In recent years, household businesses have created numerous jobs and made significant contributions to the State budget. The use of a presumptive tax system (lump-sum tax) has played a role in defining the tax obligations of household businesses to the State. However, with the strong socio-economic development of the country, the application of lump-sum tax is no longer appropriate as many household businesses today are not only making a living, but have also expanded their business activities and forms of operation.
The Politburo’s Resolution No. 68-NQ/TW on the development of the private economy has officially eliminated the lump-sum tax system for household businesses, replacing it with a declaration-based system. This resolution lays the groundwork for the National Assembly, the Government and regulatory agencies to introduce new policies that will help both household businesses and tax authorities shift to a new management model. Eliminating lump-sum taxation and transitioning to a declaration-based system will allow the tax sector to optimize its support for household businesses. Notably, this change does not alter the tax rate or method of calculation. Moreover, it is expected that the time and cost associated with filing taxes under the declaration system will be lower than under the lump-sum model.
Shifting from lump-sum taxation to self-declared, revenue-based tax payments will more accurately reflect business capacity and uphold the core principle of the Law on Tax Administration: “Taxpayers declare, pay and take responsibility for themselves”. This change will contribute to the modernization of the tax system and enhance the efficiency of administrative management. This is a step in line with the current trend of digital transformation and electronic tax management. This step also helps to effectively prevent fraud and tax losses and create a healthy competitive environment among economic sectors.
However, from the perspective of the tax authorities, supporting household businesses, especially those under the lump-sum tax regime faces many challenges as current regulations require these households to maintain fixed revenue and tax levels for an entire year while their business activities are constantly fluctuating. This has revealed the shortcomings that tax rates are very difficult to adjust to suit the reality of production and business activities. In addition, it is very difficult for the tax sector to support business households in terms of policy mechanisms, especially at times when business households face difficulties, due to natural disasters and unexpected epidemics.
Many household businesses now hope for support from tax authorities in developing accounting software. According to the tax sector, household businesses can use smartphones or tablets to generate revenue reports and determine their own tax obligations to the State budget.
Reported by Khai Anh-Translated by Kim Tin
