Giving micro-enterprises a fresh boost

The Ministry of Finance (MoF) is seeking comments on a draft National Assembly resolution proposing reductions in personal and corporate income taxes for business households, individuals engaged in business, and enterprises. Under the proposal, eligible business households, business individuals, and enterprises with annual revenues of no more than VND10 billion would receive a 30% reduction in income tax payable for 2026 and 2027.

Production at a private enterprise in Trang Dai ward.

If approved, the policy would provide greater financial room for small-scale businesses while continuing the government's efforts to support the private sector in the new development period.

Retaining resources for businesses

A notable feature of the proposal is that the reduction would be calculated directly on the amount of tax payable. Resident business households and individuals with annual revenues of up to VND10 billion would be entitled to a 30% reduction in personal income tax payable for the 2026 and 2027 tax periods. Enterprises with annual revenues of up to VND10 billion would similarly receive a 30% reduction in corporate income tax payable during the two years.

The MoF said the policy is designed to provide direct support to the targeted groups, enabling them to retain more profits for reinvestment and production expansion while increasing disposable income, stimulating consumption and savings, and supporting the goal of high economic growth.

Notably, the proposal is not an isolated support measure. In recent years, the State has introduced a range of tax, fee, and administrative reforms to reduce costs for people and businesses. The new proposal continues to place business households and micro enterprises at the center of support efforts, as they have limited financial resilience but account for a very large share of the economy.

For a business or business household with an annual revenue of several billion dong, the tax savings may not be substantial when considered individually. However, when aggregated, the resources retained could inject additional funds into the economy. Businesses could use the savings to purchase raw materials, retain workers, cover operating costs, invest in equipment, or expand their markets.

B.T.T., owner of a fashion store in Tan Trieu ward, said business establishments incur numerous expenses in the course of their operations that are not eligible for deduction, resulting in taxable income being higher than their actual earnings. Raising the annual revenue threshold from VND3 billion to VND10 billion would give business households greater confidence, he said.

Similarly, Nguyen Van Huynh, Director of Tam Long Hung Phat Co., Ltd. in Bien Hoa ward, said market access has become an urgent concern for small and micro enterprises. Retaining more resources through the tax reduction would therefore enable businesses to supplement working capital, maintain jobs, improve workers' incomes, expand their markets, and strengthen their competitiveness.

Giving businesses room to grow

The more important aspect of the proposed tax cut is its place within the broader policy framework for developing the private sector. Politburo Resolution No. 68-NQ/TW identifies the private sector as one of the most important drivers of the economy while setting out the goal of creating a favorable business environment for rapid and sustainable development.

For the private sector to grow stronger, the economy cannot rely solely on a small number of large enterprises. It needs a broad base of small businesses capable of accumulating capital, innovating, and gradually expanding. Small and medium-sized enterprises constitute an important part of this foundation.

A survey by the Vietnam Chamber of Commerce and Industry (VCCI) found that nearly 59.3% of business households and individuals continue to face difficulties due to rising and volatile input costs, while more than 43.8% encounter obstacles in finding market outlets. In addition, 32.6% of respondents reported shortages of capital and human resources. Micro enterprises are experiencing similar difficulties.

Dau Anh Tuan, Head of the VCCI’s Legal Department, said the key challenge is gradually shifting from encouraging the establishment of new businesses to helping existing enterprises survive, accumulate resources, and scale up. Although market entry remains strong, business closures have also risen sharply, while most existing enterprises are not yet ready to expand. Therefore, support policies should not focus solely on the number of newly established enterprises but should also measure and improve their ability to survive, accumulate resources, and grow after entering the market.

The 30% tax reduction over two years could serve as a “buffer”, enabling businesses to continue accumulating resources amid continued pressure from costs, markets, and capital. Importantly, the policy would not determine how businesses use the funds, but would instead give them greater resources and flexibility to make their own investment and business decisions.

Experts say Vietnam's policies are gradually shifting from short-term support measures toward creating an enabling environment in which the private sector can develop on its own. Lower tax costs give businesses greater capacity to invest in productivity. Simplified administrative procedures allow more time to be devoted to business operations. Improved access to capital, technology, and markets, in turn, enables tax support to fully deliver its intended benefits.

Nevertheless, the tax reduction should be viewed as a time-limited support measure and cannot replace policies on capital, business premises, technology, labor and markets. If the business environment remains costly, enterprises may use the tax savings mainly to address immediate difficulties rather than invest in growth.

According to calculations by the MoF, the proposed policy would reduce State budget revenue by approximately VND6.7 trillion over two years. This represents a portion of public resources that the State is prepared to leave with the production and business sector in the short term, with the expectation that it will provide an additional boost to economic growth.

By V. The – Translated by M.Nguyet, Minho