Latest calculation of small business household tax in 2026

1. How to calculate personal income tax

According to Article 7 of the Law on Personal Income Tax, small business households with an annual income of over VND500 million to VND3 billion can choose one of two ways to calculate personal income tax as follows:

Method 1: Calculate tax based on income

Personal income tax on business income of residential individuals with annual revenue of over VND 500 million/year is determined by taxable income (x) with tax rate.

In which: Taxable income is determined by the revenue of goods and services sold minus (-) on expenses related to production and business activities in the tax calculation period.

Individuals with annual revenue exceeding the level prescribed in Clause 1 of this Article to 3 billion VND: tax rate of 15%.

Accordingly, the formula for calculating personal income tax of small business households with annual revenue of over VND500 million to VND3 billion is:

personal income tax = (Revenue - Expenditures) X 15%

In addition, in the case of households and individuals with annual revenue of over VND3 billion to VND50 billion, a tax rate of 17% will be applied; annual revenue of over VND50 billion will be subject to a tax rate of 20%.

Note: Income from real estate lease does not apply this tax calculation method.

Method 2: Calculate tax based on revenue

Formula for calculating tax based on revenue: personal income tax = Tax rate X Taxable revenue

Tax and tax rate revenue is determined as follows:

- Taxable revenue is determined by the revenue exceeding VND500 million

- Tax rates for business lines and occupations:

Distribution and supply of goods: tax rate 0.5%;

Services and construction not including bidding for raw materials: tax rate of 2%. In particular, property leasing activities, insurance agents, lottery agents, and multi-level sales agents: tax rate of 5%;

Production, transportation, services associated with goods, construction with raw material packages: tax rate of 1.5%;

Activities of providing digital information content products and services on entertainment, electronic games, digital movies, digital photos, digital music, digital advertising: tax rate of 5%;

Other business activities: tax rate 1%.

Real estate lease, except for accommodation business activities: Tax rate 5%.

Note: Individuals and business households with a revenue of over 03 billion must calculate tax according to income, and cannot choose to calculate tax according to revenue.

2. How to calculate value-added tax

Small business households can choose one of two ways to calculate value added tax as follows:

Method 1: Calculate value-added tax by direct method

VAT payable = Revenue x %

The percentage for calculating value-added tax is stipulated in Point b, Clause 2, Article 12 of the Law on Value-added Tax 2024 as follows:

+ Distribution and supply of goods: 1%;

+ Services and construction not including bidding for raw materials: 5%;

+ Production, transportation, services associated with goods, construction with raw material packages: 3%;

+ Other business activities: 2%;

Revenue to calculate value-added tax is the total amount of goods and services sold on the market

In addition, business households can voluntarily register to apply the deduction method if they meet the conditions.

Method 2: Calculate value-added tax by deduction method

VAT payable = Output VAT - Input VAT deductible

According to Article 11 of the Law on Value Added Tax 2024:

- The value-added tax on output is equal to the total value-added tax on goods and services sold on the value-added tax invoice.

- Value-added tax of goods and services sold is recorded on the value-added tax invoice equal to the taxable price of goods and services subject to sales multiplied by the value-added tax rate of those goods and services.

- In case the invoice for payment price is the price with value added tax, the value added tax on output is determined by the payment price minus the price for calculating value added tax determined according to the provisions of Point k, Clause 1, Article 7 of this Law.

- The amount of input value-added tax is deducted by the total value-added tax recorded on the invoice of value-added tax for purchase of goods, services, documents for payment of value-added tax for imported goods or tax payment documents for the case of service purchase as prescribed in Clause 3, Clause 4, Article 4 of this Law and meets the conditions prescribed in Article 14 of this Law.

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