HÀ NỘI — The Ministry of Finance has proposed an exemption of corporate income tax in the first two years for newly established enterprises that have been transformed from household businesses.

Under the proposal, the corporate income tax exemption period is will begin from the first year the enterprise generates taxable income.

To enjoy the corporate income tax exemption, household businesses must ensure that they have properly registered and operate in accordance with legal regulations. The households must also do business continuously for at least 12 months.

Newly established enterprises must also have registered their business for the first time to qualify for the tax incentive.

The Government is encouraging household businesses to transform into enterprises as part of an effort to reach its target of two million firms operating in the country by 2030.

A report from the Ministry of Finance showed the country had about 940,078 operating enterprises as of early this year, of which nearly 98 per cent were small and medium-sized enterprises. Việt Nam therefore needs to see another 1.1 million new companies added within the next five years in order to reach its goal. 

Experts believe there must be more solutions to encourage household businesses to make the change to enterprises.

Deputy General Secretary of the Việt Nam Chamber of Commerce and Industry Đậu Anh Tuấn said that the country currently has about 5.2 million household businesses. If only one-third of them make the switch to enterprises, seeing more than one million new firms added over the next five years could be feasible. — VNS/BIZHUB