Vietnam Plans 30% Tax Break for Small Businesses

Picture courtesy of Quang Dinh / Tuoi Tre

Vietnam is considering a 30% income tax reduction for small enterprises, household businesses and individual businesses with annual revenue of no more than VND10 billion (US$380,000), under a Ministry of Finance proposal covering the 2026 and 2027 tax years.

The ministry sought feedback on Friday on a draft National Assembly resolution that would cut either personal income tax or corporate income tax payable by qualifying businesses. If approved, the measure would take effect from the date the National Assembly passes the resolution.

Small businesses struggling with rising costs

The proposal is intended to leave smaller businesses with more money to meet costs, recover and expand at a time when many are facing pressure from higher expenses and weaker consumer demand.

A Vietnam Chamber of Commerce and Industry survey cited by the ministry found that 59.3% of household and individual businesses were struggling with rising and volatile input costs. Another 43.8% reported difficulties caused by declining purchasing power and market demand, while 32.6% faced shortages of capital and labour. The ministry said micro-enterprises were experiencing similar problems.

For foreigners living in Vietnam, the proposal could have an indirect effect through the thousands of small businesses that form part of everyday life, although the government has not suggested the tax reduction would translate directly into lower consumer prices. Foreign residents who operate businesses in Vietnam would need to check how the final eligibility rules apply to their particular business structure if the measure becomes law.

Tax cut would cost budget $255 million

The Ministry of Finance estimates the measure would reduce state revenue by around VND6.701 trillion ($255 million) over two years.

For 2026, the estimated reduction is VND3.191 trillion ($121.6 million), comprising about VND929 billion ($35.4 million) in personal income tax and VND2.262 trillion ($86.2 million) in corporate income tax.

The 2027 reduction is forecast at VND3.51 trillion ($133.4 million), including VND1.022 trillion ($38.8 million) in personal income tax and VND2.488 trillion ($94.6 million) in corporate income tax.

Government sees longer-term economic benefit

The ministry described the loss of tax revenue as a short-term cost. It expects businesses to retain more money for reinvestment, expansion and improved competitiveness, which it believes could contribute to economic growth and generate more sustainable government revenue over time.

The proposal must still clear several stages before becoming law. The Ministry of Finance will submit it to the government, which will then put it before the National Assembly for consideration and approval at its second session, expected in October.

8th August 2026