Proposal for individual business with total revenue over 3 billion VND to be taxed at 17%

The Ministry of Finance proposed to add a method of calculating a 17% tax rate on business income of resident individuals.

The Ministry of Finance has added a tax calculation method for business income of resident individuals. Photo: Chau Duong.

The Ministry of Finance has recently sent the Ministry of Justice a dossier for appraisal of the draft Law on Personal Income Tax (amended). In it, the drafting agency proposed to amend and complete the regulations on the method of calculating tax on business income of resident individuals.

According to the provisions of Article 10 of the current Law on Personal Income Tax, business individuals pay personal income tax at a rate on revenue for each field and industry of production and business.

Revenue is the total amount of sales, processing fees, commissions, and service provision fees arising during the tax period from production and trading activities of goods and services.

In case a business individual cannot determine revenue, the competent tax authority will determine revenue according to the provisions of the law on tax administration.

To implement the policy of abolishing the lump-sum tax form from January 1, 2026, the draft Law supplements the method of calculating tax on business income of resident individuals with annual revenue above the level prescribed by the Government, determined by multiplying taxable income by the tax rate of 17%.

In which, taxable income is determined by revenue from goods and services sold minus expenses related to production and business activities during the tax period.

This regulation is equivalent to the regulation on corporate income tax for small and medium-sized enterprises currently stipulated in the Corporate Income Tax Law No. 67/2025/QH15, which applies a tax rate of 17% to enterprises with total annual revenue from over 3 billion VND to no more than 50 billion VND.

For business individuals with annual revenue below the level prescribed by the Government, the method of calculating tax based on the revenue rate as in the current Personal Income Tax Law will still be maintained.

The Ministry of Finance also proposed adjusting tax rates for some income from activities providing digital information content products and services on entertainment, electronic games, digital movies, digital photos, digital music, and digital advertising.

Law No. 71/2014/QH13 amending and supplementing a number of articles in tax laws and tax guidance documents (effective from January 1, 2015) stipulates that business individuals with revenue of over VND 100 million/year pay personal income tax at a rate on revenue according to each industry, production and business sector.

Accordingly, distribution and supply of goods: 0.5%; services, construction without contracted materials: 2% (except for asset leasing, insurance agency, lottery agency, multi-level marketing agency: 5%); production, transportation, services associated with goods, construction with contracted materials: 1.5%; other business activities: 1%.

During the implementation process, there are opinions that the personal income tax rate on revenue needs to be recalculated and adjusted to suit the characteristics of some types of income and specific business activities such as activities providing digital information content products and services for entertainment, video games, digital movies, digital photos, digital music, and digital advertising.

Currently, personal income from these activities is subject to regulation like other incomes (currently applied according to the rates on revenue of each field mentioned above), while these are incomes with special characteristics, requiring appropriate tax rates to ensure equality among taxpayers, consistency of the tax policy system, ensuring the promotion of the regulatory and redistributive role of personal income tax policy in the tax system.

The Ministry of Finance proposed a tax rate of 5% for some income from providing digital information content products and services on entertainment, video games, digital movies, digital photos, digital music, and digital advertising.

Source: https://baohatinh.vn/de-xuat-ca-nhan-kinh-doanh-co-tong-doanh-thu-tren-3-ty-dong-chiu-thue-17-post295054.html