Decree 68/2026/ND-CP: Tax Policy and Tax Administration for Household Businesses and Individual Business Operators
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Based on:68/2026/NĐ-CP - Government Official Gazette
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The Government has issued Decree 68/2026/ND-CP dated March 5, 2026, effective immediately from its signing date, which overhauls value-added tax (VAT) and personal income tax (PIT) policy for household businesses and individual business operators. The most significant change is the end of the traditional lump-sum tax (thue khoan) regime: household businesses and individual operators with annual revenue of VND 500 million or below only need to report their revenue and are exempt from both VAT and PIT. Above that threshold, taxpayers must self-declare and calculate their own tax. For annual revenue between VND 500 million and VND 3 billion, PIT is calculated using the tax rate times revenue method (with an option to switch to the income-minus-expenses method if more favorable). Above VND 3 billion, the income-minus-deductible-expenses method becomes mandatory, and once a method is chosen it must remain stable for two consecutive years. The decree also details which expenses are deductible and non-deductible, sets quarterly or monthly filing deadlines depending on whether revenue is above or below VND 50 billion, and requires mandatory e-invoices (tax-authority-coded or cash-register-linked) once annual VAT-taxable revenue reaches VND 1 billion. Notably, e-commerce platforms with online ordering and payment functions must withhold, declare, and pay tax on behalf of household businesses and individuals selling through them. A key transitional provision protects businesses that paid lump-sum tax before 2026: they will not face retroactive tax reassessment or penalties when switching to self-declaration, unless authorities find evidence of concealed revenue. Businesses moving to the income-minus-expenses method must file an inventory and fixed-asset listing as of December 31, 2025, alongside their Q1 2026 tax return. Filing deadlines for January-March 2026 have been extended to April 20, 2026. This is a far-reaching policy shift affecting millions of household businesses and sole proprietors nationwide; owners should immediately review their applicable revenue threshold, choose the right tax calculation method, and prepare their e-invoicing infrastructure.
Scope and applicability
Decree 68/2026/ND-CP governs VAT, PIT and other tax policy; tax declaration, calculation, payment, and finalization; handling of overpaid tax; and the withholding, filing, and payment obligations of e-commerce platforms and organizations that cooperate commercially with household businesses and individual business operators. It applies to household businesses, individual business operators, tax authorities at all levels, and related organizations and individuals.
VAT policy
Household businesses and individual operators with annual revenue of VND 500 million or below are not subject to VAT. Above that threshold, the direct method applies: VAT payable equals a percentage rate multiplied by revenue, with rates set under VAT Law No. 48/2024/QH15 (as amended by Law No. 149/2025/QH15).
PIT policy
Individual business operators with annual revenue of VND 500 million or below are exempt from PIT and only need to report actual revenue. For revenue between VND 500 million and VND 3 billion per year, the tax-rate-times-revenue method applies (rates under Article 7.3 of PIT Law No. 109/2025/QH15); taxpayers in this bracket may opt into the income-minus-expenses method instead. Above VND 3 billion, the income-minus-deductible-expenses times tax-rate method (Article 7.2) is mandatory.
Individuals with multiple business lines or locations may apply the VND 500 million deduction to whichever line or location is most favorable, but the total deduction cannot exceed VND 500 million per year. The same logic applies to individuals leasing multiple properties. Once a taxpayer adopts the income-minus-expenses method, it must be used consistently for two consecutive years; if actual revenue exceeds VND 3 billion, the taxpayer must switch to this method starting the following year.
Revenue and deductible expenses
Taxable revenue includes all proceeds from sales, processing, and services, including bonuses, sales-target incentives, discounts received, and compensation related to the business, regardless of whether payment has been collected - but excludes trade discounts, price reductions, and returned goods. The decree sets specific revenue-recognition rules for processing, installment sales, agency sales, asset leasing, transportation, and construction/installation.
Deductible expenses for PIT purposes include raw materials, employee wages and mandatory insurance, fixed-asset depreciation, purchased services, and business loan interest - provided they are supported by valid invoices/documents and non-cash payment evidence for any single payment of VND 5 million or more. Non-deductible items include expenses unrelated to the business, expenses lacking valid invoices, wages paid to the business owner personally, administrative fines, personal assets not used for business, and household living expenses.
Filing and payment
Household businesses with annual revenue up to VND 50 billion file and pay VAT quarterly; above VND 50 billion, monthly. Quarterly returns are due by the last day of the first month of the following quarter; monthly returns by the 20th of the following month; annual PIT finalization by March 31 of the following year. Filings must be submitted electronically, except for special cases (elderly, disabled, or residents of disadvantaged areas), who may file in person or by mail.
E-invoice obligations
Household businesses with annual VAT-taxable revenue of VND 1 billion or more must use tax-authority-coded e-invoices or e-invoices generated from cash registers connected to the tax authority's data system. Those with revenue between VND 500 million and under VND 1 billion are not required to but are encouraged to register. Newly established businesses, or those crossing the VND 1 billion threshold during the year, must register for e-invoicing within 30 days of the end of the tax period in which the threshold was reached.
E-commerce platform withholding duties
Domestic and foreign e-commerce platforms and digital platforms with online ordering and payment functions must withhold, declare, and pay VAT and PIT on behalf of household businesses and individuals selling through them, for each transaction, per Decree 117/2025/ND-CP. Tax already withheld by a platform is credited against the individual's tax liability at annual finalization.
Handling overpaid tax
Where a household business had tax withheld or paid tax but actual annual revenue turns out to be VND 500 million or below, or the amount paid exceeds the amount owed, the excess is offset or refunded under tax administration law.
Transitional provisions and effective date
Tax filings for January-March 2026 have been extended to April 20, 2026. Household businesses that paid lump-sum tax before 2026 and switch to self-declaration from January 1, 2026 will not face retroactive reassessment or penalties based on 2026 declared revenue, unless authorities discover concealed revenue. Businesses moving to the income-minus-expenses method must record inventory, machinery, and equipment values as of December 31, 2025 and submit this to the tax authority alongside their Q1 2026 return (or by April 20, 2026 if filing monthly), as the basis for deductible expenses going forward. The decree took effect on its signing date, March 5, 2026.