Workers handle handmade leather shoes in Hai Duong province (Photo: VNA)Hanoi (VNA) - In orderto transform household businesses into enterprises, it is necessary to use“economic levers” rather than “administrative orders”, deputy director of theCentral Institute for Economic Management (CIEM) Phan Duc Hieusaid at a Hanoi-based conference on June 27.
The conference, organised by the Vietnam Chamber of Commerce andIndustry (VCCI) in cooperation with the Bank for Investment and Development of Vietnam(BIDV), drew the participation of nearly 100 representatives from Statemanagement agencies, banks, industry associations, household businesses andenterprises. It was designed to discuss the current situation andsolutions for converting household businesses to firms.
In the past few years, business households have grownsignificantly in volume, making tremendous contributions to job creation andservice provision to the economy.
This sector’s important role is increasingly appreciated by theGovernment, agencies and the society, especially for the development of theprivate sector in Vietnam.
The Government Resolution 35/NQ-CP on supporting and developingenterprises has set a target of million operating enterprises in the country by2020.
Ten years ago, many business households were aware that thetransformation into an enterprise could help them to get preferential treatmentin loans and labor recruitment.
However, they worried about paying more taxes, fulfilling moreobligations to employees or implementing regulations on environment, noisereduction, fire fighting and accounting skills if they became enterprises.
One decade later, the results of a VCCI survey showed that thesituation has not changed much. The problems of administrative procedures andtaxes are still obstacles for household businesses to become firms.
As a result, in the period of 17 years, there have been 4,671million household businesses, but only 1.6 million households pay taxes,contributing a total tax revenue of 12 trillion VND (529 million USD).
Do Van Binh, a household producer of worship products, said thathouseholds want to transform to enterprises, but they wonder about the cost oftax.
Currently, households pay a fixed licence tax of less than 1million VND per year, and the owners can make accounting records by themselves.However, if households become enterprises, they will have to do more accountingand taxes will also be increased. The regulations also require the enterpriseto have a chief accountant, hence generating more personnel in enterprises, Binhadded.
To motivate household business to convert to firms, Hieu suggestedusing economic levers rather than administrative orders, creating a simplebusiness environment suitable for the size and nature of business. Whenhousehold businesses recognise benefits of being enterprises, they willvoluntarily transform.
The Government should prioritise implementing the law on supportfor small-and medium-sized enterprises (SMEs), amend accounting regulations andappropriate tax payment. Especially, the requirement of having a separateaccounting system should be omitted, encouraging business owners to do theirown accounting, reducing more than 30 types of accounting documents at present,Hieu emphasised.-VNA
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