Vietnam adopts new Capital Law and raises tax exemption threshold

On May 13, Vietnam’s Presidential Office issued an order promulgating nine laws passed by the 16th National Assembly. The most prominent is the revised Capital Law for Hanoi, set to take effect on July 1, 2026, which grants the city greater autonomy over budgeting, urban planning, natural resources, and digital technologies such as big data and artificial intelligence. Other enacted laws address access to information, civil status registration, belief and religion, and amendments to tax codes.

The tax package amends the Personal Income Tax, Value‑Added Tax, Corporate Income Tax and Special Consumption Tax. It removes the previous VND 500 million revenue threshold for individuals and small business households, shifting the authority to set exemption limits to the government based on macro‑economic indicators. A decree issued on April 29, 2026 raises the exemption ceiling to VND 1 trillion, covering roughly 2.56 million households and individuals. The Treasury estimates a revenue shortfall of about VND 16.65 trillion in 2026, with the reforms intended to support business development and economic growth. All nine laws become effective from the dates stipulated, beginning 1 January 2026 for the tax changes.