If you run a household business or a small company in Vietnam, every January used to bring the same ritual: pay the business license fee — "lệ phí môn bài" — simply for the privilege of existing. Profitable year or loss-making year, it did not matter. A street-food stall with a rough year paid. A brand-new company that had not yet earned its first dong paid. From 1 January 2026, that ritual is gone. Vietnam has abolished the fee outright — no payment, no annual declaration — as part of the biggest private-sector reform package in years. Here is what was scrapped, what you actually save, the traps to avoid, and what did not change.
What exactly was abolished
The business license tax (also translated as the license fee or "môn bài" levy) was an annual charge levied on essentially every business operating in Vietnam — enterprises, cooperatives, public service units engaged in business, household businesses, and individual business operators. It was not a tax on profit. It was a tax on existence, assessed each year whether you made money or not.
The amount depended on your registered capital or your revenue:
| Who paid | Basis | Annual amount |
|---|---|---|
| Companies with charter or investment capital above VND 10 billion | Capital size | VND 3 million (about US$120) |
| Companies with charter or investment capital of VND 10 billion or less | Capital size | VND 2 million (about US$80) |
| Branches, representative offices, and business locations | Per unit | VND 1 million (about US$40) |
| Household businesses and individuals with revenue above VND 500 million/year | Revenue | VND 1 million (about US$40) |
| Revenue above VND 300 million up to VND 500 million/year | Revenue | VND 500,000 (about US$20) |
| Revenue above VND 100 million up to VND 300 million/year | Revenue | VND 300,000 (about US$12) |
| Revenue of VND 100 million/year or less | Revenue | Exempt |
The sums look modest — and for a large company, they were. But the burden was never really the money. It was the compliance ritual around it: a declaration on establishment, a payment deadline every 30 January, penalties for late filing and late payment, and one more line item for a micro-business owner to track. For a household business netting a few million dong a month, a million-dong fee plus the paperwork stung in a way the headline rate never captured.
The legal paper trail: three documents that killed it
The abolition did not arrive as a surprise announcement. It sits inside a deliberate reform stack, and knowing the three documents helps if a local tax officer ever asks questions:
- Resolution No. 198/2025/QH15 — passed by the National Assembly in May 2025, this is the master policy on special mechanisms to develop the private economy. It expressly provides that collection and payment of the business license fee ceases from 1 January 2026.
- Decree No. 362/2025/ND-CP — the implementing decree that repeals the old framework in full: Decree No. 139/2016/ND-CP and its amendment Decree No. 22/2020/ND-CP, the two texts that had governed the fee for a decade.
- Official Letter No. 645/CT-CS — issued 24 January 2026 by the Taxation Department under the Ministry of Finance, directing provincial and city tax offices to publicize the abolition and apply it uniformly.
That third document matters most in practice, because it answers the question every accountant asked first: what about the old years? The answer is that tax offices were instructed to keep collecting outstanding license fees owed for 2025 and earlier. The abolition is forward-looking only.
What changes for you from 2026
From 1 January 2026 onward:
- No payment. Enterprises, cooperatives, household businesses, and individual operators owe zero license fee for 2026 and every year after.
- No declaration. You are also exempt from filing the license-fee declaration for 2026 and subsequent years. One form disappears from your calendar permanently.
- No first-year dance. Under the old rules, newly established businesses enjoyed a first-year exemption and then had to figure out pro-rata payments depending on which half of the year they launched in. That entire calculation is now moot — there is nothing to be exempt from.
For a small company, the direct saving is VND 2–3 million a year plus the accountant hours. For a household business, it is up to VND 1 million a year. Neither sum retires anyone. The real dividend is one fewer deadline, one fewer penalty risk, and one fewer reason for a routine inspection to turn up a foot-fault.
Five traps to avoid (the fee is gone; the mistakes are new)
Abolitions create their own compliance errors. Here is what to watch:
1. Do not "pay it anyway" out of habit. Every January, muscle memory — yours or your bookkeeper's — will reach for the license-fee payment. A payment made for 2026 has no return to be filed against and will sit as an unallocated credit at best. Delete the recurring reminder and tell your accountant explicitly.
2. Old arrears are still collectible. If you owed the fee for 2025 or any earlier year and never paid, the tax office can and will still pursue it, including late-payment interest. Do not confuse "abolished" with "forgiven." Settle outstanding years and keep the receipts — a future dispute about whether you were clear through 2025 is exactly the kind of thing that surfaces during an unrelated audit.
3. Do not file a 2026 declaration "just to be safe." Defensive over-filing is a real habit among cautious owners. Filing a declaration for a tax that no longer exists creates a record that needs explaining later. The exemption from declaring is explicit — rely on it.
4. Your other obligations did not move. This is the big one. The license fee was the smallest of your tax burdens, and everything else — value-added tax, personal or corporate income tax, e-invoicing, social insurance — continues unchanged. In particular, Vietnam's e-invoicing mandates keep expanding regardless of the fee's abolition. An owner who reads "tax abolished" as "taxes abolished" is heading for a painful conversation.
5. Treat proposals as proposals. Vietnam's 2026 reform wave includes genuine proposals — such as a 30% income-tax cut for small firms and household businesses with annual revenue up to VND 10 billion for 2026–2027 — that were still working through approval as of September 2026. Do not book savings from a cut that has not been enacted. Plan on current law; treat the proposal as upside.
The bigger picture: 2026 is a reform wave, not a single cut
The license-fee abolition lands inside the broadest small-business tax overhaul Vietnam has attempted in years, and the surrounding changes are worth more money than the fee itself:
- VAT threshold doubled. From 1 January 2026, household businesses and individuals with annual revenue below VND 200 million (about US$8,000) are exempt from value-added tax, up from the old VND 100 million line.
- Income-tax threshold quintupled. The amended Personal Income Tax Law, passed in December 2025, raises the taxable-revenue threshold for household businesses to VND 500 million a year (about US$20,000) — five times the old level — a change expected to take roughly 90% of household businesses out of income tax entirely.
- Possible 30% cut on top. The government has proposed cutting income taxes by 30% for 2026 and 2027 for household businesses, individual operators, and micro-enterprises with revenue up to VND 10 billion (about US$380,000).
Read together, the direction is unmistakable: fewer fixed charges for existing, lower entry barriers for starting, and a tax code that finally acknowledges that a street vendor and a mid-size manufacturer should not face the same paperwork. If you have been postponing formalizing a side hustle into a registered household business, the cost of entry has rarely been lower.
Clean up your books: a 15-minute checklist
Use the abolition as an excuse for a small bookkeeping tidy-up:
- Close the ledger account. If your chart of accounts carries a dedicated expense line for the license fee, post your final 2025 payment, reconcile it, and retire the account so nobody books 2026 payments into it by accident.
- Archive the history. Keep every license-fee receipt and declaration from prior years with your permanent tax file. The statute of limitations on old arrears outlives the tax itself.
- Update your tax calendar. Remove the January declaration-and-payment entry, but use the freed slot to double-check your VAT and income-tax filing dates under the new thresholds — the reform that deleted one deadline changed several others.
- Recheck your revenue band. With the VAT line now at VND 200 million and the income-tax line at VND 500 million, confirm which side of each threshold your 2026 revenue puts you on. Crossing a threshold unknowingly is a far costlier error than the old fee ever was.
- Price the saving into your budget, not your spending. VND 1–3 million a year is real money for a micro-business. Route it somewhere deliberate — an emergency reserve, an e-invoice software subscription, a quarter of social insurance — rather than letting it dissolve into operating cash.
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