Breaking tax update for household businesses
Household businesses are officially classified into
3 TAX GROUPS – misunderstand them and you may face back taxes & penalties!
From 06/10/2025, household and individual businesses in Vietnam will be managed under 3 clearer tax groups.
If you understand your group from day one, you won’t worry about back tax assessments, penalties, or
“wrong declarations” when tax officers visit 💼
💬 We are getting questions like:
“I opened a coffee shop – how exactly do I calculate tax?”
“My small street-food stall is tiny – do I really need e-invoices?”
“I heard household businesses have new groups – which group am I in?”
All of these questions become much easier when you understand the 3 tax groups below.
Know exactly which TAX GROUP you belong to => declare correctly => no back tax,
no penalties, and much less stress when the tax authority reviews your file.
Annual revenue below VND 200 million/year
Typical cases: street-food stalls, very small groceries, small barber shops, tiny online shops…
✅ Benefits: very light requirements, almost “no tax burden”.
- NO Value Added Tax (VAT) payable
- NO Personal Income Tax (PIT) payable
- Only 2 declarations per year (at the beginning of the year & when you change scale)
- Not required to use invoices
- Only simple note-keeping for daily revenue/expenses
- Not required to have a separate business bank account
👉 If your real annual revenue is below VND 200 million, keep evidence (orders, notes,
contracts) so you can prove it if needed.
Annual revenue from VND 200 million to 3 billion
Typical cases: coffee shops, spas, fashion stores, garages, retail agents, F&B services…
💰 Tax obligations: calculated as a fixed percentage on your gross revenue, depending on your business type:
VAT – PIT – Total % on revenue
- Trading of goods: 1% VAT – 0.5% PIT – 1.5%
- Services (spa, transport, beauty…): 5% VAT – 2% PIT – 7%
-
Services with goods (restaurants, coffee shops, hotels…):
3% VAT – 1.5% PIT – 4.5% - Construction (without materials): 5% VAT – 2% PIT – 7%
- Construction (with materials): 3% VAT – 1.5% PIT – 4.5%
- Declare tax quarterly and make annual finalisation
- E-invoices are strongly encouraged (and mandatory for some sectors under Decree 70/2025)
- Maintain simple books for revenue and expenses
- Must have a separate bank account if you accept non-cash payments
👉 This is the group where most active household businesses fall into – calculating
your revenue correctly is critical so that you don’t “accidentally” cross the VND 3 billion threshold.
Annual revenue above VND 3 billion
Typical cases: restaurant chains, production workshops, large distribution agents, big construction households…
💼 Managed almost like a “small enterprise”:
- VAT is applied under the credit (deduction) method
- PIT = 17% × (Revenue – allowable expenses)
- Tax filing monthly or quarterly
- E-invoices are MANDATORY
- Separate business bank account is MANDATORY
- Accounting books & source documents must be kept almost like a company
👉 At this level, MBA Audit often recommends considering a switch to a
limited company structure to fully deduct legitimate expenses, raise capital more easily
and grow more professionally.
If you sit on the borderline between Group 1 & Group 2, or Group 2 & Group 3 and you:
- Under-report your real revenue, split your business into different names, etc.
- Do not pay the correct amount of tax
- Fail to issue e-invoices when you are required to do so
⇒ You can easily be hit with back tax assessments +
20% penalty on the underpaid tax +
late-payment interest calculated by day. Once the tax authority has concluded,
it is very hard to reverse.
- Determine your REAL annual revenue (avoid guessing too low just to “fit” a group).
- Apply the correct tax rates for your exact business activity.
- Keep simple records but with proper documents & invoices as evidence.
- Talk to your accountant or a professional advisor before expanding or changing your model.
- Re-assess your model: remain a household business or convert into an enterprise?
-
Enterprises can:
deduct legitimate expenses, depreciate fixed assets, access bank loans,
and sign bigger contracts more easily. - Reduce the risk of “exceeding the threshold” while still declaring as a household business.
- Build a more professional image with clients, suppliers and banks.
– Know exactly which TAX GROUP you fall into
– Declare and pay tax correctly according to your revenue and business type
– Keep invoices and records in line with the regulations
⇒ You can confidently run your business without constantly worrying about tax penalties!
💬 Still not sure which group you belong to?
Leave a comment or inbox MBA Audit – our tax specialists will help you identify your
group quickly, free of charge 💚
