Many household businesses in HCM City are reluctant to formally register as businesses despite authorities’ inducements. (Photo: tuoitre.vn)

HCM City (VNS/VNA) - More than a year after it rolled out support policies to help household businesses become enterprises, only 3,950 out of 250,000 have done so, the Ho Chi Minh City Department of Taxation has said.

Tran Thi Thanh Phuong, Director of Phuong Cat Tax Agency, said that tax agencies have offered free tax registration and tax return filing services to new enterprises and household businesses, under the department’s programme to support new enterprises.

Free counselling was offered in all districts, including outlying districts like Nha Be and Binh Chanh, she said.

For new enterprises, registration and certain annual fees for the first three years are waived under the 2017 Law on Supporting Small to Medium Businesses.

The city’s authorities have organised 250 counselling and encouragement events to raise awareness among people running household businesses.

But only 3,950 have upgraded their business status, with many others being reluctant to become enterprises since it could entail paying higher taxes and social insurance.

Mac Quoc Anh, Deputy Director and General Secretary of the Hanoi Small and Medium Enterprises Association, said some of the businesses might also want to remain being household firms since it would help them conceal their true income.

Nguyen Nam Binh, deputy chief of the department, admitted that many of the owners may also not be fully aware of enterprise-related regulations and procedures such as enterprises registration and keeping proper records.

Some household firms also find these regulations too complicated and prefer to stay small so that they do not have to deal with enterprise responsibilities such as obligations to employees or implementing regulations on environment, noise reduction or fire fighting.

Nguyen Duc Nghia, head of the HCM City Taxation Agency Club, said tax procedures are too complicated and enterprises often have to hire service providers, adding that the procedures need to be simplified to make them easier for small and new businesses.

Phuong said policies to support small and medium-sized enterprises are not well developed.

According to the department, there are many household businesses that are more than capable of becoming enterprises, including over 420 that employ more than 10 staff, which is illegal according to the current law, 14,800 that use invoices and over 21,000 with monthly revenues of 50-100 million VND (2,200-4,400 USD).

The city aims to have 1 million enterprises by 2020.-VNS/VNA