The road to transparency and modernization through electronic taxation is anything but smooth. Immediate implementation risks leaving many behind - especially those already struggling to stay afloat.

The quiet perseverance behind every small shop

In my neighborhood lives a couple widely admired for their diligence. The husband finished only middle school, and the wife completed high school. They left their rural hometown to rent a modest house here, turning it into a small convenience store they’ve run for over a decade.

Rain or shine, the husband wakes at 3 a.m. to buy produce from the outskirts and brings it into the city for his wife to sell. The rest of their day is packed with running the store - a humble Level 4 home they lease to serve local residents.

They work tirelessly to support their two children’s education in Hanoi and even send money home to their aging parents.

Recently, when I stopped by, both looked downcast. “The tax officer came to instruct us on how to declare e-taxes, but we just don’t know how. If we don’t do it, we’ll be accused of evading taxes - and that’s a serious offense,” they confided.

Their story reflects a broader anxiety shared by millions of household businesses across Vietnam, from north to south, as previously reported by VietNamNet.

Another example: a retired government official who opened a small convenience store with his wife. With nearly 40 years of experience in public service, the couple understands laws and technology - even uses AI with ease.

In an email to me, he recounted that just over two weeks ago, a tax officer notified them of new regulations effective June 1. Despite their background, it still took an immense effort - purchasing new devices, installing software, and hiring temporary help - to comply in time.

“I don’t mean to praise myself,” he wrote, “but if even someone with our experience struggled this much, I can’t imagine how most small business owners can cope under such short notice. I now deeply empathize with those less fortunate.”

“I fully support the policy of collecting fair and accurate taxes. But many want to comply - they just lack the means to meet these sudden and demanding new standards. There’s simply no support in place.”

“In my own neighborhood, I estimate that 70-80% of business owners simply cannot adapt unless the government offers substantial and practical assistance.”

Blurry data in the largest part of the economy

Current tax regulations still offer some leniency for household businesses, such as presumptive tax (thuế khoán), and the accounting and reporting requirements are less stringent than those for private enterprises.

However, if household businesses register or convert to sole proprietorships, they lose these advantages. Moreover, strict provisions in the Enterprise Law and related regulations significantly increase the compliance burden, which deters many from formalizing their businesses.

“These disparities lead people to prefer household businesses over registering as private enterprises,” explained Dr. Le Duy Binh from Economica.

According to the 2023 Statistical Yearbook (the most updated from the General Statistics Office), as of July 1, 2022, Vietnam had nearly 5.2 million non-agricultural individual business establishments, in addition to 12 million agricultural households.

Yet, the Ministry of Finance announced that starting June 1, around 37,000 household and individual businesses with annual revenues exceeding VND 1 billion (approximately USD 39,300) must issue e-invoices generated by cash register systems connected to tax authorities. Beginning January 1, 2026, nearly 2 million household businesses under presumptive tax will be required to switch to tax declaration.

Meanwhile, the government’s May–June socioeconomic report stated that as of June 4, 121,385 businesses had registered to use e-invoices - 67.1% of those required to do so.

These numbers reveal wide inconsistencies: 37,000 taxable households vs. 121,385 registered; 2 million presumptive taxpayers vs. 5.2 million non-agricultural businesses. Even the yearbook fails to differentiate between those officially registered for business and tax purposes and those not.

As Dr. Le Duy Binh pointed out, in reality, some businesses are registered for tax but not business licenses, some have both, and some existed before regulations required registration. Others, despite large revenues, remain unregistered, while some don’t register due to small earnings.

Vietnam’s tangled grassroots economy

These statistics reveal that while replacing presumptive tax with e-invoicing is a commendable step toward fairness and transparency, its impact on millions of small businesses remains uncertain - and potentially damaging.

Add to this the fact that many household business owners - especially the elderly or those in remote areas - are not equipped with the skills or technology needed for this abrupt transition.

The household economy contributes up to 30% of Vietnam’s GDP. It also acts as the last safety net, shielding many from unemployment and poverty.

Let me share the conclusion of a letter from the same former official-turned-shopkeeper - a man who contributed much to Vietnam’s economic reform:

“My late mother was a business owner and remained sharp until her final days at age 90. But if she were asked to comply with today’s standards, the only option would be to quit her livelihood - unless she wished to break the law.”

He continued: “I’ve always supported billion-dollar ‘grand strategies’ to boost the economy. But let’s not forget: the legendary Dien Bien Phu campaign would never have succeeded without the rickety bicycles hauling sacks of rice to the front lines. Just like the iconic 500kV transmission line - our industrialization symbol - required not only steel and concrete but also bowls of rice and cups of roadside tea that fueled the workers. That’s life. That’s the economy. Millions of people are scraping by through small-scale business and trade. That, too, is Vietnam’s economy.”

Indeed, the “grassroots reality of Vietnam” offers much to reflect upon. The path to modernization through e-taxation may be paved with good intentions, but without thoughtful rollout, it risks excluding those who can least afford it.

Tu Giang