Solving the issue on the budget and business interests

Encouraging individual business households to transform into enterprises. Photo: T.H

Accounting for 2% of State revenues

According to the Deputy Chairman of the Ho Chi Minh People's Committee Tran Vinh Tuyen, there are 250,000 individual business households in Ho Chi Minh City, but they only contribute 2% of the total City’s revenue. Currently, the management of individual business households is implemented by manual methods, causing overload for the City’s administrative apparatus. A Tax officer manages about 500 individual households.

As per current regulations, individual business households pay the annual presumptive tax based on revenues fixed in advance. These revenues are determined based on the revenues reported by the trader and verified by Tax officers and unified and discussed by relevant parties in the Tax consultant teams of wards and communes and publicized for people who are interested. Individual business households can purchase the invoice from the Tax authorities to issue for customers. From beginning of 2016, each invoice which is issued must pay 1.5% of the revenues on the invoice.

From the actual investigation at wholesale markets in Ho Chi Minh City, at a recent meeting with the units under the City’s Finance and representatives of the districts, the Secretary of the Ho Chi Minh City Party Committee, Dinh La Thang stated that Finance needed to review the presumptive tax, why the number of individual business households is ten times more than the number of enterprises, they only contribute 2% of the total City’s revenues, which requires Finance to consider whether Tax officers collude with the business households to reduce Tax or not? And what is the role of the Tax Consultant Council in wards and communes for the presumptive tax?

During the past time, the Ho Chi Minh City’s leaders repeatedly directed the districts to persuade individual business households to establish enterprises. This is considered as one of the measures to transparentize the Tax collection and Tax payment of subjects with high risk of tax evasion, although revenues accounted for small rate in the total.

The Vice Chairman Tran Vinh Tuyen requested the Tax sector to persuade and encourage and create favorable mechanisms for individual business households to transform into enterprises. Firstly, reviewing to terminate the presumptive tax in the 3 wholesale markets in the Ho Chi Minh City.

Must be attractive when become enterprises

According to the leaders of Ho Chi Minh City, the addition of new enterprises transformed from individual business households also contributed to actualize the target of adding more than 50,000 new enterprises in 2017 and 500,000 enterprises by 2020 in Ho Chi Minh City. "However, the transformation of individual business households into enterprises also needed to solve the problem why they are afraid of becoming enterprises, so we should create favorable conditions for them to see clearly the benefits when transforming into enterprises and be brave to transform"- Secretary Dinh La Thang directed.

According to the analysis of experts, the model of business household has become a specific characteristic of Vietnam's economy. The number of business households is very big contributing to resolve the employment of the economy. If business households are obliged to transform into enterprises to purchase invoices, there will be many families give up the business because they do not meet the standards and requirements for enterprises such as: the standards of accounting and organizational management, etc. This is the reason leading to the practical difficulties for transformation goals from the business household into an enterprise.

According to leaders of the Ho Chi Minh City Department of Planning and Investment, through surveying shows that the individual business households hesitate to become enterprises due to the higher operating expenses. The industries which had business licenses have to apply for a business license again, being also obstacles.

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The Director of the Ho Chi Minh City Tax Department Tran Ngoc Tam said that small-scale business households continue to keep their business like this. But the business households which regularly use the invoice need to transform into enterprises. When becoming an enterprises they will print, use and declare and pay tax and post audit the invoice by themselves. The Tax authorities committed to support the information and procedures on accounting and tax for them.

The Ho Chi Minh City Department of Planning and Investment said, the Department collaborated with districts to collect and classify and assess the operation of individual business households and building the general plan and guide the transformation business model for them. The Department worked with the Tax sector and the Insurance sector to review and adjust and supplement the appropriate regulations and proposed policies to encourage business households to transform their business model, and provided support solutions. Procedures for transformation are also quickly handled to facilitate for the individual business households.