A chiken farm. Việt Nam now is home to more than 5.5 million household businesses, annually contributing about 30 per cent to GDP. —Photo phutho.gov.vn

HÀ NỘI — Household businesses need an open legal corridor for further development, according to experts.

Phùng Quốc Chí, director of the Department of Business Registration Management, emphasised that the household business sector plays an important role, making a significant contribution to national GDP growth.

According to the General Statistics Office, Việt Nam is home to more than 5.5 million household businesses, annually contributing about 30 per cent to GDP and creating millions of jobs.

The Ministry of Planning and Investment recently announced a detailed draft of a decree on household businesses to simplify administrative procedures and connect business registration procedures with tax registration for household businesses.

The development of this decree aims to create a favourable business environment for individuals and households to conduct production and business activities, significantly contributing to economic growth and improving people's lives, Chí said.

Kelvin Sergeant, Specialist on Job Creation and Enterprises Development at the ILO Decent Work Team for East and South-East Asia and the Pacific, said: “The current legal framework does not formally recognise them as economic entities. There has been a lack of attention and support for household businesses compared to other types of businesses.”

“The forthcoming decree concerning household businesses presents an opportunity to rectify these legal deficiencies and create a more conducive environment for their growth.

"There is a need to modernise the role of household businesses to clarify their legal status, connect them to existing social protection policies and other appropriate policies, and help them overcome their informality status.”

From the current decree, household businesses are divided into two types: household businesses registered by an individual and household businesses registered by family members, he said.

In practice, it seems the majority of household businesses are established by individuals rather than households. Therefore, some suggest that the criteria for establishing household businesses should include only individuals.

In international comparison, Việt Nam is almost unique in the registration of the household business sector, according to the ILO representative. In countries like the US, Brazil, or the Philippines, they use the individual business model. They also use a single tax policy called "monotax" to simplify business operations.

Regarding tax, Tạ Thị Phương Lan, deputy director of the Tax Management Department for Small and Medium-Sized Enterprises, Individuals and Household Businesses at the General Department of Taxation, said the tax authority identifies that all rights and responsibilities of a household business belong to an individual - the representative of the household business, not the household. 

In cases of disputes about rights and obligations with the tax authority, the family members want the individual, who is the representative of the household business, to take responsibility, not the other family members.

So, Lan has proposed that the decree clearly stipulate the rights, obligations, and responsibilities of household businesses, and it is necessary to clarify issues of social insurance, labour contracts, and wages. This aims to prevent situations where family members enjoy benefits, but responsibilities are assigned to the individual.

Regarding business registration, she proposed that the decree allow households to register in all fields if they conduct business in various fields, rather than registering only in the main business fields.

Additionally, Lan suggested that the draft should not stipulate an annual revenue of VNĐ100 million to identify low-income households. The General Department of Taxation is still considering this issue for adjustment.

She also emphasised that the Ministry of Planning and Investment should collaborate with other ministries, specifically the Ministry of Industry and Trade, to manage households involved in e-commerce or the sharing economy, and those providing services for the night economy.

The draft also needs to clarify the obligations of households that have conducted business but have not registered their business, or have registered their business but do not have a tax code. — VNS