Tax Bulletin: Key Changes from Decree 68/2026/NĐ-CP on Tax Administration for Business Households

On 5 March 2026, the Government issued Decree 68/2026/NĐ-CP regulating tax policies and tax administration for business households (HKD) and individual businesses (CNKD). This is a particularly important legal document that directly impacts millions of businesses in Vietnam.

Below is a summary and analysis of key points that HKD and CNKD should note:

QUICK OVERVIEW OF THE MOST IMPORTANT CHANGES

• Tax exemption below 500 million: The revenue threshold for VAT and personal income tax exemption has been raised to 500 million VND per year.
• Flexible tax calculation: Apply a new tax calculation method based on Profit (Assessable income) instead of solely on Revenue for large-scale HKDs (over 3 billion VND).
• E-commerce platforms pay tax on behalf: Transferring the responsibility of withholding, declaring and paying tax to digital platforms and e-commerce platforms with payment functions.

NEW REVENUE THRESHOLD AND TAX CALCULATION METHOD

1.  VAT and personal income tax are exempt if revenue is 500 million VND or less.

2. VAT payable on annual revenue exceeding VND 500 million is calculated as a percentage (x) of total revenue.

3. Personal income tax: Two new methods for calculating personal income tax

Decree 68 clearly classifies two methods for calculating personal income tax based on scale:

• Tax Rate x Revenue Method: Applicable to CNKDs with annual revenue between VND 500 million and VND 3 billion. HKDs are deducted by VND 500 million before calculating personal income tax according to the most favourable option, including HKDs with multiple principal business activities or multiple business locations.
• Assessable income Method x Tax Rate: Mandatory for CNKDs with revenues exceeding VND 3 billion (or CNKDs with revenues between VND 500 million and VND 3 billion may voluntarily opt in). Assessable income = Sales revenue - Reasonable expenses. Deductible expenses must be supported by valid invoices and supporting documents.

Note: The rental of real estate is not subject to the revenue minus expenses method; it is mandatory to pay a percentage of revenue.

SPECIFIC REGULATIONS FOR E-COMMERCE

• E-commerce platform operators (with payment functions): Responsible for withholding, declaring and paying taxes on behalf of HKD and CNKD for each transaction.
• E-commerce platforms without payment functions: HKD and CNKD must self-declare and pay taxes.
• For HKDs engaged in both traditional and e-commerce businesses with revenues exceeding 3 billion (or opting to pay based on income): Revenues must be consolidated for annual settlement. Taxes paid by the platform on their behalf will be deducted from the taxes payable.

ELECTRONIC INVOICES AND TRANSITIONAL PROVISIONS FOR 2026

1. Mandatory revenue threshold for using electronic invoices (EIs)

• HKD and CNKD with annual VAT-taxable revenue of VND 1 billion or more MUST use EIs with codes issued by the tax authority or EIs generated from cash registers.
• Revenue from VND 500 million to under VND 1 billion: E-invoices are not mandatory. If there is a need to issue invoices without registering for E-invoices, the tax authority will issue E-invoices on a case-by-case basis.

2. Transitional provisions "Removing obstacles"

• Asset inventory: HKD opting to pay tax based on "Assessable income x Tax rate" from 2026 must prepare an inventory list of inventories and machinery as at 31 December 2025 as the basis for calculating deductible expenses for 2026. The deadline for submitting the inventory list is 20 April 2026 or the same period as the Q1 2026 tax return.
• No retroactive collection: For HKDs that paid lump-sum tax from 2025 onwards, when switching to tax declaration from 1 January 2026, the tax authority SHALL NOT use the 2026 declared revenue to reassess tax liabilities for previous years (except in cases where revenue concealment is detected).

Effective date: This Decree shall take effect from the date of issuance (5 March 2026).

RECOMMENDATION FROM BAKER TILLY A&C

With the comprehensive changes introduced by Decree 68, we recommend that businesses and business owners:

• Reassess your model: Immediately determine your projected revenue for 2026 to select the most appropriate tax calculation method.
• Prepare invoices and supporting documents: For HKDs subject to profit-based taxation (over 3 billion), the collection and storage of valid input cost invoices is mandatory for accurate tax calculation and minimising tax risks.
• Timely inventory: Promptly complete the carry-forward schedule for 2026.

Please contact Baker Tilly A&C for the latest information and specific advice.

Consultation contact:

• Mr. Nguyen Bao Anh - Deputy General Director in charge of Tax, Transfer Pricing & Outsourcing services

          Email: anh.nb@a-c.com.vn

• Ms. Nguyen Thi Thu Thao – Senior Manager of Tax and Accounting Services.

          Email: thao.ntt@a-c.com.vn