National Assembly finalizes the tax threshold of 500 million VND for business households

Removing the tax threshold of 500 million VND for business households

On the morning of April 24, with 466/488 delegates present to vote in favor (accounting for 93.2%), the National Assembly officially passed the Law amending and supplementing a number of articles of the Law on Personal Income Tax, Law on Value Added Tax, Law on Corporate Income Tax and Law on Special Consumption Tax.

The law will take effect from April 24, 2026.

Accordingly, resident individuals with production and business activities with annual revenue from the Government's regulations or below are not required to pay personal income tax. Based on macroeconomic indicators and budget balancing capacity, the Government stipulates the annual revenue level to suit the socio-economic context in each period.

This means that the tax threshold of 500 million VND for business households stipulated in the 2025 Personal Income Tax Law will be removed.

In addition, the amended Law also stipulates that the income of enterprises and organizations established under the provisions of Vietnamese law with total annual revenue from the Government's prescribed level or below is exempt from corporate income tax. Based on macroeconomic indicators and budget balancing capacity, the Government stipulates the total annual revenue level to suit the socio-economic context in each period.

Before the draft Law was passed, the report on receiving and explaining this content, Minister of Finance Ngo Van Tuan said that in the thẩm tra report, there were opinions that the submission did not specifically show the expected plan to adjust the revenue threshold level (increase or decrease) compared to the current Law's regulations, leading to a lack of clarity in the Government's orientation in applying policies in case they are considered and approved by the National Assembly.

The impact assessment contents have not yet calculated and quantified the impact of the policy on state budget revenue.

Clarifying this issue, Minister Ngo Van Tuan said that the Government has also comprehensively assessed the impact on budget revenue, impact on economic growth and impact on people and businesses when promulgating the Law. In addition, in the Report on receipt and explanation, the Government also reported that it is expected to increase this level to 1 billion VND and is regulated in the detailed legal regulations.

According to calculations by the tax authority, currently, the number of households and individuals with revenue under 1 billion VND is about 2,556,042 households and individuals. With this proposal, the estimated reduction in state budget revenue is 16,650 billion VND compared to 2025 (revenue under the presumptive tax regime and the threshold of revenue not subject to tax is 100 million VND/year) and a reduction of 4,850 billion VND compared to the current policy that has adjusted the threshold of tax-exempt revenue to 500 million VND/year.

At the same time, to ensure synchronization with increasing the level of revenue not subject to tax for households and individual businesses, it is necessary to supplement regulations on corporate income tax exemption for enterprises with total annual revenue not exceeding 1 billion VND. With the expected corporate income tax exemption for enterprises with total revenue not exceeding 1 billion VND/year, the amount of corporate income tax exemption is about 2,164 billion VND and the number of enterprises exempted is about 235,800 enterprises.

Extending the period of special consumption tax incentives for battery-powered electric vehicles to 2030

The new law passed will also extend the preferential consumption tax period for battery-powered electric vehicles to 2030.

Regarding this adjustment, the Minister of Finance said that the National Assembly's immediate approval of regulations allowing the continued application of this policy for a longer period (until the end of 2030 instead of the end of February 2027) is extremely meaningful.

This shows consistency in policies, helping people feel secure and proactive in consumption plans, vehicle conversion and also helping businesses proactively build medium and long-term investment plans for production lines, product development, expansion of distribution networks, warranty services, maintenance, investment in charging station infrastructure and gradually improving the localization rate.

Not clarifying the policy roadmap early risks creating a waiting mentality, slowing down the vehicle conversion process and failing to achieve the emission reduction goals that Vietnam has committed to at COP26.

Therefore, immediately defining a long-term policy framework until 2030 is of market orientation significance, in line with the constructive role of the State in green transformation" - the Minister said.

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