For those seeking detailed, practical tax and registration guidance on Vietnam’s sole proprietorship status in 2025, this article outlines the availability, conditions, and key obligations for individuals looking to establish an individual business household (Hộ kinh doanh cá thể) within the country.
Availability of Sole Proprietorship Status in Vietnam
In Vietnam, the closest equivalent to a sole proprietorship is the Hộ kinh doanh cá thể—commonly translated as “household business” or “individual business household.” As of 2025, this status is widely accessible to Vietnamese citizens. It is actively used by a range of small entrepreneurs, freelancers, shop owners, and family-run businesses across the country.
Unlike companies, the Hộ kinh doanh cá thể is not a separate legal entity. The business’ obligations, liabilities, and tax duties reside entirely with the owner (or the family, if registered as such). Establishment and registration procedures are relatively straightforward, providing a pragmatic route for those wishing to run a formal but uncomplicated business in Vietnam.
Registration Process and Business Structure
The registration for an individual business household is typically handled at the local district-level business registration office. The process is open to Vietnamese citizens who wish to run a business individually or as a family unit. The scope covers almost all service, commercial, and manufacturing activities suitable for micro and small enterprises, although certain regulated sectors may require additional permits.
- Name of Status: Hộ kinh doanh cá thể
- Who Can Register: Individual Vietnamese citizens or family groups
- Legal Personality: Not a separate legal entity; owner holds personal liability for all obligations
- Main Uses: Small shops, freelancers, micro-enterprises, family businesses
Taxation of Individual Business Households (‘Hộ kinh doanh cá thể’)
Vietnam employs a mixture of fixed and presumptive tax regimes for sole proprietorships, depending on the nature of the business and its annual revenues. The system is explicitly tiered to support micro-entrepreneurs and is thus particularly attractive for those seeking simple tax compliance at low revenue levels.
| Revenue Threshold (VND) | USD Equivalent (USD, 1 USD ≈ 24,500 VND) | Personal Income Tax Rate (%) | Value Added Tax Rate (%) | Tax Status |
|---|---|---|---|---|
| Below 100,000,000 | $4,082 | 0% | 0% | Exempt from PIT and VAT |
| Above 100,000,000 | > $4,082 | 0.5% – 2% (by sector) | 0.5% – 5% (by sector) | PIT and VAT apply, sector-based |
Taxable revenues refer to total gross receipts during the calendar year. The Vietnamese dong (VND) is the official currency, with an approximate rate of 1 USD = 24,500 VND as of 2025 (rounded for clarity).
Sector-Specific Taxation
For those exceeding the exemption threshold, fixed tax rates are applied based on business activity. For instance, commercial and service sector businesses generally face a VAT rate of 0.5% to 5% and a personal income tax rate of 0.5% to 2%. The precise rate is determined by the government based on sector which is regularly published in official circulars.
Key Features
- If annual revenue is below 100 million VND ($4,082), the business is fully exempt from both personal income tax and value-added tax.
- Once annual revenue exceeds this threshold, PIT and VAT apply at rates depending on your sector (e.g., retail, food service, repair, etc.).
- Personal liability: Owners of a Hộ kinh doanh cá thể are fully responsible for all business obligations and debts.
Regulatory Sources & Further Information
- If you want to review the official legal frameworks or access comprehensive guides from government authorities, see the Vietnamese tax authority’s main homepage: https://www.gdt.gov.vn/.
Pro Tips for Setting Up and Managing a Vietnamese Household Business
- Carefully monitor your annual revenue. Staying below 100 million VND ($4,082) keeps your business exempt from both PIT and VAT.
- Maintain simple but clear records of all sales and income. Even exempt businesses may need to document revenue if reviewed by local authorities.
- Remember that this status does not shield your personal assets. Owner liability is unlimited, so consider insurance or other risk management where appropriate.
- Stay up to date with changes in sector-specific tax brackets as published by the tax authorities in Vietnam.
- If your activities expand or you foresee higher turnover, consider transitioning to company status to limit liability and access broader business rights.
Vietnam’s Hộ kinh doanh cá thể status offers a simple, popular solution for individuals and families running small-scale enterprises. Key benefits include straightforward registration and tax exemption below a clear income threshold—currently set at 100 million VND ($4,082) per year. Once annual revenues rise above this, sector-based presumptive tax rates apply. Always keep in mind that the status does not create a separate legal entity, so the owner remains personally liable for all obligations. For full official resources, visit the General Department of Taxation main page.