From 2026, according to Decision 3389/QD-BTC, the lump-sum tax regime for business households will be officially abolished. This is a revolutionary change in tax management, particularly affecting the way business households settle their taxes in Vietnam.

A particularly important point is that Groups 2 and 3 are required to file annual tax returns – a completely new requirement compared to current regulations. Understanding the documentation and procedures for tax settlement according to each revenue group is a prerequisite for business households to comply with the law and avoid tax risks.

Essential Concepts for Understanding Household Businesses

According to Article 79 of Government Decree 01/2021, a business household is defined as follows:

Official definition:

• Subject : Individuals or members of a household registering for establishment.
• Legal liability : Unlimited liability with all of one's assets.

IMPORTANT NOTE : Unlimited liability means that all of your personal assets (whether personal bank accounts or business accounts) can be used to pay off the business's obligations.

Find out about your tax obligations when selling on e-commerce platforms.

Key legal features:

• ✅ No legal personality - You are an individual, not a legal entity.
• ✅ Establishment Limit - An individual/household is only allowed to establish one sole business.
• ✅ Membership restrictions : Cannot simultaneously be the owner of a private business; Cannot be a general partner in a partnership company.

Classification of Household Businesses by Revenue (From 2026)

Decision 3389/QD-BTC divides business households into 3 groups based on annual revenue:

Settlement Documents and Procedures by Group

GROUP 1: Revenue Under 100 Million VND/Year

Characteristic:

• Tax method : Fixed tax rate based on industry
• Annual tax settlement : NOT mandatory
• Filing : Quarterly or annually (optional)

Documents required:

• 📄 Simplified VAT and Personal Income Tax Declaration Forms
• 📄 Business Registration Certificate
• 📄 Documents proving revenue (if required by the tax authorities)

Procedure:

1. File tax returns periodically (quarterly/annually).
2. Pay taxes at a fixed tax rate.
3. No financial statements need to be prepared.

Advantages : Simple procedure, no time wasted preparing detailed reports.

GROUP 2: Revenue from 100-500 Million VND/Year

Characteristic:

• Tax method : Declaration based on actual revenue and expenses.
• Annual tax settlement : MANDATORY (major change from 2026)
• Declaration : Quarterly

Annual tax return form (NEW):

Personal Income Tax Final Settlement Declaration Form (Form 02/QTT-TNCN)

Basic accounting records :

• Income and expenditure ledger
• Inventory and materials tracking log (if any)
• Fixed asset register (if any)

Supporting documents :

• Sales and service invoices
• Valid expense documents (invoices for purchases, rent, electricity, etc.)
• Bank documents (business account statement)

NEW REQUIREMENT : A separate bank account must be maintained for business operations to easily track and verify revenue and expenses.

Annual tax settlement procedures:

Step 1 : Summarize all revenue and expenses for the year.

• Gather all sales invoices
• Gather all valid expense documents.

Step 2 : Prepare the tax return.

• Fill in all the revenue and expense information.
• Calculate taxable income = Revenue - Reasonable expenses
• Determine the amount of tax payable according to the progressive tax rate schedule.

Step 3 : Submit the settlement documents.

• Submit directly to the managing tax office.
• Alternatively, you can submit it electronically (if you have a digital signature).
• Deadline : Before March 31st of the following year

Step 4 : Pay taxes (or claim a tax refund)

• If there is a shortfall: Pay the remaining tax amount.
• If there is a surplus: Apply for a tax refund or offset it against the next tax period.

ADVICE : It is advisable to open a separate bank account for your business at the beginning of the year for easier tracking and clear documentation during settlement.

GROUP 3: Revenue of 500 Million VND or More

Characteristic:

• Tax method : Declare as a business.
• Annual tax settlement : MANDATORY (similar to Group 2 but stricter)
• Declaration : Monthly
• Accounting : It is recommended to hire professional accountants.

Annual tax return documents (DETAILS):

Personal Income Tax Final Settlement Declaration Form (Form 02/QTT-TNCN)

Complete accounting records system :

• Ledger
• Revenue ledger
• Expense Ledger
• Inventory tracking log
• Fixed asset and depreciation register

Basic financial report :

• Business performance report
• Trial balance

Documentation is sufficient :

• All input/output invoices
• Economic contract (if any)
• Business bank account statement (MANDATORY)
• Bank payment documents

⚠️ MANDATORY : A separate bank account is required for business operations, and cashless payments are preferred for clear documentation.

Annual tax settlement procedures:

Step 1 : Close the accounting books at the end of the year.

• Summary of all business transactions
• Verify the validity of the document.
• Compare with your bank statement.

Step 2 : Prepare financial statements

• Business performance report
• Determine taxable profit
• Adjust any unreasonable expenses (if any).

Step 3 : Prepare the final settlement declaration.

• Provide a complete and accurate breakdown of revenue and expenses.
• Personal income tax is calculated according to the progressive tax rate schedule.
• Compare this with the amount of tax already paid provisionally during the year.

Step 4 : Submit documents and settle accounts.

• Submit your application before March 31st of the following year.
• Pay any outstanding taxes (if applicable) within 10 days of filing the tax return.
• Or process a refund for excess tax.

RECOMMENDATION : Group 3 should hire a professional accountant or use accounting software to ensure accuracy and full compliance with regulations.

Comparing Changes Before and After 2026

Benefits of Properly Settling Taxes

• ✅ Comply with the law : Avoid administrative penalties for tax violations (penalties of 10-20% of the unpaid tax amount).
• ✅ Financial transparency : Easily manage the actual revenue, expenses, and profits of the business.
• ✅ Legitimate tax savings : Deductible expenses can reduce the amount of tax payable compared to the old flat-rate tax (for Groups 2 and 3).
• ✅ Easier to get a loan : Having financial statements helps banks/credit institutions assess your ability to repay the debt.
• ✅ Foundation for development : A clear accounting system is the basis for future transformation into a business entity.

Important Notes to Remember

Regarding legal liability :

• Remember that you are liable without limit – all personal assets may be used to pay your tax obligations.
• All income received into a personal or business account is considered household revenue.

Regarding bank accounts :

• Groups 2 and 3 SHOULD open separate bank accounts for their businesses right from the beginning of the year.
• Limit cash transactions and prioritize bank transfers for clear documentation.
• Do not mix personal funds and business funds.

Regarding documentation :

• Keep all valid invoices and expense documents (including VAT if applicable).
• Expenses without supporting documents will not be deductible when calculating taxes.
• Keep records for at least 5 years.

Regarding deadlines :

• Annual tax settlement: Before March 31st of the following year
• Underpayment of taxes: Within 10 days of filing the tax return.
• Late payments will incur a late payment penalty of 0.03% per day.