Tax Policy Guidelines for Household Businesses with Annual Revenue Below VND 500 Million (Group 1) – Latest Update 2026

As tax authorities continue to promote administrative simplification and digital transformation, tax policies for small-scale household businesses are undergoing significant changes aimed at reducing obligations, increasing transparency, and making compliance easier.

According to Notice No. 85/TB-CT of 2026 and related guiding documents, household businesses with annual revenue below VND 500 million (Group 1) are subject to a separate management mechanism with many noteworthy incentives.

The article below provides a comprehensive overview of tax policies, declaration obligations, and important considerations applicable to this group.

1. Identifying Group 1 Household Businesses Under the New Regulations

Tax authorities currently classify household businesses into four groups based on annual revenue in order to apply appropriate management mechanisms:

• Group 1: Revenue below VND 500 million/year.

• Group 2: Revenue from VND 500 million to under VND 3 billion/year.

• Group 3: Revenue from VND 3 billion to under VND 50 billion/year.

• Group 4: Revenue above VND 50 billion/year.

Accordingly, Group 1 household businesses are the smallest-scale entities, commonly involving individual trading activities, retail businesses, or small service operations.

Importantly, this classification is not merely statistical; it directly determines tax obligations, declaration methods, and applicable accounting regimes.

2. Tax Policy: No Tax Payment Obligation

One of the most notable points for Group 1 household businesses is that they are not subject to VAT and Personal Income Tax (PIT).

Specifically:

• No obligation to pay Value Added Tax (VAT).

• No obligation to pay Personal Income Tax (PIT).

This clearly reflects the government’s orientation toward supporting small household businesses, reducing financial pressure, and encouraging entrepreneurship.

However, it is important to note that this tax exemption is not permanent. If:

• Actual annual revenue exceeds VND 500 million,

Then the household business must:

• Move to the corresponding taxable group;

• Declare and pay taxes starting from the quarter in which the threshold is exceeded.

This is a common practical risk, as many businesses fail to closely monitor revenue, leading to tax arrears and penalties.

3. Accounting Regulations: Simplified but Mandatory

Although exempt from tax payment, Group 1 household businesses must still comply with minimum management requirements to ensure transparency.

Mandatory Accounting Book

Businesses must maintain:

• A Sales Revenue Ledger for goods and services (Form S1a-HKD).

The purposes of this ledger include:

• Tracking actual revenue generated;

• Serving as the basis for determining tax obligations;

• Supporting reconciliation during tax inspections.

Accounting Documents

• Full accounting documentation systems are not mandatory.

• However, in practice, businesses should still retain input/output invoices (if any) to prove revenue sources.

Record Retention

• Storage format: paper or electronic.

• Minimum retention period: 5 years.

This requirement is important but often overlooked, causing difficulties during future inspections.

Organizing Accounting Work

Businesses may choose to:

• Record transactions themselves;

• Ask family members for assistance;

• Hire accounting services.

For businesses with revenue approaching VND 500 million, hiring accounting services early is advisable to control the risk of moving into another tax group.

4. Tax Declaration Obligations: Simplified but Still Mandatory

A common misunderstanding is:

“Not being required to pay tax means not being required to file declarations.”

Declaration Principles

Group 1 household businesses must still:

• Report revenue;

• Declare bank account/e-wallet information.

This helps tax authorities:

• Monitor revenue fluctuations;

• Determine tax obligations accurately when changes occur.

Tax Declaration Periods and Submission Deadlines

For newly established businesses, declaration periods depend on the time business activities begin during the year.

If business begins in the first 6 months of the year:

Tax declarations must be filed twice annually:

• First filing: Revenue up to June 30; deadline July 31.

• Second filing: Revenue for the last 6 months; deadline January 31 of the following year.

If business begins in the last 6 months of the year:

Only one declaration is required for the entire operating period, with a submission deadline of January 31 of the following year.

For stable operating household businesses:

• Bank account/e-wallet notification deadline: April 20, 2026 (and updated whenever changes occur).

• Annual revenue declaration deadline: January 31 of the following year.

Tax Declaration Dossier

The dossier includes:

• Form 01/BK-STK: Bank account/e-wallet information.

• Form 01/TKN-CNKD: Revenue notification.

Submission Methods

• Electronic submission (encouraged).

• In special cases: direct submission or postal service.

5. Tax Declaration Deadlines Under the Latest Guidance

According to Notice No. 85/TB-CT of 2026:

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