Are household businesses subject to tax sanctions in Vietnam still entitled to assistance when being converted into small and medium-sized enterprises in Vietnam?

Regarding this matter, LawNet would like to answer as follows:

1. Are household businesses subject to tax sanctions in Vietnam still entitled to assistance when being converted into small and medium-sized enterprises in Vietnam?

According to the provisions of Clause 1, Article 16 of the Law on Support for Small and Medium Enterprises 2017, small and medium-sized enterprises (SMEs) converted from business households will receive assistance if the following conditions are fulfilled:

Article 16. Assistance for SMEs in conversion from household business to SMEs

1. An SME converted from a household business will receive assistance if the following conditions are fulfilled:

a) Before being converted to a SME, the household business has obtained the enterprise registration certificate (ERC) and is run in accordance with the regulations of the law.

b) The household business has been operating continuously for at least 01 year by the day on which the first ERC is issued.

Thus, an SME converted from a household business will receive assistance if the following conditions are fulfilled:

- Before being converted to a SME, the household business has obtained the enterprise registration certificate (ERC) and is run in accordance with the regulations of the law.

- The household business has been operating continuously for at least 01 year by the day on which the first ERC is issued.

In addition, currently, there are no regulations stipulating that household businesses subject to tax sanctions in Vietnam are not entitled to assistance when being converted into SMEs.

Thus, household businesses subject to tax sanctions in Vietnam are still entitled to assistance when being converted into SMEs if they meet the two conditions mentioned above.

2. Forms of assistance for SMEs in conversion from household business to SMEs in Vietnam

Pursuant to Clause 2, Article 16 of the Law on Support for Small and Medium Enterprises 2017, to create favorable conditions for the process of operation and development, the law has policies to support SMEs converted from household businesses including:

- Free consultancy and instruction on applications and procedures for the enterprise establishment;.

- Free consultancy and instruction on applications and procedures for business eligibility certification for conditional business lines (if any).

- Support for business registration and disclosure of business information: SMEs converted from business households that meet the application conditions are exempt from the first business registration fee at the business registration agency; Exemption from fees for publication of business registration content for the first time on the National Business Registration Portal.

- Exemption from fees for assessment and fees and licensing fees for the first license of business lines subject to conditions

- Exemption from licensing fees within 3 years from the day on which the first ERC is issued;

- Free consultancy and instruction on the tax administrative procedures and the accounting regime within 03 years from the day on which the first ERC is issued;

- Remission of land rental, land levy and the levy on non-farming land for a limited period of time in accordance with regulations of law on land.

- Remission of corporate income tax for a limited period of time in accordance with regulations of law on corporate income tax.

 The SME converted from a household business shall inherit all rights, obligations, and legal interests of the household business in accordance with the regulations of the law. If a household business is converted into a limited liability company or a joint stock company, the household business owner, with his/her entire property, shall be liable for the outstanding loans of the household business unless otherwise agreed by the parties in accordance with the regulations of the law.