💰 Real-World Tax Comparison: Household Biz vs Company

(Revenue: VND 3 billion/year)

With tighter rules on accounting, tax, and invoices, household businesses no longer enjoy as many advantages as companies. So when choosing between a household business and a company, let’s look at the tax cost angle:

• Household business: Cannot deduct input VAT → Actual cost +8%
• Company: Can deduct input VAT
• Current VAT rate (common): 8% (reduced from 10% until 30/06/2025)

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🛒 RETAIL – GOODS TRADING

Item	Household Business	Company	Impact
📊 Revenue	3,000 million	3,000 million	-
💸 Cost (original)	2,550 million	2,550 million	-
🔴 Cost (actual)	2,754 million	2,550 million	+204M (8% VAT)
📈 Actual margin	8.2%	15.0%	-6.8%
📈 Gross profit	246 million	450 million	-204 million
🏷️ VAT	30 million (1%)	36 million (8%-8%)	-6 million
💼 Income tax	15 million (0.5%)	90 million (20%)	-75 million
📊 TOTAL TAX	45 million	126 million	-81 million
💰 PROFIT AFTER TAX	201 million	324 million	-123 million

❌ Company comes out ahead by 123 million VND/year

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🍜 F&B – FOOD & BEVERAGE

Item	Household Business	Company	Impact
📊 Revenue	3,000 million	3,000 million	-
💸 Cost (original)	1,800 million	1,800 million	-
🔴 Cost (actual)	1,944 million	1,800 million	+144M (8% VAT)
📈 Actual margin	35.2%	40.0%	-4.8%
📈 Gross profit	1,056 million	1,200 million	-144 million
🏷️ VAT	90 million (3%)	96 million (8%-8%)	-6 million
💼 Income tax	45 million (1.5%)	240 million (20%)	-195 million
📊 TOTAL TAX	135 million	336 million	-201 million
💰 PROFIT AFTER TAX	921 million	864 million	+57 million

✅ Household business comes out ahead by 57 million VND/year

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CONSULTING SERVICES

Item	Household Business	Company	Impact
📊 Revenue	3,000 million	3,000 million	-
💸 Cost (original)	600 million	600 million	-
🔴 Cost (actual)	648 million	600 million	+48M (8% VAT)
📈 Actual margin	78.4%	80.0%	-1.6%
📈 Gross profit	2,352 million	2,400 million	-48 million
🏷️ VAT	150 million (5%)	192 million (8%-8%)	-42 million
💼 Income tax	60 million (2%)	480 million (20%)	-420 million
📊 TOTAL TAX	210 million	672 million	-462 million
💰 PROFIT AFTER TAX	2,142 million	1,728 million	+414 million

✅ Household business comes out ahead by 414 million VND/year

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🎯 KEY INSIGHTS

💡 Core takeaway:

• High margins: Household business wins big (services: +414M)
• Medium margins: Household business still slightly better (F&B: +57M)
• Low margins: Company wins (goods: -123M)

📊 Break-even margin:

Around 25–30% margin is the tipping point between the two models.

⚠️ Very important notes:

• Household business cost is effectively 8% higher due to no input VAT deduction
• Actual margin is lower than the “nominal” margin
• The bigger the scale, the more obvious the impact

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🔥 Conclusion: Household businesses are only really advantageous in industries with HIGH MARGINS!