Understanding Tax Declaration Methods To Ensure Accurate, Sufficient, And Timely Fulfillment Of Tax Obligations For Household Businesses In 2025

The year 2025 marks a period of significant changes in tax policy applicable to household businesses in Vietnam. Understanding and applying the appropriate tax declaration methods is essential not only for legal compliance but also for effective business management. The following provides an overview of current tax declaration methods and newly issued regulatory provisions that household businesses must take into account.

Current Tax Declaration Methods

Pursuant to Circular No. 40/2021/TT-BTC, household businesses may apply one of the following tax declaration methods:

Presumptive Tax Method (The method and basis for calculating fixed tax payable by household businesses and individual businesses)

• Applicable entities: Household businesses with annual revenue from VND 100 million and above.
• Tax determination: The tax authority shall determine the presumptive tax based on estimated revenue and the applicable tax rate according to the business line.
• Note: Household businesses are not required to maintain accounting records, invoices, or source documents prior to May 31, 2025.

Pursuant to Decree No. 70/2025/NĐ-CP, from June 1, 2025, household businesses with annual revenue from VND 1 billion or more, operating in sectors such as food and beverage, restaurant, hotel, supermarket, and retail, shall no longer be eligible for the presumptive tax method. Such entities shall be required to issue e-invoices generated from point-of-sale (POS) systems connected to the tax authority and shall transition to the declaration method.

Declaration Method

• Applicable entities: Household businesses of large scale or those voluntarily opting in.
• Tax determination: Based on actual revenue generated monthly or quarterly, subject to applicable tax rates.
• Note: Entities must comply with accounting, invoicing, and documentation regulations.

Per-Occurrence Declaration Method

• Applicable entities: Individuals and household businesses conducting non-regular business activities.
• Typically applicable to: Temporary or seasonal business activities such as property leasing, mobile sales, or short-term service provision.
• Characteristics:
  • Tax must be declared and paid upon each taxable occurrence.
  • No requirement to maintain regular accounting books.
  • Suitable for taxpayers with occasional revenue, such as property rentals, private land sales, or event organization under short-term contracts.
    

Key Policy Changes Effective From 2025

Abolishment of the Presumptive Tax Method for High-Revenue Household Businesses

Pursuant to Decree No. 70/2025/NĐ-CP, from June 1, 2025, household businesses with revenue from VND 1 billion/year or more, operating in specific sectors, shall no longer be permitted to apply the presumptive tax method. They must utilize e-invoices generated by POS systems and transition to the declaration method.

Use of Personal Identification Numbers in Place of Tax Codes

Pursuant to Circular No. 86/2024/TT-BTC, from July 1, 2025, the 12-digit personal identification number indicated on the Citizen Identification Card shall be used in lieu of the tax identification number for all tax transactions involving individuals, households, and household businesses.

Official Abolishment of the Presumptive Tax Method from January 1, 2026

Pursuant to Resolution No. 198/2025/QH15 dated May 17, 2025, regarding mechanisms and policies for private sector development, the presumptive tax method applicable to household businesses shall be completely abolished no later than 2026.

Previously, the Minister of Finance, in the explanatory report on revisions to the draft legislation, stated that the effective date for abolishing the presumptive tax method had been amended from July 1, 2026 to January 1, 2026, to promote transparency and encourage household businesses to transition into enterprise models.

Conclusion

Accurate understanding and proper application of tax declaration methods are essential for household businesses to ensure compliance with tax laws and to support sustainable development. Timely updates and adaptation to newly issued regulations will enable household businesses to proactively adjust their operations in accordance with current tax policies.