Workers make bamboo mats in Dinh Tuong Commune in the central province of Thanh Hoa. (Photo: VNA)HCM City (VNA) -The Government should create the best possible conditions, including easing taxprocedures, to encourage household businesses to expand into companies.
Speaking at a seminar on April 27 on “Transforming household businesses intocompanies” organised by Tuoi Tre (Youth) newspaper, Nguyen Thi Cuc, Chairwomanof the Vietnam Taxation Consultancy Association and former deputy head of theGeneral Department of Taxation, said “Household businesses worry about thecomplex procedures and paying higher taxes and so don’t want to expand intocompanies.”
There are around five million household businesses in the country with totalannual turnover of 100 billion USD and nearly eight million employees.
Household businesses are mostly involved in trading and services, especiallywholesale and retail business, accommodation, food, and motorbike and carrepair.
But since they are designated as household businesses, they face limitationswith respect to their development.
“They cannot expand to other districts, can’t do business in severalindustries, can’t employ more than 10 workers and have limited financialresources,” Phan Duc Hieu of the Central Institute of Economic Management said.
He pointed out they would have certain advantages if they expand into companieslike better labour quality, accurate taxes and greater capacity to mobilisefinancial resources.
“The process of upgrading into an enterprise is very simple, and householdbusinesses can benefit from consultation and incentives from the Government[for upgrading].”
However, when asked in a recent survey by the institute what problems they fearin upgrading, household businesses said they would have to pay higher salaries,social insurance and bonuses for employees; adopt a complex accounting system;follow many cumbersome procedures and spend more on management and other feesand undergo regular inspections. They would be unable to negotiate their taxeslike they do as household businesses.
To encourage businesses to upgrade, Cuc said the Government should pass a Smalland Medium Sized Enterprises Law.
“The Government should show household businesses through a clear legalframework how they can benefit if they expand into enterprises. Administrativereforms should be sped up to reduce costs and time for them.
“The Government should support household businesses in terms of technology,market information and product demand if they turn into enterprises.”
Hieu said “Relevant authorities should review the whole legal system,especially on taxation, conditions for doing business and investment to createthe best conditions for small enterprises.”
He also wanted more taxation and accounting agencies set up to support them.
HCM City authorities are encouraging and helping household businessesbecome companies to achieve the city’s target of registering more than 50,000enterprises this year and having a total of 500,000 by 2020.-VNA
Speaking at a seminar on April 27 on “Transforming household businesses intocompanies” organised by Tuoi Tre (Youth) newspaper, Nguyen Thi Cuc, Chairwomanof the Vietnam Taxation Consultancy Association and former deputy head of theGeneral Department of Taxation, said “Household businesses worry about thecomplex procedures and paying higher taxes and so don’t want to expand intocompanies.”
There are around five million household businesses in the country with totalannual turnover of 100 billion USD and nearly eight million employees.
Household businesses are mostly involved in trading and services, especiallywholesale and retail business, accommodation, food, and motorbike and carrepair.
But since they are designated as household businesses, they face limitationswith respect to their development.
“They cannot expand to other districts, can’t do business in severalindustries, can’t employ more than 10 workers and have limited financialresources,” Phan Duc Hieu of the Central Institute of Economic Management said.
He pointed out they would have certain advantages if they expand into companieslike better labour quality, accurate taxes and greater capacity to mobilisefinancial resources.
“The process of upgrading into an enterprise is very simple, and householdbusinesses can benefit from consultation and incentives from the Government[for upgrading].”
However, when asked in a recent survey by the institute what problems they fearin upgrading, household businesses said they would have to pay higher salaries,social insurance and bonuses for employees; adopt a complex accounting system;follow many cumbersome procedures and spend more on management and other feesand undergo regular inspections. They would be unable to negotiate their taxeslike they do as household businesses.
To encourage businesses to upgrade, Cuc said the Government should pass a Smalland Medium Sized Enterprises Law.
“The Government should show household businesses through a clear legalframework how they can benefit if they expand into enterprises. Administrativereforms should be sped up to reduce costs and time for them.
“The Government should support household businesses in terms of technology,market information and product demand if they turn into enterprises.”
Hieu said “Relevant authorities should review the whole legal system,especially on taxation, conditions for doing business and investment to createthe best conditions for small enterprises.”
He also wanted more taxation and accounting agencies set up to support them.
HCM City authorities are encouraging and helping household businessesbecome companies to achieve the city’s target of registering more than 50,000enterprises this year and having a total of 500,000 by 2020.-VNA
VNA
