Pressure and opportunities go together
Opening a restaurant following the household business model in Binh Thanh District for more than 5 years, Mr. Nguyen Van Tan - owner of a chain of restaurants - shared: "Previously, just a business license was enough. But when I wanted to open more branches and sign contracts with large partners such as shopping malls and supermarkets, they required me to have corporate legal status. So I have decided to convert for about a year now.
The Ho Chi Minh City government has launched many programs to support small and medium-sized enterprises to convert from business households such as free consultation and guidance on procedures, business registration documents, etc.
From June 1, 2025, business households in Ho Chi Minh City with a revenue of VND 1 billion/year in 6 groups of industries specified in Decree 70 will have to issue electronic invoices generated from cash registers, connect data with tax authorities, instead of paying contract tax as at present.
To support and facilitate business households, the Tax Department of Region II has worked with the Ho Chi Minh City Tax Consultants and Agents Association as well as prepared digital transformation solutions, cash registers as well as electronic invoices generated from cash registers.
Thereby, all units are committed to exempting all services for business households for a period of 6-12 months, to help business households easily get acquainted and switch to a modern electronic invoice model, helping taxpayers feel secure in fulfilling their tax obligations in accordance with regulations, in a timely and effective manner.
Mr. Nguyen Nam Binh - Head of the Tax Department of Region II - said that the Government is oriented to convert tax policies for business households from paying contract tax to self-declaration and self-payment of tax. This is one of the important solutions to promote the development of the private economic sector.
There are many challenges to transform
However, the transition process was not completely smooth. Many business households are concerned about increased operating costs after becoming a business such as accounting costs, costs for tax compliance, social insurance for employees, periodic financial reports, etc.
Ms. Le Thi Quy - the owner of a wedding service business in Hoc Mon district - shared: "I want to convert to be stronger, but I am worried about the burden of paperwork and reporting. In addition, there must be specialized personnel with knowledge of accounting and tax to prepare tax reports. If not well guided, it is easy to get into trouble".
Mr. Nguyen Duc Nghia - Deputy Director of the Center for Supporting Small and Medium Enterprises in Ho Chi Minh City - said: "Currently, business households only have to pay contract tax at a rate of several million VND per month. However, when converting to a business, they will have to pay many different taxes, at the same time, additional obligations such as social insurance and facing a relatively complicated process of dissolving a business if they do not continue to operate in the future".
Dr. Can Van Luc - an economic expert, member of the National Financial and Monetary Policy Advisory Council, said that it is necessary to encourage business households to convert to micro enterprises. This process needs to be supported by policies such as income tax exemption in the initial stage of operation, simplification of business establishment procedures, and providing accounting and management support.
At the same time, Vietnam needs to implement breakthrough reforms in improving the investment and business environment. It is necessary to amend the Law on Supporting Small and Medium Enterprises, apply tax reduction policies for small and micro enterprises, and strongly reduce administrative procedures, costs, and time for processing documents.
Despite many challenges, converting business households into businesses is an inevitable trend, bringing long-term benefits. When becoming a business, businesses will easily access capital, expand scale, participate in the supply chain and improve competitiveness.
