More Regimes for Enterprise Registration Encouragement

In spite of not yet officially being brought into force, Circular 47 on collection and payment rates and regimes, management and use of charges for provision of enterprise information and fees for enterprise registration is expected to reduce administrative procedures, especially in time and costs in business registration.

In the first six months of 2019, Vinh Phuc province had nearly 600 new enterprises registered for establishment, totaling over 10,100 enterprises with a combined capital of more than VND93 trillion, exceeding the target of 10,000 enterprises as set for 2020. To have this result, in addition to seriously implementing governmental mechanisms and policies, Vinh Phuc has pushed administrative procedure reform, especially business procedures. Specifically, the time for issuing investment certificates has been slashed by 30-50% compared to the time specified in the Investment Law; and the time of issuing business registration certificates has been reduced to three working days from five. In some cases, results are immediately returned to applicants if documents are legal and sufficient. Planning policies and administrative procedures are made clear and transparent on mass media.

In fact, after transforming into an enterprise, a business household will have many advantages: The brand will be enhanced; production/business capacity can be expanded, and images will be enhanced; corporate income tax will not be taken in case of no profit and accumulated loss will be rolled over to the following year; easily controlled costs and revenue will help share profit to shareholders; and access to bank loans will be much quickened. Especially, according to the Enterprise Law 2014, from July 1, 2015, business households that employ 10 workers or more must register for enterprise establishment. However, the transformation from business households to enterprises remains a hard-nut-to-crack issue for many localities. At present, the country has about 3.3 million business households eligible for enterprise establishment.

In Vinh Phuc province, thousands of business households are eligible to be upgraded to enterprises but they are yet to make a transformation because they are hesitant with accounting, financial reporting, invoicing and bookkeeping policies subject to a company plus more complicated administrative procedures than those applied to business households like insurance, labor and fire prevention, which force them to spend more for business operations.

To remove difficulties and encourage business establishment, since late 2017, the Ministry of Finance has issued many circulars on exemption and reduction of many types of fees and charges in order to stimulate them to be upgraded into enterprises. Most recently, in August 2019, the ministry issued Circular 47 on collection and payment rates and regimes, management and use of charges for provision of enterprise information and fees for enterprise registration. Accordingly, from September 20, 2019, a number of business registration fees are significantly reduced. Specifically, the fee for enterprise registration - including fees for first time issue, revised issue, changes in the content of enterprise registration certificate and operation registration certificate of branches, representative offices, and business locations - will be VND50,000 each, 50% lower than the rate applied under Circular 130 of the Ministry of Finance.

In addition, Circular 47 stipulates a reduction in fees for disclosure of business registration to VND100,000 each time, instead of VND300,000. At the same time, five subjects that are exempted from fees and charges: Enterprises supplement or change address information due to changes in administrative boundary; enterprises register for dissolution, temporary business surrender, operational termination of branches, representative offices and business locations; enterprises register business via electronic network; enterprises provide information at the request of State agencies; and small and medium-sized enterprises (SMEs) converted from business households are exempt from fees of first enterprise registration and first information provision.

Hopefully once enacted, Circular 47 will create positive effects and stimulate the development of business entities.

Bich Phuong (Vinh Phuc Electronic Information - Communication Portal)