Vietnam Cuts Income Tax by 30% for Businesses With Annual Revenue Up to 10 Billion Dong

Tax relief arrives with a strict annual revenue limit

Vietnam has introduced a 30% reduction in income tax payable for eligible household businesses, individual business operators and companies with annual revenue of no more than 10 billion Vietnamese dong. The measure covers the 2026 and 2027 tax years, with eligibility assessed separately for each year.

Deputy Prime Minister Nguyễn Văn Thắng signed Decree 398/2026/NĐ-CP on October 29, 2026, implementing National Assembly Resolution 43/2026/QH16. The decree took effect that day and allows qualifying taxpayers to claim relief through their regular declarations or provisional corporate tax payments, rather than waiting until their annual tax calculation is complete.

The Ministry of Finance estimated that the policy would reduce government revenue by about 6.7 trillion dong over two years. It expected the revenue threshold to cover 99.86% of individual and household businesses and 81.1% of enterprises.

A business with an income tax bill of 100 million dong would receive a reduction of 30 million dong, leaving 70 million dong payable. The calculation uses the tax bill, rather than sales revenue or a direct reduction in the tax rate. Value added tax remains outside this measure.

The main condition is the business's actual revenue for the entire year. A taxpayer can claim relief based on a reasonable expectation of staying within the limit, but must repay the reduction if annual revenue eventually exceeds 10 billion dong. For owners approaching that amount, tracking total revenue becomes part of managing both their tax obligations and the money available to run the business.

Which individual and household businesses qualify?

Article 2 of Decree 398 covers resident individuals earning income from production or business activities. Eligible taxpayers include individual operators, people registered as household business owners, and representatives authorized by household members to act for the business.

The reduction covers personal income tax payable on all qualifying production and business income, regardless of the method used to calculate that tax. Income from wages and salaries falls outside the policy.

Annual revenue for individual business eligibility is determined under Articles 4 and 5 of Decree 68/2026/NĐ-CP, as amended by Decree 141/2026/NĐ-CP. Operators must consider revenue from all their business activities, rather than assessing each shop or activity separately.

Decree 141 also sets a separate exemption: household and individual businesses with annual revenue of 1 billion dong or less owe no personal income tax. The new 30% reduction applies to an income tax liability that actually arises. An operator already owing no personal income tax therefore has no bill to reduce under this measure.

Three forms govern claims and adjustments

Individual business operators expecting annual revenue of no more than 10 billion dong can claim the reduction using Form 01, included in the decree's appendix. They submit it with their applicable quarterly, first half, second half or annual tax declaration.

Organizations and individuals that withhold tax, file declarations or pay tax on behalf of a business operator use Form 02. They may apply the reduction to qualifying tax within the scope of those arrangements, with declarations made monthly, quarterly or for individual transactions, as applicable.

Form 03 handles the reversal when an individual's cumulative revenue passes the limit. The three forms serve different purposes: claiming relief directly, applying it through someone handling the tax, and correcting a claim after the revenue condition changes.

An operator whose tax is handled by another organization still needs to monitor revenue across all business activities. The final eligibility test uses the individual's actual annual total, including activities beyond a particular withholding or filing arrangement.

What happens when revenue exceeds 10 billion dong?

Exactly 10 billion dong remains within the limit because the decree uses a threshold of no more than that amount. Once actual annual revenue exceeds it, the individual loses eligibility for the reduction for that tax year and must pay back the tax previously reduced.

The repayment covers the relief already claimed during the year. The policy does not gradually reduce the benefit as revenue approaches the threshold, so crossing the limit can create an additional tax payment alongside the obligations arising from increased business activity.

Individual operators must submit Form 03 with the tax return for the period in which cumulative revenue from the beginning of the year first exceeds 10 billion dong. They therefore need to act when the threshold is crossed, rather than waiting automatically until the annual tax settlement.

The additional personal income tax resulting from that reassessment carries no late payment interest up to the filing deadline for the period in which the threshold is crossed. This gives operators a defined period to correct the earlier reduction.

For a shop buying additional stock late in the year, the practical issue is cash flow: money saved through earlier tax reductions may have to return to the tax authority just as the business needs funds for purchases and operating costs. Monitoring cumulative revenue helps owners anticipate that payment.

Companies can reduce provisional quarterly payments

Article 3 applies the 30% corporate income tax reduction to eligible enterprises and organizations established under Vietnamese law. The eligible categories include companies, cooperatives, cooperative unions, public service units and other organizations earning income from production or business activities.

Companies expecting annual revenue of no more than 10 billion dong can calculate the reduction themselves when making quarterly provisional corporate income tax payments. Provisional payments are amounts paid during the year before the final annual tax obligation is settled.

The reduction applies across the company's income covered by the decree for the relevant annual tax period, regardless of the corporate income tax calculation method. Businesses already receiving other tax incentives can also qualify.

Existing incentives are applied first. The additional 30% reduction is then calculated on the corporate income tax still payable. A company therefore needs to determine its remaining tax liability after those incentives before working out the new relief.

Companies whose actual annual revenue exceeds the ceiling must declare and pay the shortfall. Corporate late payment treatment follows the applicable rules, including the provisions identified in Decree 252/2026/NĐ-CP. The specific protection described for individual operators up to the threshold period's filing deadline is set out separately in the personal income tax rules.

Corporate revenue includes more than sales

Companies must add together revenue from selling goods, providing services, financial activities and other income when checking eligibility. The sales and service component excludes revenue deductions under the prescribed calculation.

Dependent units and business locations also count. Their revenue, as reflected in the company's combined annual financial statements, forms part of the total used to assess the 10 billion dong ceiling. The calculation therefore reaches beyond the activity recorded at a company's main office.

A company with several locations needs to assess their combined revenue, together with its other qualifying revenue and income categories. Looking only at one location's sales could leave the business with an incomplete view of its eligibility and a tax shortfall to settle later.

Revenue and taxable income play different roles in this policy. Revenue determines whether the company falls within the size limit. The income tax payable, after any existing incentives, determines the amount of the 30% reduction. Keeping those calculations separate helps explain why two eligible businesses can receive different amounts of relief.

Splitting a company does not reset the limit

Companies formed through division or separation after Resolution 43 took effect on August 24, 2026, face an additional eligibility rule. If the combined annual revenue of the resulting businesses exceeds 10 billion dong, those businesses are excluded from the reduction.

The calculation adds the revenue of all businesses formed from the original division or separation during the relevant tax year. This prevents a business above the limit from gaining access simply by distributing its activities among several smaller legal entities.

Decree 398 also addresses certain short first or final corporate tax periods. These can arise when a company is newly established, changes legal form or ownership, merges, divides, dissolves or enters bankruptcy.

Where such a period lasts less than three months and is combined with the 2026 or 2027 tax period, the revenue and tax reduction calculation applies to the 12 months of the relevant 2026 or 2027 period. Businesses using combined tax periods must account for that specific rule when assessing the relief.

Earlier payments and later corrections can be recalculated

Individual operators who already filed a tax return without claiming the reduction may amend or supplement that return, or determine the reduction during their annual tax finalization. Finalization is the process of settling the year's tax obligation using the completed annual figures.

Taxpayers who calculate personal income tax as a percentage of revenue and have paid too much can have the excess offset against tax obligations, refunded, or handled through a combination of those methods under tax administration rules. This gives eligible operators a route to recover overpayments made before they claimed the relief.

Amended returns, tax inspections and audits can also change the underlying income tax bill. If an adjustment increases tax payable for 2026 or 2027, the additional amount can receive the 30% reduction where the taxpayer still meets the eligibility conditions.

If the underlying tax bill falls, the reduction must be recalculated downward as well. Any resulting overpayment is then handled under the applicable offset and refund rules. These adjustments apply to individual business operators and companies, keeping the benefit tied to their corrected tax liability.

Two tax years, with eligibility checked each year

The Ministry of Finance's estimates indicate that the policy reaches a larger share of individual and household businesses than enterprises. The expected coverage of 99.86% for the first group exceeds the 81.1% figure for enterprises by 18.76 percentage points. These are estimates of coverage under the revenue threshold, while each taxpayer's actual annual revenue determines eligibility.

The main dates show how the parliamentary decision and implementation rules fit together:

• August 24, 2026: Resolution 43/2026/QH16 took effect, establishing the date used for the restriction on companies formed through division or separation.
• October 29, 2026: Deputy Prime Minister Nguyễn Văn Thắng signed Decree 398/2026/NĐ-CP, which took effect the same day.
• Tax years 2026 and 2027: Eligible taxpayers receive the reduction, subject to the revenue test for each year.

A business may qualify in one year and exceed the ceiling in the other. Owners therefore need to assess 2026 and 2027 separately. During each year, the decree allows earlier access to the tax saving, while the completed annual revenue figures decide whether the taxpayer can keep it.

Key Points

• Eligible businesses with annual revenue of no more than 10 billion dong receive a 30% reduction in income tax payable for 2026 and 2027.
• The reduction applies to business personal income tax and corporate income tax. VAT and personal income from wages and salaries are excluded.
• Individuals use Form 01 to claim, substitute filers use Form 02, and individuals crossing the revenue ceiling use Form 03 to adjust.
• Companies can apply the reduction to quarterly provisional payments, after other tax incentives.
• Actual revenue above 10 billion dong removes eligibility for that year and requires repayment of the reduction.
• The Ministry of Finance estimated a budget revenue reduction of 6.7 trillion dong over two years.