Ho Chi Minh City has applied measures to encourage business households to turn themselves into companies, but the results have not met expectations, according to the municipal government.

Illustrative image (Photo: VNA) 

Figures from the municipal People’s Committee show that the number of business households shifting to company status has fallen in recent years, from 3,675 in 2017 to 3,380 in 2018, and 1,621 in the first eight months of 2019.

Nguyen Duc Nghia, chairman of the HCM City Tax Agent Club, said despite the efforts made by the political system, the Government and society, the number of start-ups and household businesses turning into enterprises was still not high.

He also pointed to difficulties in encouraging households to form companies, saying that most households are small and that owners are confused about complicated accounting and tax declaration procedures.

Most businesses do not clearly understand tax policies.

In addition, there have been no specific guidelines on implementing provisions concerning capital and tax in the Law on Support for Small and Medium-sized Enterprises.

One of the obstacles hindering households from forming companies is the increase in legal obligations and indirect costs.

Moreover, a lack of business management skills has also caused business households to become less confident.

To overcome the problems, standing vice chairman of the municipal People's Committee Le Thanh Liem has assigned the city's Tax Department to meet owners of newly established businesses and provide information related to new tax policies.

He asked the HCM City Union of Business Associations to work with the City Tax Agent Club to disseminate information about tax policy to enterprises so they can avoid committing violations of the law.

At the same time, certain agencies must take effort to effectively implement the Government Directive No 02 on supporting and developing enterprises in 2020, he said.

“Household businesses enjoy fixed tax amounts, so becoming a company means they must pay more tax. It's not easy to encourage households to turn into companies, so the association and tax authorities should offer more support.”

The city targets having half a million enterprises by 2020. Experts said there are three main sources for business development: new startup firms, enterprises expanding their operations, and business households developing into companies.

In recent years, local departments, agencies and districts have implemented specific solutions to support and encourage business households to turn themselves into enterprises.