High Revenue, Low Profit Reality: The 200-Million Tax Threshold: A Burden on Small Vendors
In recent months, many small household businesses have voiced growing concerns over the proposal to maintain the current tax threshold at just over 200 million VND in annual revenue. To them, this figure no longer reflects the reality of today’s volatile market, where input costs have skyrocketed across the board. In countless sectors where profit margins are razor-thin, high revenue does not automatically translate to actual earnings. For many vendors, “money flowing in” is nothing more than numbers passing through their hands before being paid straight back to suppliers.
A vivid example is the livelihood of lottery ticket sellers—a job commonly perceived as low-income but surprisingly high in revenue once total daily sales are accumulated. A lottery seller typically earns only a few hundred to one thousand dong per ticket. To make around 70,000–80,000 VND per day, they must sell at least 70–80 tickets. On the surface, this seems manageable. But when multiplied over a full year, their total revenue easily surpasses the 200-million mark, despite their true profit remaining meager. This leaves many feeling “shocked” when told they fall under the category that requires tax declaration, even though their income barely supports basic living needs.
Small business owners argue that the current threshold is too low for present economic conditions. Consider a birthday flower bouquet priced at 500,000 VND; selling just two bouquets already registers one million VND in daily revenue. Meanwhile, the costs of wholesale flowers, transportation, storage, spoilage, and shop rent have surged dramatically. Some florists even buy a bouquet at 800,000 VND and only dare sell it at 820,000 VND to stay competitive—making a fragile profit of only 20,000 VND, which is less than 3%.
The situation is no better for coffee vendors, small restaurants, or convenience stall owners. Even the cheapest rental space today costs several hundred thousand dong per day. Hiring a single employee adds another significant expense. Combined, operating costs already push their minimum daily expenses toward 550,000–600,000 VND. Yet these vendors are still classified as businesses with revenue exceeding the tax threshold. Many point out that “revenue is just a flow of money,” not an accurate representation of real profit. The more they earn in total sales, the more they must spend immediately on inventory and operation.
To make matters worse, transitioning to issuing VAT invoices for input purchases pushes total expenses up by another 8–10%. Larger companies can absorb this due to VAT deductions, but small household businesses must bear the entire amount as actual cost. This puts them at a serious disadvantage in an already highly competitive market.
Clearly, the current 200-million-VND threshold is outdated given the rapid changes in cost of living and market prices. Business owners hope tax authorities will consider profit margins, the specific cost structures of each trade, and the real financial resilience of small vendors. A fair and reasonable tax policy should not only ensure equity but also protect the livelihood of millions who are struggling to survive amid rising expenses. Many vendors emphasize that they do not oppose taxation; what they fear is a tax mechanism that calculates solely based on revenue rather than genuine income.
In the broader economic landscape, small household businesses—especially daily wage earners like lottery ticket sellers—play a vital role in sustaining local economies. They operate quietly yet consistently, contributing to circulation of goods and services even during economic downturns. Ignoring their hardships could weaken the very grassroots economy that supports larger markets. For policymakers, revisiting the tax threshold is not just a matter of paperwork—it is an evaluation of social fairness and the nation’s long-term economic health.
A revenue-based tax system may have been appropriate in the past when input costs were stable and profit margins more predictable. But in today’s climate of rising fuel prices, fluctuating imports, and inflation affecting everything from rent to raw materials, the structure is losing its balance. Vendors repeatedly stress that taxing them based on revenue is like “judging a person’s wealth by the number of bills passing through their hands,” even though none of those bills stay long enough to build actual income.
If the threshold remains unchanged, many fear that genuine micro-businesses—including lottery ticket sellers, sidewalk vendors, small cafes, flower shops, and household stalls—will be pushed into unsustainable pressure. Some may shut down entirely; others may be forced into operating informally to avoid being categorized as taxpayers. Ironically, this could reduce overall tax collection and create regulatory blind spots—an outcome no one desires.
Ultimately, small vendors are calling for a tax policy that acknowledges their reality: high revenue but low profit, high effort but fragile income. They hope policymakers will listen closely, evaluate carefully, and adjust wisely. A well-designed tax policy should not drown the smallest contributors of the economy but instead help them stay afloat, ensuring livelihoods are preserved and communities remain stable.
