Reducing cumbersome procedures

According to the report "Quicker business procedures in Vietnam: Reality and solutions”, procedures to start a business (based on the definition “Starting a business in the Doing Business 2020 Report) in Vietnam are today much simpler and more convenient than those in previous legal regulations (Law on Enterprises 2014 and 2005). According to surveys by the Vietnam Chamber of Commerce and Industry (VCCI), for many years in a row, the business registration procedure is always rated to have the fastest and steadiest changes by enterprises in the provinces, have the best connection to the information system, and apply the earliest interagency mechanism among other fields of procedures. And above all, behind these advances is a strong shift in thinking toward service for businesses. In addition, significant progress has been made, including the Law on Enterprises 2020, Decree 122/2020-ND/CP, Decree 22/2020-ND/CP on amendments to Decree 139/2016-ND/CP, or Decree 01 2021-ND/CP, expected to create new changes to speed up business registration procedures.

As of July 2021, Vietnam's latest business startup procedures, after being amended, have some fundamental changes. Particularly, more than half of procedures are reduced (abolishing procedures for making seals and notifying seal samples, updating business registration information with the Business Registration Office, license tax, and making reports by employers. Tax code is also assigned to the code of social insurance for employers which accordingly only need to carry out social insurance procedures for their employees). Besides, the business startup procedure also needs less time for the completion of invoice issuance. Currently, companies are urged and encouraged to use e-invoices. New companies, if IT conditions are met, are required to register to use e-invoices. Therefore, the procedure for approving the VAT invoice form (provided by taxation authorities) or notice of tax invoicing takes only two days instead of 5 to 10 days as before.

However, there are many obstacles in carrying out business startup procedures. Most companies are still hiring others to perform business registration services rather than do this on their own. Hiring external services helps them avoid hassles in studying procedures, contacting authorities and reducing repeated corrections. This shows that carrying out business startup procedures in practice in Vietnam is still inconvenient and there are many unclear points that easily lead to mistakes. Despite having no official statistics on the percentage of enterprises hiring third-party services to perform business startup procedures, according to interviews with providers of business registration and support services, most startups hire law firms or providers of business registration services to do this process for them.

In addition, business registration procedures are time-consuming in practice. According to current regulations, it takes three days for experts to answer document validity or ask for correction and supplementation. In case of correction and supplementation, applicants may need three more days to have valid documents. Besides, in some places, it is time-consuming to print, sign, stamp, and deliver the Business Registration Certificate. This time may be longer than licensing time.

Although the Law on Enterprises of 2014 abolishes industry declaration on the Business Registration Certificate, the Business Registration Office still requires companies to declare industry and has a procedure for notification of changing industry. Representatives of some consulting firms said that many employers find it difficult to declare the right business lines.

Notably, there are still many shortcomings in information technology applications. There are so many small platforms while information on online business registration gateways is not integrated.

Consistent and unified reform needed

To speed up business startup procedures in Vietnam, according to the report, the room for reforming current legal regulations, like cutting unnecessary procedures, is quite narrow. Therefore, in order to improve this area, it is necessary to ensure unity and consistency in the legal system. Tax and customs fields need to be reformed first.

Particularly, it is necessary to build a platform to be the only receiver of business registration information. Indeed, reforms are moving in this direction. However, businesses still have to use many different platforms to carry out some post-establishment procedures like those related to tax authorities and insurance for employees. For authorities, the management of many different platforms, administered by different agencies, makes it difficult to synchronize information. For businesses, it takes time to learn how to use, declare the same type of information multiple times, and interact with different authorities. Therefore, specialized agencies need to study ways to integrate current individual platforms, and establish a single receiver of business registration information, not only business establishment registration information but also procedures related to tax and insurance to enable enterprises to go into operation quickly after being licensed.

Besides, it is necessary to improve the quality of online business registration support services and rearrange the interface for easy access, by type of enterprise and by procedure. Designing the platform should be aimed at people who have never implemented business registration procedures before, because they are business owners, not lawyers or consultants. The information that users need is simple to understand, and specific and timely.

The population database of the Ministry of Public Security can be connected to the business registration database, allowing automatic authentication of personal information. Users do not need to scan personal documents and upload them to the system as it is now.