Vietnam Abolishes Business License Tax from 2026

Vietnam has officially abolished the business license tax (BLT), effective January 1, 2026. This change is part of broader regulatory reforms aimed at reducing compliance costs, simplifying the business environment, and promoting private-sector growth.

What Was the Business License Tax?

The business license tax was an indirect tax levied annually on businesses operating in Vietnam. Under this tax regime, enterprises were required to pay between VND 2 million and VND 3 million (US$80-120), while household businesses paid from VND 300,000 to VND 1 million (US$12-40) upon establishment and throughout their operations.

The tax was determined by factors such as charter capital, investment capital, or revenue, regardless of whether the business was profitable or not.

Tax Authority Guidance

The abolition of the BLT is anchored in Resolution No. 198/2025/QH15 on special mechanisms and policies to promote private-sector development, which expressly provides that the collection and payment of the business license fee shall cease from January 1, 2026.

In alignment with this resolution, Decree No. 362/2025/ND-CP repeals the previous regulatory framework, specifically Decree No. 139/2016/ND-CP and its amendment Decree No. 22/2020/ND-CP, that governed BLT collection.

On January 24, 2026, the Taxation Department under the Ministry of Finance issued Official Letter No. 645/CT-CS ("OL 645"), directing provincial and city tax authorities to disseminate information on the abolition and ensure uniform implementation of the new rules.

OL 645 instructs tax offices to review and apply tax management measures to collect outstanding business license fees due for the years 2025 and earlier.

Who Is Affected?

From January 1, 2026, onward:

Enterprises, cooperatives, public service units engaged in business activities, household businesses, and individual business operators are no longer required to pay BLT.
Taxpayers are also exempt from submitting BLT declarations for 2026 and subsequent years.

Under the previous regime, the tax was calculated annually based on charter capital, investment capital, or revenue, regardless of whether a business made a profit or loss.

Policy Rationale and Business Impact

Although the BLT usually imposed a modest compliance cost, removing it is viewed as a significant reduction in regulatory burden, especially for micro, small, and medium-sized businesses, as well as newly established companies.

The policy aligns with Vietnam's ongoing efforts to simplify administrative procedures, lower entry barriers for business formation, and encourage private-sector dynamism. Abolishing the tax enables businesses to retain more working capital and reduces the number of routine declarations and payments, contributing to a more streamlined operating environment.

Key Points to Remember

For Operating Businesses

No BLT payment required from 2026 onward
No declaration filing required for tax period 2026 and beyond
Must still settle any outstanding BLT obligations from 2025 and prior years

For Newly Established Businesses

Complete exemption from BLT upon establishment
Reduced startup costs
Simplified initial administrative procedures

For Household and Individual Businesses

No longer required to pay VND 300,000 to VND 1 million annually
Reduced financial burden for small household businesses
Encourages formalization of individual business activities

Significance for Small and Medium Enterprises

For small and medium enterprises (SMEs), the abolition of BLT brings tangible benefits:

Cost Savings: While the amount may seem modest, for many SMEs, especially startups and new businesses, saving VND 2-3 million annually is meaningful.
Reduced Administrative Burden: Eliminating the need to prepare, file declarations, and track payment of this tax allows businesses to focus on core operations.
Improved Cash Flow: Retaining working capital provides businesses with greater flexibility for investment and expansion.
More Favorable Business Environment: As part of a broader reform trend, this builds confidence among domestic and foreign investors.

Implementation Timeline

January 1, 2026: BLT officially abolished
January 24, 2026: Official Letter No. 645/CT-CS issued with implementation guidance
Ongoing: Tax authorities continue collecting outstanding BLT from 2025 and earlier

What Businesses Should Do

Immediate Actions

Review Outstanding Obligations: Check if you have any unpaid BLT from 2025 or earlier years and settle these promptly to avoid penalties.
Update Financial Planning: Adjust 2026 budgets and financial projections to reflect the elimination of this tax expense.
Inform Accounting Teams: Ensure your finance and accounting staff are aware of the change and update procedures accordingly.

Ongoing Compliance

Monitor Further Guidance: Stay informed about any additional implementing regulations or clarifications from tax authorities.
Document Compliance: Maintain records showing awareness of the abolition and proper implementation.
Leverage Savings: Consider how to reinvest the saved capital into business growth and development.

Broader Reform Context

The abolition of BLT is part of Vietnam's comprehensive reform agenda to:

Enhance competitiveness: Making Vietnam more attractive for business establishment and operation
Support private sector: Implementing Resolution No. 198/2025/QH15's vision for private-sector development
Reduce compliance costs: Eliminating unnecessary taxes and fees that create administrative burden
Modernize tax system: Streamlining the tax framework to focus on more significant revenue sources

Conclusion

The abolition of the business license tax from 2026 represents a positive step in Vietnam's reform efforts. Businesses should ensure they settle any outstanding BLT obligations from 2025 and prior years to avoid legal issues. Meanwhile, companies should stay updated on new regulations and leverage the benefits of this policy to optimize their business operations.

This change particularly benefits the SME sector, reducing both financial and administrative burdens while contributing to a more dynamic and competitive business environment in Vietnam. As the government continues its reform agenda, businesses can expect further measures aimed at simplifying compliance and promoting growth.