Vietnam’s National Assembly has approved a 30% income tax cut for many small businesses and business households. The measure is one of the key economic decisions made during the first extraordinary session of the 16th National Assembly.
The resolution was approved on August 24, one day before the latest reports published on August 25. It took effect on the same day. The tax cut will apply to the 2026 and 2027 tax years.
The policy covers resident individuals who earn income from business and have annual revenue of no more than VND10 billion. It also covers Vietnamese firms and other eligible organizations with annual revenue within the same limit.
The tax cut covers personal income tax and corporate income tax. It is designed to reduce the tax burden on smaller firms and business households. The government says the measure can help them keep more money in their businesses.
For many small firms, lower tax costs can support daily operations. The money may help cover wages, rent, stock and other business costs. Some firms may also use the savings to buy equipment or expand their services.
The move comes as Vietnam seeks strong economic growth while facing pressure from changes in the global market. Small firms are important to the wider economy because they operate in many sectors and create jobs in cities and provinces.
The National Assembly vote was strong. A total of 480 of 481 lawmakers taking part voted in favor of the resolution. The result shows broad support for using tax policy to support smaller economic players.
The new measure also sets limits to prevent firms from using company splits to gain the tax benefit. A firm formed through a division or separation after the resolution took effect will not receive the cut if the combined revenue of the resulting firms is above VND10 billion.
The measure may be especially useful for firms that are trying to move from small informal operations into more stable businesses. A lower tax bill can free cash for basic needs. It can also reduce the pressure that comes when sales change from month to month.
The policy follows earlier tax support steps taken in 2026. The government has also used other measures to ease pressure on small businesses and households. These steps include tax exemptions for some very small businesses and changes to tax payment rules.
The latest cut may give business owners more room to plan. It can also improve cash flow at a time when firms must manage costs with care. However, a tax cut alone cannot solve every business problem.
Small firms still need access to credit, stable demand and clear rules. They also need simple tax procedures and reliable public services. These factors can affect whether a tax saving leads to new investment or only helps firms meet current costs.
The policy may also support formal business activity. Lower tax costs can make it easier for smaller operators to invest, hire staff and keep better financial records. Over time, stronger firms may contribute more to the tax base as their sales and profits rise.
The timing is also important for Hanoi and other major cities. Many small shops, service firms and family businesses depend on steady local demand. Lower tax payments could give some of them a little more room to handle seasonal changes and rising operating costs.
The government expects the measure to support production and business activity. It also fits a wider effort to use fiscal policy to help growth while keeping the economy stable.
For businesses below the VND10 billion revenue threshold, the change is a direct financial benefit. The effect will depend on each firm’s tax position and the income it earns.
For Vietnam’s wider economy, the policy offers a clear message. Small businesses are being given more space to grow during the next two tax years. The key test now will be whether the relief leads to stronger investment, more jobs and wider business activity.
