Official: 30% Reduction in Income Tax for Household Businesses, Individual Business Operators, and Enterprises in 2026–2027
do KMC Consulting Company Limited
On the afternoon of August 24, 2026, the National Assembly passed a Resolution to reduce personal income tax and corporate income tax by 30% for the 2026 and 2027 tax periods, with near-unanimous approval (480 out of 481 delegates). Notably, the Resolution takes effect immediately from August 24, 2026—without having to wait for implementing circulars, as has been the case with many previous tax policies.
Eligible Taxpayers
The beneficiaries include resident individual business operators and enterprises established under Vietnamese law with annual revenue not exceeding VND 10 billion. This policy is expected to affect approximately 2.69 million household businesses (99.98% of all household businesses nationwide) and more than 865,000 enterprises (approximately 81.1% of all active enterprises)—meaning that nearly the entire household business sector and the majority of small and micro enterprises in Vietnam are expected to benefit.
Reduction Rate and Application
The reduction is equal to 30% of the personal income tax payable and 30% of the corporate income tax payable, applicable to the 2026 and 2027 tax periods. For enterprises that are currently enjoying other tax incentives (such as investment incentives or industry-specific incentives), the 30% reduction will be calculated based on the remaining tax payable after existing incentives have been applied; the two benefits are not cumulative.
One notable exclusion is that enterprises established through a split or division after the Resolution takes effect will not be eligible for this policy if the combined revenue of the enterprises after the split or division exceeds VND 10 billion. This provision is intended to prevent taxpayers from circumventing the revenue threshold by artificially dividing a business into smaller entities.
Why Is This Policy Important?
At a time when operating costs and competitive pressures remain high, a direct 30% reduction in tax payable can provide household businesses and small enterprises with additional cash flow to maintain operations, reinvest, or cover the costs of transitioning to new regulations on electronic invoices and tax administration that took effect on July 1, 2026. The policy also signals the State’s continued priority in supporting the small and medium-sized private sector—a group that accounts for an overwhelming number of businesses but is also among the most vulnerable to changes in costs and policies.
What Should Enterprises and Household Businesses Keep in Mind?
To accurately determine their eligibility and benefits, enterprises and individual business operators should proactively:
- Review their revenue for the 2026 and 2027 tax periods;
- Determine the amount of income tax payable in accordance with applicable regulations;
- Review the tax incentive policies currently being applied;
- Accurately determine the amount of tax eligible for reduction under the Resolution.
In particular, enterprises currently benefiting from tax incentives should pay close attention to how the tax reduction is calculated to ensure compliance with the applicable regulations.
KMC will continue to provide updates on new tax policies and legal regulations, helping enterprises and individual business operators stay informed of important changes in a timely manner.
Note: This article is intended for informational updates only. The specific determination of eligible taxpayers, applicable conditions, and the amount of tax reduction should be based on the actual circumstances and guidance issued by the competent authorities.
