Small shops and eateries taxed based on revenue, not input-output

Under current rules, household businesses and individual traders are not subject to the input-output (credit-invoice) method used by enterprises. Instead, their tax liability is determined as a percentage of total revenue. Taxable revenue includes all sales, services, commissions, and other business income generated during the tax period, regardless of whether payment has been collected.

At present, household businesses with annual revenue of 100 million VND or less are exempt from value-added tax (VAT) and personal income tax (PIT). From January 1, 2026, this exemption threshold will increase to 200 million VND per year, reducing the tax burden on small operators. Other taxes such as excise tax and environmental protection tax continue to apply under sector-specific laws.

The Ministry confirmed that the input-output deduction method does not apply to household businesses. However, under Resolution 198/2025/QH15, major reforms are being prepared. Starting in 2026, the current lump-sum tax (khoán thuế) system will be abolished and replaced with a mechanism of self-declaration and self-payment, similar to corporate taxpayers.

To ensure a smooth transition, tax authorities have been instructed to expand communication and support efforts, helping small businesses adapt to the new filing and payment system from day one of implementation.