Stuck with many barriers, business households are afraid to become enterprises
Vietnam currently has nearly 1 million operating enterprises and about 5 million individual business households. This is considered an important resource for developing the private enterprise force, playing an increasingly large role in the economy. The goal is that by 2030, the whole country will have about 2 million private enterprises, with the expectation that this area will contribute about 70% of GDP.
However, in reality, most business households are still hesitant to step through the "border" to convert into official enterprises.
Ms. Nguyen Thi Hong - a traditional confectionery producer in Xuan Dinh (Bac Tu Liem district, Hanoi) - said that her family has been in the profession for a long time, mainly supplying to agents and regular customers during holidays and Tet. The small-scale home production model helps her be proactive in her work and suit current conditions.
When asked about switching to a business model, Ms. Hong shared: There are times when I think about establishing a business to expand scale and do business more methodically. But now I still prioritize doing things in the familiar way, because if I start a business, I have to learn a lot about procedures, accounting, taxes... While my family mainly does traditional jobs, I do not really need it."
In another case, Ms. Nguyen Thi Hoang Ha - owner of an electronic equipment distribution store in Thanh Hoa - has experience directly operating both the business model and business households. Previously, she established a company to expand her business, but after a period of operation, she still decided to return to the form of a business household.
"To establish a business, you have to make a tax report, hire an accountant, and then take care of many documents. Meanwhile, the tax rate and operating costs are significantly higher" - Ms. Ha shared. Currently, with the business model, every quarter she only pays contract tax of about 1,350,000 VND, the procedures are simple, flexible and time-saving. "If I expand the branch later, I will recalculate. But now, when there is no clear support mechanism, maintaining a business is really difficult" - she added.
There needs to be an appropriate mechanism to activate the potential of business households
According to experts, if legal and psychological barriers cannot be removed, the transition from business households to enterprises will be very difficult to create a breakthrough.
Mr. Nguyen Quang Huy - CEO of the Faculty of Finance - Banking, Nguyen Trai University - said that Vietnam currently has more than 5 million business households, but many of these do not want to convert to private enterprises, although this is a very potential area to aim for the target of 2 million enterprises by 2030.
According to Mr. Huy, business households are currently applying contract tax - a simple form, suitable for stable models, without having to declare a lot or have a system of books and accounts. Meanwhile, when switching to a business, they will have to have monthly accounting, tax declaration, annual tax settlement... leading to other reports and administrative procedures.
The scale of business households is often small, when converting, they will have to hire more people, use consulting services, incur additional costs and take more time. Many businesses are small traders, seasonal, seasonal and flexible. But when it becomes a business, it needs an entire management and operation system. That makes them feel like this is a burden, Mr. Huy analyzed.
Mr. Huy said that to remove obstacles, there should be a policy to support micro-enterprises - those who are business households after the conversion. Support is needed in systems, accounting books and digital transformation, for example, the use of sales software, automatic revenue and expenditure management software. These tools will make tax declaration and financial reporting easier, save effort, reduce the apparatus, thereby creating motivation for business households to convert.
In addition, it is possible to consider tax rates for micro enterprises at a certain level, instead of applying a single level as for large enterprises. Having incentives for a period of 5 years, 7 years will help businesses consider between contract tax and declaration tax.
They will see that when the revenue scale increases, switching to businesses will help enhance their brand and reputation - Mr. Huy emphasized.
