Proposal for individual business to pay 17% income tax on profits

The Ministry of Finance proposes that business individuals pay income tax determined on the difference between revenue and expenses, at a tax rate of 17%.

Currently, business individuals with annual revenue of over 100 million VND must pay personal income tax at a rate based on revenue. Revenue is the total amount of sales, processing, commissions, and service provision arising during the tax period. In case the revenue cannot be determined, the tax authority will determine it according to regulations.

However, from January 1, 2026, in accordance with the policy of abolishing the lump-sum tax, the Ministry of Finance proposed to add a method of calculating tax based on income instead of revenue. Accordingly, resident individuals with annual revenue above the level prescribed by the Government will have the tax payable determined by multiplying taxable income by the rate of 17%.

Taxable income is understood as revenue from the sale of goods and services minus expenses related to production and business activities during the period. This calculation is similar to the provisions in the Law on Corporate Income Tax, which currently applies a tax rate of 17% to small and medium-sized enterprises with revenue of over 3-50 billion VND per year.

In case an individual business has annual revenue below the taxable threshold, the current method of calculating tax based on revenue rate will remain the same.

The country currently has about 5.2 million business households, contributing more than 24% to GDP and is considered the "backbone" in many industries and fields, from industry and agriculture to trade and services. Last year, revenue from business households and individuals reached VND25,953 billion, equal to 120% compared to 2023.

In addition to the calculation method, the Ministry of Finance also proposed to apply a 5% tax rate to some income from providing digital information content products and services on entertainment, electronic games, digital movies, digital photos, digital music, and digital advertising.

According to Law No. 71/2014, this income of individuals is subject to the 1% rate like some other incomes. However, according to the operator, these are incomes with special characteristics. Therefore, the Law needs to stipulate appropriate tax rates to ensure equality and consistency, while promoting the regulatory and redistributive role of the policy.

PV (synthesis)

Source: https://baohaiphong.vn/de-xuat-ca-nhan-kinh-doanh-nop-thue-thu-nhap-17-tren-lai-520045.html