Businesses and business households are entitled to a 30% tax reduction

The Government has just issued Decree No. 398/2026/ND-CP detailing Resolution No. 43/2026/QH16 on reducing personal income tax and corporate income tax for individuals and businesses.

The 30% reduction is calculated on the amount of tax payable, not on the revenue of the business owner.

According to the decree, households and resident business individuals with revenue from production and business activities not exceeding 10 billion VND/year are entitled to a 30% reduction in personal income tax payable.

The subjects of application include business individuals; people registering to establish business households; or people authorized by household members to represent business households.

The reduced tax amount is calculated on the entire income from production and business activities, regardless of the method of calculating personal income tax.

Regarding declaration procedures, in case the estimated revenue in 2026 or 2027 is not more than 10 billion VND, business individuals are allowed to declare tax reduction according to form No. 01. The dossier is submitted with the tax return quarterly, in the first 6 months of the year, in the last 6 months of the year or annually.

For cases where organizations and individuals carry out deductions, declare on behalf of and pay taxes on behalf of business people, a 30% reduction is applied to tax amounts within the scope of deduction, declaration on behalf of, and payment on behalf if they meet the conditions. Declaration dossiers according to form No. 02 are submitted with the corresponding tax return.

Notably, the conditions for enjoying incentives are determined based on total actual revenue from all business activities in the year. If revenue exceeds 10 billion VND, individuals are no longer eligible for tax reduction and must pay additional tax that has been reduced.

When accumulated revenue from the beginning of the year exceeds the threshold of 10 billion VND, business people must declare adjustments according to form No. 03, and submit the same tax declaration dossier for the period when revenue exceeds the threshold.

For the additional tax payable, businesses are not subject to late payment penalties until the deadline for submitting tax returns of the period when revenue exceeds the threshold.

In case tax declaration has been made but tax reduction declaration has not been carried out, individuals can supplement dossiers or determine the amount of tax reduced when finalizing the year. The amount of tax paid in excess is handled according to regulations on compensation and tax refund.

For businesses, the decree stipulates a 30% reduction in corporate income tax payable in 2026 and 2027 if annual revenue does not exceed 10 billion VND.

The policy applies to enterprises, cooperatives, cooperative unions, non-business units and other organizations with income-generating production and business activities.

Notably, businesses that are enjoying other tax incentives are still entitled to an additional 30% reduction on the amount of tax payable after deducting those incentives.

Businesses expected to have revenue of no more than 10 billion VND are allowed to self-determine the tax amount to be reduced when temporarily paying corporate income tax quarterly.

However, if actual revenue exceeds the prescribed threshold, the enterprise must declare and pay the remaining tax amount. The calculation of late payment fees is implemented according to current regulations.

To prevent policy abuse, the decree also stipulates that enterprises established from division and separation after the resolution takes effect will not be entitled to tax reduction if the total revenue of enterprises after division and separation exceeds 10 billion VND.

This Decree takes effect from October 29, 2026 and applies to the tax periods of 2026 and 2027.

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