From June 1, 2025: Elimination of Lump-Sum Tax for Business Households with Large Revenue

by KMC Consulting Company Limited

What should business households prepare before the complete abolition of the lump-sum tax method in 2026?

In recent years, tax policies for business households (BHH) have undergone significant changes aimed at enhancing transparency, modernizing tax administration, and encouraging business households to transition into enterprises. One of the notable reforms is the phased elimination of the lump-sum tax method, starting from June 1, 2025, and expected to be fully implemented by 2026.

1. What is Fixed Tax?

According to Circular 40/2021/TT-BTC issued by the Ministry of Finance, fixed tax is a tax calculation method based on estimated revenue, determined by the tax authorities according to the actual business situation of the business household or individual entrepreneur. The fixed tax includes:

  • Value Added Tax (VAT)
  • Personal Income Tax (PIT)
  • Other fees and charges (if any)

This fixed tax method is simple, does not require complex invoices or documentation, and is typically applied to small-scale, household-run business households.

2. From June 1, 2025: Abolition of Fixed Tax for Business Households with Annual Revenue from VND 1 Billion or More

According to the new regulation stipulated in Clause 8, Article 1 of Decree 70/2025/ND-CP, starting from June 1, 2025, business households and individual entrepreneurs with annual revenue of VND 1 billion or more, operating in sectors such as retail, food and beverage, hospitality, transportation, entertainment, etc., will be required to switch to using electronic invoices generated from cash registers and will no longer be eligible to apply the fixed tax method.

Some of the affected industries include:

  • Shopping centers, supermarkets, retail stores
  • Restaurants, eateries, food service establishments
  • Hotels, motels, homestays
  • Passenger transportation services
  • Cinemas, theaters, entertainment games

The use of electronic invoices connected to the tax authorities’ data systems will enhance revenue transparency, enabling tax authorities to calculate taxes based on actual figures — similar to the tax declaration method applied to enterprises.

3. By 2026 at the Latest: Complete Abolition of Fixed Tax for All Business Households

According to Resolution 68-NQ/TW dated May 4, 2025, issued by the Party Central Committee on private sector development, the State will fully abolish the fixed tax method for business households in 2026 in order to:

  • Encourage business households to transition into enterprises
  • Enhance transparency and fairness in tax management
  • Simplify management and accounting procedures for business households

At the same time, strong support policies will be implemented, including:

  • Free shared accounting software for business households
  • Free legal, accounting, and tax consultancy services
  • Training on business management skills and digital transformation
  • Financial incentives for business households belonging to vulnerable groups and those in remote or disadvantaged areas

✅ KMC Supports Business Households in Transitioning to Enterprise Models and Tax Declaration

With the abolition of the fixed tax method, maintaining proper accounting records, issuing electronic invoices, and timely tax declaration will become mandatory requirements for most business households. To avoid difficulties during the transition, business households are advised to:

  • Consult on selecting an appropriate transition model (private enterprise, limited liability company, etc.)
  • Establish an accounting system according to Circular 88/2021/TT-BTC
  • Register to use electronic invoices from cash registers
  • Train accounting and finance personnel

KMC – A trusted partner of thousands of business households nationwide in ensuring compliance with tax and accounting regulations and achieving sustainable business model transformation.

📞Contact KMC now for free consultation!

For more detailed information about this or related Tax Advisory, please don't hesitate to contact us.
Website: https://kmc.vn/
Hotline: +84 81 489 4789 or +84 91 988 9331
Email: info@kmc.vn