Removing inadequacies in tax management

The private sector has increasingly become an important driving force of Vietnam’s economy, with household businesses making significant contributions to growth and the state budget revenue.

However, the current tax management method for this sector still relies heavily on the “lump-sum” system, which has revealed shortcomings in fairness, transparency, and efficiency. In addition, tax policies and administrative procedures for household businesses differ markedly from those applied to enterprises, creating an unintended advantage in compliance costs for household businesses.

To address these issues, and in line with Resolution No.68 of the Politburo on private sector development, which emphasizes the elimination of the lump-sum tax, the General Department of Taxation has developed a proposal titled “Improving Tax Policy and Management Methods for Household Businesses after Abolishing Lump-Sum Tax”.

According to the proposal, the lump-sum tax system will be completely abolished, with all household businesses shifting to a declaration-based system, meaning they will self-declare and self-pay taxes. This reform aims to establish a fairer and more transparent business environment between household businesses and enterprises, while reducing both time and compliance costs for taxpayers.

The proposal also emphasizes greater application of information technology and database systems in tax management, widespread use of electronic invoices, and stronger coordination with local authorities and related agencies. These measures are expected to improve management efficiency, reduce revenue losses, and modernize the tax administration system.

Duy Duc