HM&P lawyer shared tax regulations for business households in the new context

Business households have long been an important component of Vietnam's economy, ranging from traditional models such as restaurants and retail stores to modern forms of business on digital platforms. However, this is also a group of subjects who often face many difficulties in accessing and complying with tax laws, especially in the context that regulators are promoting digitalization and risk management. Recently, Senior Associate Nguyen Nhat Duong, representative of HM&P Law Firm ("HM&P"), had an in-depth discussion with The Saigon Times on tax policies for business households in the new period, focusing on clarifying important changes.  How to determine tax liabilities and legal risks to be aware of.

Source: The Saigon Times

Tax policies are changing in the direction of flexibility, but compliance requirements are increasing

According to Lawyer Duong, one of the most notable new points in the current tax policy is the change in the approach to the non-taxable revenue threshold. Instead of rigid regulations in the law, the new mechanism allows the Government to flexibly adjust from time to time, helping policies respond faster to economic fluctuations.

At the same time, tax management is shifting sharply towards digitization, electronic data exploitation and multi-source information comparison. This means that business households are no longer the "less noticed" area as before. As business activities expand across multiple channels such as stores, social networks, e-commerce platforms and cashless payments, without proper recording and management systems, tax risks will increase significantly.

Lawyer Duong emphasized: "A fundamental point is to properly understand the concept of "revenue". In tax law, revenue is the entire revenue from business activities, not profits. Confusion between these two concepts is a common cause of misdeclaration and incorrect tax calculation."

The tax calculation method is simple but easy to make mistakes if you do not understand the true nature

For most business households today, value-added tax (VAT) and personal income tax (PIT) are calculated as a percentage of turnover. This mechanism simplifies the procedure compared to businesses, but to apply it correctly, business people need to accurately determine three factors: actual revenue, business line and corresponding tax rates.

In practice, different groups of industries will apply different tax rates. For example, the distribution of goods often has a lower proportion than that of service activities due to the characteristics of different profit margins. Therefore, two business households with the same revenue but operating in different fields may have completely different tax obligations. Notably, many business models today are mixed, both selling and providing services. In these cases, if the revenue is not separated by each source, the wrong application of the tax rate is a very common risk and may lead to the tax authority readjusting the obligation later.

The risk lies not only in the amount of taxes to be paid, but also in the possibility of long-term development

In the context of modern tax management, these errors can lead to many consequences such as tax arrears, late payment interest, and penalties for administrative violations. More noteworthy, however, are the long-term consequences for business operations, including difficulty accessing bank capital, limited cooperation with major partners, and difficulty demonstrating financial capacity in important transactions.

From a prevention perspective, HM&P recommends that business households should gradually standardize their governance activities, including separating business and personal accounts, recording revenue from all sources, keeping adequate documentation and reviewing the true nature of the industry. At the same time, as the scale of the business increases, considering the transition to a business model is also a necessary step to ensure sustainability.

At the end of the discussion, HM&P lawyer emphasized that taxation is not only an obligation to be fulfilled but a part of modern business governance; In the context of increasingly digitized and transparent tax management, business households that soon standardize revenue recognition, separate cash flows and comply with regulations will not only limit legal risks but also create advantages in expanding cooperation, access to capital and sustainable development.

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