Tax Management For Business Households: A Breakthrough For Transparency, Modernity, And Fairness

With the aim of modernizing and improving the effectiveness of tax administration, enhancing the application of information technology and digital transformation for Household Businesses nationwide, on February 28, 2025, the General Department of Taxation issued Decision No. 420/QD-TCT on the project: “Innovation and Improvement of Tax Management Quality for Household Businesses.”

Current Situation In Household Business Tax Administration

Manual and outdated management methods: Currently, tax administration for Household Businesses mainly relies on lump-sum tax methods and traditional paper-based bookkeeping. Digital technology has not been fully implemented. Data on Household Businesses is largely fragmented and lacks synchronization between tax authorities, local governments, and relevant sectors.

Low and inaccurate tax declaration rates: Most Household Businesses do not follow a self-declaration and self-payment regime, instead depending on tax authorities’ estimations. Many cases involve underreporting actual revenue, leading to budget revenue losses. A common business mindset of “hiding” operations and avoiding transparency still prevails.

Lack of coordination among administrative levels: Collaboration between tax authorities and local governments in monitoring and updating information on Household Businesses remains loose. The presence of “ghost” or unregistered businesses poses challenges for inspection and oversight.

Inequity in tax policies: There is a clear disparity between Household Businesses and Enterprises regarding tax calculation, accounting systems, and compliance obligations, leading to an unfair competitive environment. Some Enterprises disguise themselves as Household Businesses to evade taxes and legal responsibilities.

Low contribution to the national budget: Although tax revenue from Household Businesses reached VND 25,953 billion in 2024, a 20% increase from 2023, it accounted for only about 1.47% of total state budget revenue. This indicates untapped potential in this sector.

Limited tax compliance awareness: Many Household Businesses have yet to fully understand that tax declaration and payment are not only obligations but also legal rights that can facilitate access to credit, business expansion, and formal partnerships.

Main Goals Of The Project

Transform tax management methods: Shift from lump-sum tax estimation to self-assessment, self-declaration, and self-payment through electronic means, based on a centralized database.

Comprehensive coverage of tax subjects: Ensure that all Household and Individual Businesses are fully managed under the tax system.

Increase contribution to the national budget: Gradually raise the share of Household Business tax revenue in proportion to their scale and development.

Specific Objectives

Ensure 100% of Household Businesses use electronic tax declaration methods.

Achieve 80% of tax revenue from Household Businesses paid via electronic methods.

Advise local governments to ensure all Household Businesses are properly registered under the law.

Improve digital mapping for better management of Household Business entities.

Control invoice risks to prevent the misuse of Household Business invoices for cost legitimization by Enterprises.

In a context of rapid socio-economic development, demands for transparency in state management and market operations have become an inevitable trend. The powerful shift in information technology, particularly the application of digital data and artificial intelligence in management, has created both pressure and opportunities for deep reforms in tax administration—especially for Household Businesses, which have long faced many inadequacies.

Accurate, complete, and timely tax declaration is no longer just an administrative requirement; it has become a standard for evaluating legal compliance and the level of professionalism of a business. Honest tax reporting helps minimize legal risks, avoid back taxes and penalties, and create long-term operational stability. At the same time, reliable tax data enables the State to formulate effective fiscal policies, support businesses, and better regulate the economy.

Step-by-step modernization, technological application, and improved compliance awareness among citizens are crucial. Though this transition will face many challenges—from resistance to change, investment costs for new systems, to training implementation teams—the long-term benefits are undeniable. A transparent and efficient tax system will:

• Ensure fair and reasonable budget revenue,
• Help Household Businesses gradually integrate with professional Enterprise standards,
• Create a fairer and more transparent competitive environment among all economic sectors.

In the long run, this will not only stabilize business operations but also lay the foundation for a sustainable, competitive, and well-integrated economy both regionally and globally.

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