In the diverse economic picture of Vietnam, the individual business household (HKD) model plays an important role, penetrating into every corner of socio-economic life. With the characteristics of flexibility in management, capital scale often suitable for the ability of individuals or households, HKD has become the choice of starting a business for many people.
From small roadside eateries, familiar grocery stores to sophisticated handicraft services, HKD contributes to creating jobs, providing essential goods and services, and contributing to the overall development of the economy.
However, along with that freedom and flexibility comes the responsibility to comply with legal regulations, especially tax regulations. So What taxes do individual businesses have to pay? Understanding What taxes do individual businesses have to pay? Not only does it help business owners operate legally and avoid unnecessary legal troubles, it also ensures their rights and creates a foundation for sustainable development in the future.
A failure to grasp and fulfill tax obligations can lead to serious consequences, affecting the business operations and reputation of the business household.
This article will provide a detailed overview of the main taxes that Individual business households must pay, according to current regulations. We will learn together about each type of tax, tax exemptions, common tax calculation methods and specific instructions on how to declare and pay taxes, helping business owners feel more confident in fulfilling their financial obligations.
Main taxes that businesses must pay
According to current regulations on tax administration in Vietnam, What taxes do individual businesses have to pay? – The answer includes some of the following main types of taxes:
- Business license fee (tax): This is a fixed fee that a business must pay annually (or when newly established) based on the average revenue of the previous year. The business license fee is regulated differently depending on the revenue level.
- Value Added Tax (VAT): This is a tax calculated on the added value of goods and services during the production, business and consumption process. Business households subject to VAT must declare and pay this tax based on revenue and tax rates prescribed for each industry and field.
- Personal income tax (PIT): This is a tax calculated on the taxable income of individual business owners. For business households, personal income tax is usually calculated based on revenue and tax rates prescribed for each industry and business sector according to the lump sum or declaration method.
In addition to these three main taxes, in some special cases, business households may have to pay other taxes if their business activities are related to taxable entities under the provisions of other tax laws, for example:
- Environmental protection tax: If a business household produces or trades in items that have negative impacts on the environment and are subject to tax.
- Resource tax: If the business exploits natural resources.
- Other fees and charges related to business operations (e.g. road and sidewalk usage fees if doing business in these areas).
Cases of business households exempted from tax
Many people wonder: “What taxes do individual businesses have to pay? and when is it exempt?
In order to support small and newly established businesses, the tax law stipulates a number of cases exempted from VAT and personal income tax based on a certain revenue threshold or specific business activities. In addition, there are also cases exempted from business license fees such as low revenue, irregular business, or newly established.
VAT and Personal Income Tax exemption:
- Revenue threshold: Business households have Revenue from production and business activities in the calendar year from 100 million VND or less then in case no VAT and personal income taxThis regulation aims to facilitate small-scale businesses, those that are just starting operations or have low incomes.
- Business households in the form of groups of individuals and households: Revenue level 100 million VND/year or less is determined for one (01) sole representative in the tax year. This means that if a group of individuals or households do business together, as long as the total revenue of the group does not exceed 100 million VND/year and there is a representative who declares, the entire group will be considered exempt from VAT and personal income tax.
- Non-full year business: In case the business household operates for less than 12 months in a calendar year, the revenue threshold 100 million VND/year is still determined as the taxable income of a year (12 months). To determine whether a business household has to pay tax or not, it is necessary to convert the actual revenue according to the number of business months to the revenue of the whole year. If this converted revenue exceeds 100 million VND, the business household still has to pay VAT and personal income tax on the actual revenue.
Illustration: Mr. B started his business in April 2025 and had a total revenue of 90 million VND (9 months of business) by the end of the year. To consider tax exemption, we convert Mr. B's revenue for the whole year to: (90 million / 9 months) * 12 months = 120 million VND. Because the converted revenue of 120 million VND is greater than 100 million VND, Mr. B still has to pay VAT and personal income tax corresponding to the actual revenue of 90 million VND.
Exemption from Business License Fees:
- Low Revenue: Business households have Revenue from 100 million VND/year or less are exempted from business license fees. This regulation is consistent with the exemption of VAT and personal income tax, creating maximum conditions for micro-business households.
- Irregular business, no fixed location: Individuals and households doing business in this form often have unstable income and are small in scale, so they are exempt from business license fees. For example: street vendors, freelancers without fixed stores.
- Specialized industries:
-
- Salt production business.
- Household business in aquaculture, fishing and fishing logistics services.
- Newly established business: Business household newly established in the first year (For households established after February 25, 2020) are exempted from business license fees for the year of establishment.
Illustration: Household A established in October 2022 will be exempted from business license fees for 2022. In 2023, Mr. A will have to pay business license fees based on 2022 revenue.
- Other cases as prescribed: The law may also provide for exemption from business license fees for some other special cases, such as business households operating in mountainous areas, remote areas with difficult economic conditions; agricultural cooperatives in the initial stages of establishment and operation.
Understanding What taxes do individual businesses have to pay and when are they exempted from tax? will help save costs and avoid fines due to incorrect or late declaration.
Tax calculation methods for business households
One of the other important factors when looking for What taxes do individual businesses have to pay? is the method of calculating tax. Currently, there are three methods:
- Declaration method: This method is often applied to large-scale businesses with full accounting documents or voluntarily choosing the declaration method. Business households will have to declare revenue, expenses and determine taxable income to calculate VAT and personal income tax.
- Tax declaration method for each occurrence: This method is applicable to businesses that operate irregularly and do not have a fixed business location. Every time revenue is generated, the business must declare and pay tax for that revenue.
- Contract method: This is the most common method of tax calculation for small businesses. The tax authority will base on the declared information of the business household (on industry, location, business scale, expected revenue, etc.) and the actual situation in the locality to determine a fixed revenue level and VAT and PIT levels to be paid monthly or quarterly.
Detailed instructions on the Lump sum method (applicable to VAT and PIT)
The lump sum method is a form of periodic fixed tax calculation for business households based on revenue and industry rates, determined by the tax authority. The following content will go into detail on how to determine lump sum tax.
What is lump sum tax?
Lump-sum tax is a form in which the tax authority determines a fixed VAT and PIT rate that a business household must pay periodically (monthly or quarterly) based on factors such as business lines, business locations, scale of operations, and actual or projected revenue declared by the business household. This lump-sum tax rate is usually stable for a certain period of time (usually one year).
Formula for calculating VAT and PIT by lump sum method:
- VAT payable = VAT taxable revenue x VAT rate
- Personal income tax payable = Taxable revenue x Personal income tax rate
Determine Taxable Revenue:
Taxable revenue under the lump sum method is the total revenue including tax (if taxable) arising from all production and business activities of the business household during the tax period (month or year), regardless of whether the money has been collected or not. This revenue includes:
- Revenue from sales of goods.
- Revenue from providing services.
- Revenue from processing.
- Commission, bonus, promotion, discount.
- Contractual allowances, surcharges, and compensation.
In case a business household uses invoices issued by the tax authority for each occurrence, taxable revenue will include:
- Taxable revenue = Lump sum revenue (determined by tax authority) + Revenue on individual invoices.
In case a business household does not use invoices issued by the tax authority, the taxable revenue is only the lump-sum revenue determined by the tax authority.
If the tax authority finds that the declared revenue of a business household is inconsistent with the actual business situation in the locality, the tax authority has the right to take action. taxable revenue determination.
Tax rate on revenue:
The VAT and personal income tax rates applied to taxable revenue under the lump-sum method are specified in detail for each field and business line in Appendix I issued with Circular 40/2021/TT-BTCBelow is a table of reference rates for some major industries:
Note: The personal income tax rate for some services may range from 2% to 5% depending on the specific type of service. Business households should refer to Appendix I of Circular 40/2021/TT-BTC for details to apply the correct rate for their industry.
In case a business household operates in multiple fields or industries at the same time, the business household must declare and calculate tax according to the applicable rate for each field or industry corresponding to the actual revenue generated from each field or industry. If the separate revenue of each field or industry cannot be determined, the tax authority will determine the revenue for each field or industry to calculate tax.
In case of non-full year business:
For business households applying the lump-sum method that stop or cease business for a period of time during the year, if the business household has been notified by the tax authority of the lump-sum tax payable for the entire year, the business household will have the lump-sum tax payable reduced corresponding to the number of months of stopping or ceasing business after notifying the tax authority.
- Illustration: Ms. C was informed of the lump-sum tax payable for 2022. However, Ms. C ceased business operations from September 2022. Ms. C has notified the tax authority of this. Therefore, Ms. C will receive a reduction in the lump-sum tax for the last 4 months of 2022 (September, October, November, December).
How to calculate license fees
The business license fee for individual business households is determined based on the average annual revenue of the previous year, specifically as follows:
- Revenue over 500 million VND/year: The license fee is 1,000,000 VND/year.
- Revenue from 300 to 500 million VND/year: The license fee is 500,000 VND/year.
- Revenue from 100 to 300 million VND/year: The license fee is 300,000 VND/year.
As mentioned above, business households have revenue from 100 million VND/year or less and other exempted cases will not have to pay business license fees.
Time to determine revenue for calculating Business License Fee:
- For newly established households (after February 25, 2020): Exemption from business license fee in the first year of establishment. The starting point for calculating revenue to determine the business license fee for the following year is from January of the year following the year of establishment.
- For active households (to calculate business license fees for next year): The time to determine average annual revenue is from November 20 to December 15 of the year prior to the tax year. Business households need to base on the revenue of the current year to determine the business license fee to be paid for the following year.
- For new businesses or those with changes in scale or business lines during the year: Within 10 days from the date of commencement of business or the date of change, the business household must declare the business license fee. The business license fee payable during the year will be determined based on the remaining operating time of the year.
Instructions for declaring and paying taxes by each method
Each tax calculation method (contractual, declaration, each occurrence) has different procedures for declaring documents, submission locations and tax payment deadlines that business households need to understand clearly to comply with regulations. The content below will present details for each method.
Contract method:
Tax return:
- Tax declaration for business households and business individuals according to form No. 01/CNKD (issued with Circular 40/2021/TT-BTC).
- Attach a copy of the business contract (if any).
- Copy of acceptance and contract liquidation minutes (if any).
- Copies of documents proving the origin of goods (if using retail invoices).
Where to submit tax return:
- At the People's Committee of the commune, ward or town (where the working group receiving the declaration is located).
- Or at the inter-commune, ward, and town tax team (LXP tax team).
- Or at the one-stop department of the tax authority when starting a business or there is a change in the declaration method.
Deadline for submitting tax returns:
- Stable tax declaration for the whole year: No later than the date December 5 of the year before the tax year.
- New business start-up/change of business method/change of business scale: No later than the 1st day 10 from the date of commencement of business or the date of change.
- Households using individual invoices for each occurrence: No later than the 1st day 10 from the date of revenue generation requiring the use of invoices.
Tax payment deadline:
- According to the Tax Payment Notice of the tax authority (usually monthly or quarterly).
- For revenue on retail invoices: No later than the 1st day. 10 from the date of revenue generation requiring the use of invoices (same tax declaration period on individual invoices).
Declaration Method
Tax return:
- Tax declaration for business households and business individuals according to form No. 01/CNKD.
- Appendix: List of business activities during the period according to form No. 01-2/BK-HDKD (if any).
Where to submit tax return: The Tax Department directly manages business households.
Tax filing deadline:
- Monthly declaration: No later than the date 20 of the month following the month in which the tax liability arises.
- Quarterly declaration: No later than the last day of the first month of the quarter following the quarter in which the tax liability arises.
Tax payment deadline: Along with the tax filing deadline.
Per Occurrence Method
Tax return:
- Tax declaration for business households and business individuals according to form No. 01/CNKD.
- Attach a copy of the business contract, acceptance minutes, contract liquidation, documents proving the origin of goods, services, etc. (depending on each specific case).
Where to submit tax return:
Tax Department where the business activity arises or Tax Department where the individual resides (depending on specific regulations for each type of business).
Tax filing deadline:
No later than the 1st day 10 from the date tax liability arises.
Tax payment deadline:
No later than the last day of the tax return filing deadline.
Some special business cases
In addition to traditional business forms, business households operating on e-commerce platforms or leasing assets also have their own regulations on VAT and personal income tax obligations that they need to pay attention to and comply with.
Business households/Individuals doing business on e-commerce platforms:
According to current regulations, business households and individuals doing business on e-commerce platforms (for example: Shopee, Lazada, Tiki, Facebook Marketplace...) still have to fulfill VAT and personal income tax obligations similar to other traditional business forms.
If the total revenue from e-commerce business activities and other business activities (if any) in the calendar year over 100 million dong, business households will have to pay VAT and personal income tax according to the lump sum or declaration method depending on the scale and choice. E-commerce platforms are responsible for providing information about sellers and revenue to tax authorities for tax management.
Individuals renting out property/houses:
Property leasing activities (e.g. houses, business premises) are also subject to tax. For individuals leasing property, the law stipulates a specific tax calculation method in Article 9 of Circular 40/2021/TT-BTC. Accordingly, individuals leasing property must pay:
- VAT: Calculated on rental income at a rate of 5%.
- Personal Income Tax: Calculated on rental income at a rate of 5%.
Tax declaration and payment are usually done each time a payment period occurs or annually.
Clearly understand What taxes do individual businesses have to pay? is a key factor to ensure legal business operations, comply with legal regulations and avoid unnecessary legal risks. The article has provided an overview and details of the main taxes that business households need to pay attention to, including business license fees, value added tax and personal income tax.
In addition, we also learned about tax exemption cases, common tax calculation methods (especially the lump-sum method) and basic instructions on the tax declaration and payment process according to each method.
To operate a sustainable and effective business, individual business owners need to proactively learn and master current tax laws. In case of any questions or need in-depth advice, do not hesitate to contact the local tax authority or reputable tax consulting organizations for timely support.
Full compliance with tax obligations is not only a legal responsibility but also contributes to building a transparent and healthy business environment, creating a premise for the stable development of business households themselves and the entire economy.
Monitor Bizzi To quickly receive the latest information:
- Facebook: https://www.facebook.com/bizzivietnam
- Linkedin: https://www.linkedin.com/company/bizzi-vietnam/
- Youtube: https://www.youtube.com/@bizzivietnam