Difficult to put business households in "frameworks" like enterprises

VCN - Although solutions to put business households into legal frameworks like enterprises are continuously discussed, there remain a number of controversies.
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It is important to have mechanisms to "promote" the development of business households into businesses. Photo: H.Diu

Difficult for business households to access policies

Most countries in the world only identify two types of legal subjects: individuals and legal entities. But in Vietnam, due to historical conditions, business households also exist. According to statistics, currently, Vietnam has about 1.6 million business households with business registrations and about 3.4 million business households without business registration.

According to oneeconomic expert, a legal entity doing business was called a company; an individual doing business was called an individual business or a one-owned enterprise. However, in Vietnam, this was quite "disordered", because a legal entity doing business was called a company;a household doing business was called a "business household", andan individual doing business was called an "individual business household".

Discussing this issue, Mr. Fushihara Hirota, legal expert of Uryu&Itoga Vietnam Company, said that in fact, business households in Vietnam still had legal status, but they did not have enough capacity and conditions to develop, such as borrowing and accounting.While in Japan, there wereno "business households" but personal businesses with a simple and flexible accounting and bookkeeping regime.With this type, Japan does not ask them to register for business, they are free to do their business, but they must notify the tax department to consider the accounting books, thereby receivingthe appropriate tax rate.

In Vietnam, the concept of "business households" is always a big problem for managers, from how to manage and collect taxes to issue support policies to "promote" households to become businesses. Economic expert Le DuyBinh, Economica Vietnam Company, said that the new regulations andcontent related to the business management of economic sectors needed to have a long-term vision to avoid causing difficulties for the business environment.

Originally, private enterprises exist in the Law on Enterprises, so they should be called aone-owned enterpriseor an individual enterprise;therefore, if more legal regulations for individual business households are included, it will be a big challenge for the Drafting Board who amend the Enterprise Law to explain the difference between the current form of private enterprise and the form of an enterprise which is an individual business household. In addition, if we put business households into the Enterprise Law, it will cause difficulties and prove costly for business households in remote areas. "If business households are included in the Enterprise Law, this will certainly be a unique "invention"of Vietnam", Mr. Binh stressed.

The roadmap must be set

In many countries, the individual business form is very popular and appropriate.For example, in Australia, if an individual does business and earns less than 75,000 AUD, he/she needs to apply for an Australian business number (ABN), then he/she will pay the Personal Income Tax and be allowed to deduct expenses for his/her business activities.

In terms of quantity, for the whole of Europe, up to 60% of the number is registered in the form of individual business, 61% in the US, 90% in France, and65% in Malaysia. In Japan, the number of enterprise and individual business are similar, but the individual businesses are regulated by the Civil Law, and the enterprises are governed by the Law on Companies.Therefore, according to Mr. Fushihara Hirota, it is necessary to clearly separate the legal framework for the two entities to have a clear distinction and be consistent with the international practice.

In addition to the above problem, many people are concerned that when individuals and households become businesses, they will be managed as a company, such as they need to have accounting, books, pay insurance, be inspected and checked.According to Ms. Nguyen Thi Cuc, Chairman of Vietnam Tax Consultant Association, business households have not yet kept their accounting books, or they have conducted only simple records; most business households have not yet implemented the invoice and voucher regime, have had simple management level. Thus, the tax authorities find itdifficult to control the revenue and expenditure situation, to apply preferential tax policies for these households.Therefore, experts agree that, in addition to providing a reasonable legal mechanism to manage this type of business household, there must be a mechanism to not only help these business households operate smoothly but also contribute to "promote" these households to become businesses.

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Accordingly, Mr. Le Duy Binh said that the goal must be to improve the efficiency, productivity and quality of business households; to formalize the business households’ activities; to reform a series of policies on social insurance, taxes and business conditions. To "make a clear way" for business households to become businesses; to set a roadmap, should not be required to ensure successful conversion of business households.

In general, although there are still conflicting opinions about bringing business households into the concept of "enterprise", it is important to find suitable ways for businesses, to help all individuals and organizations have the right to do their business freely in accordance with the law. No matter how different the business households and businesses are, there must be a foundation standard or a basic ground for them.

By Huong Diu/ Ha Thanh

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