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When a household business exceeds VND 1 billion in annual revenue, additional requirements regarding taxation, e-invoicing, and bookkeeping begin to apply. This also marks a stage where many household businesses transition from experience-based management to data-driven financial management in order to gain better control over costs, profitability, and cash flow.
Household businesses are categorized into different groups based on annual revenue, with each group subject to distinct tax obligations, invoicing requirements, and record-keeping rules. Among these, businesses generating annual revenue between VND 1 billion and VND 3 billion represent a significant segment of the economy and are generally required to adopt more structured tax filing and financial management practices compared to smaller household businesses.
This group includes a wide range of businesses, such as retail stores, small restaurants, service providers, and online sellers. Once annual revenue exceeds VND 1 billion, household businesses are not only subject to Value Added Tax (VAT) and Personal Income Tax (PIT), but must also comply with requirements related to electronic invoices, periodic tax declarations, and accounting records.
1. Tax Obligations for Household Businesses with Annual Revenue Between VND 1–3 Billion
Pursuant to Article 3 and Article 4 of Decree 68/2026/ND-CP, as amended by Decree 141/2026/ND-CP, household businesses with annual revenue above VND 1 billion and below VND 3 billion are subject to both Value Added Tax (VAT) and Personal Income Tax (PIT).
The applicable tax obligations are as follows:
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Value Added Tax (VAT): Calculated using the direct method based on revenue. The VAT payable is determined by applying the prescribed percentage rate to taxable revenue, with the applicable rate depending on the business sector in accordance with the Law on Value Added Tax and related guidance documents.
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Personal Income Tax (PIT): Household businesses may choose between two tax calculation methods:
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Option 1: PIT based on taxable revenue. Under this method, an individual is entitled to a deduction of VND 500 million before calculating PIT on the total annual business revenue.
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Option 2: PIT based on taxable income (Revenue – Deductible Expenses). Businesses choosing this method must apply it consistently for a minimum period of two consecutive years.
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1.1 Value Added Tax (VAT)
VAT is calculated directly as a percentage of revenue using the following formula:
VAT = Revenue × Applicable VAT Rate
The applicable percentage depends on the business activity conducted by the household business.
| Business Activity | VAT Rate | PIT Rate |
| Distribution and sale of goods | 1% | 0.50% |
| Services and construction without materials supplied | 5% | 2% |
| Manufacturing, transportation, services associated with goods, and construction with materials supplied | 3% | 1.50% |
| Other business activities | 2% | 1% |
| Property leasing, real estate leasing, digital content products and services | 5% | 5% |
| Insurance agents, lottery agents, multi-level marketing agents | - | 5% |
Accurately identifying the business category is essential to applying the correct tax rate and minimizing filing errors.
1.2 Personal Income Tax (PIT): Which Method Should You Choose?
Taxpayers may choose the PIT calculation method that best fits their business model and ability to track expenses.
Method 1: PIT Based on Taxable Revenue
Under this approach, PIT is calculated using the following formula:
PIT = (Revenue – VND 1 Billion) × Applicable PIT Rate
This method is relatively straightforward because it does not require detailed tracking of business expenses. It is often suitable for household businesses that do not yet maintain comprehensive expense records.
However, if actual annual revenue exceeds VND 3 billion, the business must switch to the taxable-income method from the following year.
Method 2: PIT Based on Taxable Income
This method applies when the household business is able to identify and document deductible expenses.
PIT is calculated as follows:
PIT = (Revenue – Deductible Expenses) × 15%
Deductible expenses must satisfy all of the following conditions:
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Directly related to business operations.
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Supported by valid invoices and documentation.
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Paid through non-cash methods for transactions valued at VND 5 million or more.
For businesses with relatively high operating costs, maintaining proper expense documentation may provide a more accurate representation of business performance and support tax optimization within regulatory requirements.
2. Electronic Invoices: Mandatory Above the VND 1 Billion Threshold
Household businesses generating annual revenue of VND 1 billion or more are required to use electronic invoices.
To comply, businesses must register for e-invoice usage with the tax authority. In cases where registration information changes due to a change in the business owner or legal representative, biometric verification and electronic authentication must be completed through the eTax Mobile application.
Beyond regulatory compliance, e-invoices create a reliable source of revenue data that supports financial management and tax reporting.
3. How Should Tax Filing Be Handled?
The filing process depends on the PIT calculation method selected by the household business.
If PIT Is Calculated Based on Revenue
The business files taxes quarterly using Form 01/CNKD.
The filing deadline is the last day of the first month following each quarter.
If PIT Is Calculated Based on Taxable Income
The business must make provisional tax declarations during the year and complete a year-end tax finalization.
Quarterly Provisional Filing
Each quarter, VAT and PIT are declared using Form 01/CNKD.
The provisional PIT amount is determined by multiplying taxable revenue for the quarter by the PIT rate applicable to the business sector. For example, businesses engaged in goods distribution apply a provisional PIT rate of 0.5%.
Annual Tax Finalization
At the end of the fiscal year, the household business submits its annual PIT finalization using Form 02/CNKD-TNCN-QTT.
The filing deadline is March 31 of the following year.
4. What Accounting Records Are Required?
Bookkeeping requirements vary depending on the PIT method applied.
If PIT is calculated based on revenue, the business is required to maintain only the Revenue Ledger (Form S2a-HKD) to record sales revenue and service income.
If PIT is calculated based on taxable income, the business must maintain a complete set of accounting records, including:
Maintaining these records is not only necessary for tax compliance but also provides business owners with visibility into revenue trends, cost structures, and cash flow performance.
5. From Tax Compliance to Financial Management
For household businesses generating annual revenue between VND 1–3 billion, complying with tax regulations, e-invoicing requirements, and bookkeeping obligations is only the starting point. As business operations grow, the ability to effectively manage revenue, expenses, profitability, and cash flow becomes increasingly important.
In practice, many e-commerce household businesses operate across multiple sales channels, while revenue data, orders, advertising expenses, marketplace fees, and payment transactions are often scattered across different systems. This can make it time-consuming and challenging to consolidate information for tax filing, financial reporting, or evaluating overall business performance.
Sliner helps e-commerce household businesses monitor and analyze key financial metrics using their existing accounting and sales data. Through intuitive reports covering revenue, expenses, profitability, and cash flow, business owners can quickly gain visibility into business performance, identify unusual trends, and make timely decisions based on reliable data.
With a clearer view of financial performance, business owners can move beyond simply knowing how much tax they need to pay. They can answer more strategic questions such as which sales channels generate the highest profit, which expenses are increasing unexpectedly, and whether the business is financially prepared for its next stage of growth. This is the shift from tax compliance to proactive financial management.
