Vietnam Proposes 30% Income Tax Cut for Small Businesses

The Vietnamese government is advancing a proposal to substantially cut income taxes for small and medium-sized enterprises (SMEs) and individual business households, a move intended to bolster businesses grappling with economic headwinds. This legislative initiative is slated for submission to the National Assembly for deliberation and potential approval. The core of the proposal involves a 30 percent reduction in personal income tax for micro-enterprises and business households whose annual revenues do not exceed VND 10 billion (approximately $400,000 USD). This tax relief is earmarked for the fiscal years 2026 and 2027. Complementing this, the government intends to elevate the annual revenue threshold for business households and individuals who qualify for simplified tax application from the current VND 3 billion to VND 10 billion. These measures are strategically formulated to address the prevalent difficulties encountered by numerous businesses, exacerbated by economic deceleration and pervasive global inflation. The government's objective extends beyond mere tax reduction; it seeks to streamline compliance processes, thereby diminishing the time and financial outlays associated with tax, accounting, and invoicing regulations, ultimately easing the operational burden on entrepreneurs. These proposed amendments will be integrated into the revised Law on Support for Small- and Medium-Sized Enterprises. The National Assembly is anticipated to review and endorse these changes during its second sitting scheduled for October. Within Vietnam's political framework, characterized by a one-party system, the administration places paramount importance on sustaining economic momentum and ensuring the welfare of its populace. SMEs are recognized as vital contributors to the national economy, making their support a key policy priority. These initiatives also take into account the broader economic environment, including the dynamics of Vietnam's relationship with China, as the nation strives to invigorate its domestic industries. Source: Bao Chinh Phu