“Big Benefits for Small Businesses: Transforming into an Enterprise”

“The government has thoroughly discussed specific solutions, and significant incentives will be designed to encourage households to transition into enterprises,” said Minister of Finance Nguyen Van Thang, during his explanation to the National Assembly on May 16th regarding the draft resolution on special mechanisms for private economic development.

The National Assembly will vote on and approve this draft resolution tomorrow morning, May 17th.

Currently, Vietnam has over 5.2 million household businesses, generating 8-9 million jobs, equivalent to the number in the private company sector. According to Resolution 68 of the Politburo, Vietnam aims to have 2 million enterprises by 2030 and 3 million by 2045.

The private sector, including household businesses, currently contributes approximately 51% of GDP and over 30% of the state budget.

“We are piloting the elimination of lump-sum tax for households in certain areas, and we have found this policy to be very beneficial and worthy of official implementation,” added Minister Thang.

Currently, the three types of taxes and fees that households and individuals engaged in business activities must pay include the business license tax, value-added tax (VAT), and personal income tax. Additionally, they may be subject to environmental protection taxes, resource taxes, and others, depending on the nature of their business.

According to regulations, the business license tax ranges from VND 300,000 to VND 1 million, depending on revenue, for households with an annual turnover of over VND 100 million. They are also required to pay an additional 1.5%, consisting of 0.5% personal income tax and 1% VAT.

Regarding tax incentives, Mr. Thang stated that while it may lead to a reduction in revenue, it will provide businesses with opportunities to grow, contribute more to the state budget, and foster economic development.

According to Mr. Thang, some opinions suggest that eliminating the lump-sum tax could create a compliance burden for household businesses. However, he emphasized that doing so is the right decision, ensuring tax regime equality between enterprises and household businesses, and facilitating the transition of household businesses into enterprises.

The Minister of Finance stated that this policy has been piloted in certain areas and has proven to be effective, warranting its implementation as soon as possible.

“In addition, there are significant incentives to encourage household businesses to transform into enterprises. This is one of the key solutions to increase the number of enterprises, achieve the resolution’s objectives, and promote economic growth,” Mr. Thang added.

Commenting on this issue, Delegate Tran Hoang Ngan from Ho Chi Minh City stated that, on average, the country gains 30,000-40,000 new enterprises each year. To achieve the set targets, he emphasized the need for special solutions and supportive policies for household businesses to transition to the enterprise form.

“To facilitate the transformation of the 5.2 million household businesses into enterprises, the draft resolution proposes eliminating the lump-sum tax for this sector starting January 1, 2026. Regarding this matter, Minister of Finance Nguyen Van Thang affirmed that it is the right decision to ensure transparency in the operations of household businesses. One of the initial policies designed is for the state to support the cost of renting or purchasing common accounting software for household businesses to use free of charge,” said Delegate Ngan.

Providing further input on this matter, Delegate Nguyen Thi Viet Nga from Hai Duong suggested specifying the level and rate of state support for renting or purchasing digital platforms and common accounting software for household businesses, small businesses, and micro-enterprises.

Additionally, Mai Van Hai, Vice Chairman of the Thanh Hoa Provincial People’s Council, proposed additional policies to support the training of household businesses in utilizing digital platforms and software for tax declaration and payment. He recommended postponing the elimination of the lump-sum tax for household businesses until after July 1, 2026, to provide management agencies with more time to adequately prepare the necessary infrastructure.