Is Vietnam going too far with its tax revolution? • From photo booths on street corners to family-run workshops, Vietnam’s tax overhaul will soon reach almost every cash register. Critics warn it could wipe out a swath of the economy it is aimed at strengthening.

For decades, most small businesses in the one-party communist state of  Vietnam have used a simplified lump-sum tax system, where taxes are calculated based on estimated revenue rather than formal accounting. 

In many cases, revenue assessments rely on informal consultations with local tax officials, as many businesses often do not maintain detailed sales records. 

According to Vietnam's Finance Ministry, around 2 million household businesses and entrepreneurs were using the lump-sum method at the beginning of 2025, while only around 6,000 had adopted the more complicated declaration system. 

The lump-sum system will be abolished entirely from 2026, meaning all registered businesses will be required to use the declaration system.

The change is part of Resolution 68 — a grand scheme announced by Vietnam in May of this year to make the country's homegrown private companies the "most important driving force" of the economy by 2035. It aims to put them ahead of the foreign corporations and state-owned enterprises that have traditionally been privileged by Hanoi.

Why is Vietnam overhauling its tax system?

The resolution aims to deregulate markets for local firms, increase their protections, and improve access to capital. It is also the first to explicitly enshrine property rights, fair competition and contract enforcement as legal principles. It is also aimed at substantially increasing tax revenue over the coming decades.

Small businesses bear the brunt of reform

Dissent is rare in Vietnam, where the Communist Party has further tightened its grip over the past decade. But videos of distressed store owners complaining about new tax demands have gone viral in recent weeks. 

Since every business has to switch to the declaration system by January 2026, many will face steep tax hikes, have to pay for expensive cash registers, learn bookkeeping and accountancy, and train staff to navigate the new rules.

While the government wants the private sector to drive growth, the new tax demands "appear to have the unintended consequence of putting many people out of business," he added.