Ha Noi Taxation Department: Actively encouraging business households to upgrade to enterprises

VCN- In the first half of 2017, in Hanoi, there were more than 152,000 business households operating, however, the number of business households that moved to current businesses only accounted...

VCN- In the first half of 2017, in Hanoi, there were more than 152,000 business households operating, however, the number of business households that moved to current businesses only accounted for a very small percentage.

Individual business households have been large, but the tax contribution to total revenues has been quite low (less than 2%), while the tax office is currently spending a lot of manpower on the business. In order to promote business more and more transparent, one of the measures is to encourage business households to upgrade to enterprises. Moreover, in order to achieve the goal of 2020 that Hanoi has an addition of 200.000 enterprises, in addition to the number of newly established enterprises every year, there is a need for a large number of enterprises which are transformed from business households. Nevertheless, it is difficult to mobilize and encourage business households.

According to Mr. Mai Son – the Deputy Director of the Hanoi Taxation Department, there are many reasons that make business households do not want to upgrade to enterprises. Specifically, business households employ more than 10 workers with a high turnover do not want to upgrade to enterprises because they are operating in the traditional family business style, do not want to expand the scale; others do not want to upgrade to enterprises because they are afraid to carry out accounting procedures, tax declaration monthly; conditional business license, such as a certificate of food hygiene and safety, to meet the safety and security requirements, etc. More importantly, if they upgrade to enterprises, they must have accounting books, while they have unqualified employees. In addition, many business households get goods from many establishments but few of them can provide invoices to legalize inputs. A more profound cause that makes business households not to have the motivation to switch is that no one needs to get a bill so the business households do not have to upgrade to enterprises. Business individuals will only voluntarily upgrade to enterprises when all buyers ask the sellers to present invoices.

Moreover, when operating in the form of business households, the names of business households are only checked within the district so the names rarely coincide. When upgrading to enterprises, they must review the name on the whole country because it is easy to duplicate. Meanwhile, if they change to another name, it will greatly affect the business operations. In addition, a number of business households said that in the field of conditional business, even if the certificate has been qualified in the district but if they upgrade to enterprises, they will be forced to convert certificates issued by the city’s provincial departments, procedures are more difficult, etc. In fact, many business households want to “hide themselves” in the small business scale because they do not want to do current obligations include the purchase of social insurance for employees, or simply because of “hesitation” to change.

Recently, the Hanoi Taxation Department has introduced many solutions to support small and medium enterprises, micro enterprises, business households and achieved many positive results, bringing satisfaction to people and taxpayers. The Hanoi Taxation Department is developing the project “Supporting start-up businesses, small and medium enterprises in the period 2017-2020 ” with the aim of providing and timely supporting legal information and solutions related to policies, initial tax procedures, services for newly established enterprises; spreading propaganda, advocacy to support business households to upgrade to enterprises to ensure the business households to be aware of the benefits when upgrading to enterprises. Through this project, the tax office will collect information on problems related to tax policies and procedures of newly-established enterprises, thus having a plan to support enterprises in a practical manner.

As for the solutions coming, Mr. Mai Son said: The unit will continue to propagate so that the households realize the practical benefits when upgrading to enterprises and these benefits must be greater than the cost, enhancing the status, expanding business production, easily access to capital. The Hanoi Taxation Department will strengthen the conference experience sharing of successful households or legal procedures; open a telephone support line, provide information and answer questions about taxation for households intending to upgrade to enterprises at the Office of the Taxation Department and 30 Taxation Branches in districts and towns.


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