Proposal to bring a household business into a business type: Should it or not?

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Illustration. Source: Internet

New type of business

On April 4, in Hanoi, Vietnam Chamber of Commerce and Industry (VCCI) in collaboration with the Central Institute for Economic Management (CIEM) organized a seminar to study the legal framework for business households according to Enterprise Law.

Speaking at the talk, Dr. Vu Tien Loc, Chairman of VCCI, said that all amendments to legal documents must be based on ensuring equality in business, so the introduction of legal provisions for business households must ensure this. The current legal framework does not guarantee freedom and equality for business households, these households are still "tied up" with less protection from disputes and have difficulties in accessing capital, while they contribute significantly to the national GDP.

In the context of integration, every economy can develop and participate in the global value chain, Dr. Vu Tien Loc said that it is necessary to upgrade and facilitate business households to operate; the choice of business in any form is the right of the trader but the rights and responsibilities must be ensured.

"We have to recognize a household business as a type of enterprise, the Law on Enterprises currently has 4 types; one more type should be added as a registered individual business household. This means that businesses do not have to convert or have to change their names, but are protected on a legal basis”, Mr. Vu Tien Loc stressed.

Economic expert Le Duy Binh agrees, saying that individual business households are contributing up to 30.5% of GDP and creating jobs for about 8.7 million workers nationwide. However, he said that, proposing to bring the type of individual business household into an enterprise in the Enterprise Law would indeed cause difficulties for many.

Mr. Binh suggested that those who have the initial difficulties with this proposal are probably the Drafting Committee of the upcoming revised Enterprise Law; by registering an individual business household, to be considered a type of enterprise in the Enterprise Law will not guarantee the legal status of business households.

“The Enterprise Law has regulations on the form of private enterprises (essentially co-owned enterprises, individual enterprises). But individual business owners have not chosen this form but have chosen individual business households. It is a challenge for the Drafting Committee or legislators to explain the difference between the current form of private enterprise and the form of an individual business enterprise,” Mr. Binh said.

Meaningless?

According to Lawyer Tran Vu Hai, the idea that bringing individual business households into the Enterprise Law with the purpose of helping and supporting development is not practical. What kind of support is available to small and super-small enterprises or if there is a mechanism, most of these businesses are not aware of them and do not care about them.

However, Lawyer Truong Thanh Duc, Chairman of Member Board of BASICO Law Company, said that from 2006 and 2014 onwards, all conditions for establishment and operation of enterprises in general and private enterprises in particular have been removed, no different from the establishment of a business household. Therefore, the existence of "business households" is no longer reasonable.

He proposed that the solution is not a transfer or a non-conversion option, but a recognition that the business household has business registration and has reached a certain scale as an enterprise.

According to Mr. Le Duy Binh, the formalization and enhancement of the legal status of business households will require other amendments of the Enterprise Law plus a reasonable roadmap to oblige some economic objectives. Individual businesses, while reducing compliance costs, improving benefits and making business households clearly see the benefits compared to the cost of registering under the Enterprise Law rather than registering in the business form.

Businesses and business households are ready to use e- invoices

Dr. Vu Tien Loc said that VCCI will report to the Government and the National Assembly for a favorable proposal; but the view is that it is impossible for business households to operate in the current legal framework, VCCI will propose many options.