maximum benefits.
Methods for declaring personal income tax for household businesses.
Currently, the law stipulates three main methods for declaring personal income tax for household businesses. The choice of the appropriate method depends entirely on the scale and actual accounting capacity of each household.
Declaration method (Large-scale business households)
This method applies to large-scale household businesses or those who voluntarily choose to pay personal income tax as a household business. The main requirement is to fully comply with accounting, invoicing, and documentation regulations as stipulated in Circular 88/2021/TT-BTC.
Household businesses will submit their personal income tax returns monthly or quarterly, depending on their registration. This is the most transparent method, making it easier for individual business owners to transact with large partners who require official input invoices.
Contract-based method (Small-scale household businesses)
The lump-sum tax method is for household businesses that do not fully implement accounting procedures. The tax authority will determine a stable lump-sum personal income tax rate for the entire calendar year based on the actual business scale.
For individuals with revenue exceeding 100 million VND who pay flat-rate taxes, the monthly personal income tax payable by the business household will be fixed. If the scale of the business changes, the business household must notify the authorities promptly so that the personal income tax rate from business can be adjusted.
The method of filing tax returns on a transaction-by-transaction basis.
This method is for individuals engaged in mobile business, without a fixed location, but who are still subject to personal income tax as a household business. Whenever revenue is generated, the individual must fulfill their tax obligations immediately to ensure compliance with regulations.
Risks and considerations when settling personal income tax for household businesses.
During the process of fulfilling their tax obligations, many households encounter legal problems due to a lack of in-depth understanding of regulations. Below are some important considerations from the perspective of tax risk control and management.
Control of incoming and outgoing invoices.
Regardless of the method used for filing personal income tax for household businesses, document retention remains extremely important. Failure to prove the origin of goods can lead to higher tax assessments or administrative penalties related to invoices.
Individuals with revenue exceeding 100 million VND should note the need to use electronic invoices generated from cash registers. This is a mandatory trend that helps to increase transparency in cash flow and simplify the procedures for filing personal income tax for household businesses.
Deadline for filing tax returns in 2025
- Household tax declaration: The deadline for submitting the household business personal income tax return is the last day of the first month of the following quarter.
- For businesses operating under the lump-sum tax system: Submit your annual personal income tax return no later than December 15th of the preceding year.
- Tax payment deadline: Coincides with the deadline for filing tax returns as stipulated by law.
FAQ – Frequently Asked Questions about Personal Income Tax for Household Businesses
If I sell goods online and have an annual revenue of 120 million VND, how should I pay personal income tax as a household business?
You belong to the group of individuals with revenue exceeding 100 million VND. You need to pay personal income tax for household businesses at a rate of 0.51% on the total revenue generated during the year.
Will I have to pay taxes in 2026 if my revenue is below 500 million VND?
According to the latest regulations, you will be exempt from personal income tax for household businesses if your total annual revenue is under 500 million VND, effective from January 1, 2026.
How to accurately calculate personal income tax for individual business owners?
You multiply your revenue by the corresponding tax rate for your business. For safety, consult a business tax expert.
Conclude
Personal income tax for household businesses is an integral part of risk management for individual entrepreneurs today. Understanding the regulations on personal income tax for household businesses and the obligations of individuals with revenue exceeding 100 million VND helps you proactively plan your finances. With the roadmap to raise the tax exemption threshold in 2026, household businesses will have more room for sustainable development.
If you are having difficulty setting up accounting records or need advice on optimizing personal income tax for household businesses, please contact MAN – Master Accountant Network. We are a leading provider of accounting solutions., audit and professional tax advice. MAN is always with you on the path to financial transparency and compliance with personal income tax laws from business activities.
Service contact information at MAN – Master Accountant Network
- Address: No. 19A, Street 43, Tan Thuan Ward, Ho Chi Minh City
- Mobile/Zalo: 0903 963 163 – 0903 428 622
- Email: man@man.net.vn
Content production by: Mr. Le Hoang Tuyen – Founder & CEO MAN – Master Accountant Network, Vietnamese CPA Auditor with over 30 years of experience in Accounting, Auditing and Financial Consulting.
