This article will provide information on the elimination of lump-sum tax for household businesses with annual revenue of 01 billion VND or more, and guidance on complying with tax obligations for household businesses.
First, it's necessary to understand what lump-sum tax for household businesses is.
According to Circular No. 40/2021/TT-BTC, Clauses 7 and 9 of Article 3 stipulate the following:
Article 3. Definition of terms:
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7. "The lump-sum method" is a method of calculating tax based on a percentage of the lump-sum revenue determined by the tax authority to calculate the lump-sum tax amount as stipulated in Article 51 of the Law on Tax Administration.
9. "Lump-sum tax" refers to the amount of tax and other revenues payable by business households and individual business owners paying taxes using the lump-sum method, as determined by the tax authority in accordance with Article 51 of the Law on Tax Administration.
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A lump-sum tax can be understood as a type of tax. calculated as a percentage of contracted revenue Determined by the tax authorities, applicable to business households and individual business owners paying taxes using the lump-sum method.
Abolish the lump-sum tax for business households with annual revenue of 1 billion VND or more, effective from June 1, 2025.
In Clause 8, Article 1 Decree 70/2025/ND-CP Amend and supplement Clause 1, Article 11 of Decree 123/2020/ND-CP regulating invoices and documents required from June 1, 2025 as follows:
Article 11. Electronic invoices generated from cash registers.
1. Household businesses and individual businesses as stipulated in Clause 1, Article 51, with annual revenue of VND 01 billion or more, Clause 2, Article 90, and Clause 3, Article 91 of the Law on Tax Administration No. 38/2019/QH14, and enterprises engaged in the sale of goods and provision of services, including direct sales to consumers (shopping centers; supermarkets; retail (excluding automobiles, motorcycles, and other motor vehicles); food and beverage; restaurants; hotels; passenger transport services; services directly supporting road transport; art, entertainment, recreation, film screening activities; and other personal services as regulated by the Vietnamese Economic Sector Classification System) shall use electronic invoices generated from cash registers connected to and electronically transferring data with the tax authorities.
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Therefore, from June 1st, 2025, business households will have Annual revenue of 01 billion VND or more. They will have to issue electronic invoices generated from cash registers connected to the tax authority's data system, and will no longer pay taxes using the lump-sum method.
The lump-sum tax for household businesses and individual business owners will be officially abolished from January 1, 2026.
Clause 6 of Article 10 of Resolution 198/2025/QH15, which stipulates tax, fee and levy policies to promote the development of the private economy, states the following:
Article 10. Support for taxes, fees, and charges
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6. Household businesses and individual business owners will not apply the lump-sum tax method from January 1, 2026. Household businesses and individual business owners will pay taxes in accordance with the law on tax administration.
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Therefore, from January 1, 2026, the lump-sum tax system for business households and individual businesses will be officially abolished, and they will switch to paying taxes according to the tax administration law.