"Liberating" the household economy, nurturing large enterprises

Ceramic production in the traditional craft village of Bat Trang commune. *Photo: Do Tam*

Many individual businesses are "afraid" to become enterprises.

Currently, the private economic sector in our country includes more than 940 thousand enterprises and more than 5 million business households in operation, contributing 85% of jobs in the economy. However, the contribution of business households to the state budget and economic growth is still limited.

Most household businesses currently operate in the informal sector, accounting for about 25-30% of the Gross Domestic Product (GDP), but are almost outside the macro-policy system, do not have access to formal finance, lack modern governance and a long-term development roadmap. The potential of this sector has not been exploited due to institutional and psychological barriers when household businesses do not have legal status, are discriminated against in terms of tax policies, accounting regulations, and access to capital.

In reality, many individual business households are “afraid” to become enterprises. Meritorious artisan Do Van Cuong, owner of a family-owned fine art wooden furniture business, Chairman of the Thiet Ung Craft Village Association, Thu Lam commune, Hanoi (formerly Van Ha commune, Dong Anh district), with nearly 30 years of experience and dedication to the craft village, shared: “When you are an individual business household, everything is simple; business registration is also easier, only requiring basic procedures such as a business registration certificate, no need to submit periodic financial reports or conduct audits. At the same time, a business household helps optimize operating costs, because it pays lump-sum taxes, no need to hire a professional accountant. When you become an enterprise, all activities must have invoices and documents, while our wood suppliers are mainly business households, and if there are invoices, they are just regular invoices.”

Doctor of Economics, expert Nguyen Van Hien, Vice Principal of Gia Dinh University, said that business households are not "keen" on becoming enterprises because they are worried that when they become enterprises, all business activities must be transparent and clear, so they may have to pay higher taxes, along with concerns about unexpected expenses.

Incentives are the key

To encourage individual households to become enterprises, many experts believe that it is necessary to build a national "one-stop shop" model, which comprehensively supports the conversion of business households into enterprises in the simplest way, from registration, accounting, tax, to electronic invoices in the initial stage. Along with that, it is necessary to promote propaganda; clearly analyze the advantages and difficulties; guide specific methods and procedures for converting from business households to enterprises.

In addition, there should be substantial incentive policies. Expert Nguyen Van Hien expressed his opinion that the State should have financial support policies such as reducing compliance costs, such as reducing or completely exempting business registration fees, costs of purchasing electronic invoices, costs of registering digital signatures, business license tax; exempting corporate income tax for a certain period of time; supporting training and developing business capacity; supporting access to credit and finance.

Along with that, accounting and tax work needs to be simple and easy to apply to help this subject reduce costs by not having to hire tax agents to declare taxes.

In addition, credit support packages can be applied to small and micro enterprises from converted business households through preferential interest rate packages from the Vietnam Bank for Social Policies or the Vietnam Bank for Agriculture and Rural Development.

According to many experts, individual business owners are often only concerned with ensuring income and daily life, rarely thinking about developing into large, modern, large-scale, professional enterprises. Therefore, innovation centers, business incubators at national, provincial and city levels need to have many activities and programs to support newly formed small and micro enterprises, improve thinking and knowledge about startups, innovation, and business strategy development through training and consulting.

Along with that, there are solutions to encourage the application of science and technology in business activities such as digital transformation; support for legal advice in business, tax accounting advice; support for technical advice, loans, especially connecting business networks, expanding markets, building brands, improving business management capacity, sales of business households and small and micro enterprises.

Dr. Nguyen Thi Cam Giang, Faculty of Finance (Banking Academy):

A crucial push to remove legal barriers

Promoting business households to transform into enterprises is to contribute to expanding business scale and increasing national competitiveness in the context of deep integration. The State needs to continue to improve the legal system, improve the capacity of management agencies and promote extensive communication through training courses, seminars, as well as direct consultation channels. Thanks to that, business households clearly understand the benefits, responsibilities and necessary steps of the conversion process.

Vietnam is facing a golden opportunity to transform small, fragmented businesses into large-scale enterprises with modern management capacity and to enhance its international competitiveness. Strong incentive policies, especially Resolution No. 68-NQ/TU, are groundbreaking in minimizing administrative procedures and exempting many types of fees and taxes during the start-up phase. This is an important push to remove legal and financial barriers, helping small and medium-sized enterprises develop sustainably on a transparent and effective basis.

Executive Director of the Faculty of Finance and Banking (Nguyen Trai University) Nguyen Quang Huy:

Management training for business households

It is necessary to launch a management training program for business households nationwide, divided into two levels. The basic level includes accounting, cash flow management, sales, customer care, legal registration. The advanced level includes brand building, digital transformation, human resource management, and scale expansion. Innovation centers and business incubators must be the pillars of creating an ecosystem by expanding their role from supporting technology startups to developing modern business households…; at the same time, bringing simple technology to business households.

Along with that, it is necessary to implement a model combining training - finance - legal support - market connection by training on digital management; legal advice, model conversion support; connecting business households with supermarkets and e-commerce platforms. Each province and city needs to build a network of centers to support business households in conversion, including full or partial scholarships, 1:1 expert companionship, connection with banks and micro-investment funds.

Ms. Tran Thi Ngoc Lan, fashion business (Tuong Mai ward):

There should be specific, accessible instructions soon.

The business model is usually family-based. Having gotten used to the old way of doing things, if we were to change to a business, we would be hesitant because of the requirements for operating the business, having to set up an accounting system, financial reports, and comply with many administrative procedures - things that we do not have enough resources to do.

When becoming a business, being granted a tax code, being able to issue invoices, expand scale, access official capital sources, participate in the supply chain... These are opportunities that business households cannot have. In addition, they can enjoy income tax incentives for many first years. Decree No. 70/2025/ND-CP requires that from June 1, 2025, business households with revenue of 1 billion VND/year or more use electronic invoices connected to cash registers, creating a premise for business households across the country to gradually stop paying lump-sum taxes from 2026. Therefore, the authorities should soon have specific, easy-to-access instructions so that business households that have not yet applied electronic invoices can fully prepare to meet the necessary requirements.

Huong Binh recorded

Source: https://hanoimoi.vn/giai-phong-kinh-te-ho-gia-dinh-uom-mam-doanh-nghiep-lon-715799.html