Recently, the Government of Vietnam has issued the Decree No. 01/2021/NĐ-CP on enterprise registration. There have been many new changes in business household registration in Vietnam from 2021, specifically as follows:
Article table of contents
1. Household is not the household business’ owner
According to Clause 1 Article 79 of the Decree No. 01/2021/NĐ-CP (effective from January 04, 2021), a household business is established by:
- an individual;
- family household members that shall take responsibility for business operations of the household business with all of their property; if a household business is established by members of a family household, one of them shall be authorized to act as the representative of the household business.
Compared to provisions according to Clause 1 Article 66 of the Decree No. 78/2015/NĐ-CP (expires from January 04, 2021), a household business is:
- owned by an individual;
- owned by a group of individuals being Vietnamese citizens from 18 years of age or older, have full civil capacity;
- owned by a household.
It can be seen that from 2021, one of the household members shall be authorized to act as the representative of the household business instead of that household. Provision on a household business owned by a group of individuals is also abolished.
2. Amending cases not allowed to establish household business
According to Clause 1 Article 80 of the Decree No. 01/2021/NĐ-CP, any individual or family household member that is a Vietnamese citizen and has full legal capacity as prescribed in the Civil Code of Vietnam shall have the right to establish household businesses, except the following cases:
- Minors; people with limited legal capacity; incapacitated people; people having difficulties in controlling their behaviors;
- People who are facing criminal prosecution, kept in temporary detention, serving an imprisonment sentence, serving an administrative penalty in a correctional institution or rehabilitation center, or is prohibited by the court from holding certain positions or doing certain works;
- Other cases prescribed by relevant laws.
Compared to provisions according to Clause 1 Article 67 of the Decree No. 78/2015/NĐ-CP, it only states that every Vietnamese citizen from 18 years of age or over, has full legal and civil capacity, every household is entitled to establish business households and has the responsibility to register business households.
Thus, the Decree No. 01/2021/NĐ-CP of the Government of Vietnam has amended cases that are not allowed to establish household business from January 04, 2021.
3. Clearly separate the rights and obligations of business household owners and household members
According to Article 81 of the Decree No. 01/2021/NĐ-CP, the rights and obligations of owners of household businesses and family household members applying for household business registration are specified as following:
- The owner of a household business shall fulfill tax and other financial liabilities, and perform business operations of the household business in accordance with regulations of law.
- The owner of a household business shall represent the household business in civil proceedings, as the plaintiff, defendant, person with relevant interests and duties in front of the court or arbitral tribunal, and perform other rights and obligations as prescribed by law.
- The owner of a household business may hire another person to manage and direct business operations of the household business. In this case, the owner and other family household members applying for household business registration remain liable for debts and other asset-related liabilities arising from business operations.
- The owner and other family household members applying for household business registration shall be liable for all business operations of the household business.
- They shall perform other rights and obligations as prescribed by law.
In comparison with the Decree No. 78/2015/NĐ-CP, there was absolutely no regulation on this issue.
4. Another person may be hired to manage and direct business operations
According to Clause 3 Article 81 of the Decree No. 01/2021/NĐ-CP, the owner of a household business may hire another person to manage and direct business operations of the household business.
Note: In this case, the owner and other family household members applying for household business registration remain liable for debts and other asset-related liabilities arising from business operations.
This is a completely new regulation compared to the Decree No. 01/2021/NĐ-CP.
5. 04 conditions for issuance of the household business registration certificate
According to Article 82 of the Decree No. 01/2021/NĐ-CP, a household business shall be issued with the certificate of household business registration if all of the following conditions are satisfied:
- The registered business lines are not banned;
- The name of the household business is conformable with regulations of Article 88 hereof, to be specific:
+ The name of a household business shall consist of two elements in order: The phrase “Hộ kinh doanh”; the proper name.
+ The proper name consists of letters in the Vietnamese alphabet, the letters F, J, Z, W, digits, and symbols.
+ It is prohibited to use words or symbols that contradict Vietnam’s tradition, history, culture, and ethics in the proper name of the household business.
+ The name of a household business must not consist of the phrase “công ty” or “doanh nghiệp”.
+ The proper name of the household business must not coincide with the name of another household business which has been registered within the same district.
- The application for household business registration is valid;
- Fees for household business registration are fully paid.
6. Household business may carry out business operations at multiple locations
According to Article 86 of the Decree No. 01/2021/NĐ-CP, the business location of a household business is the place where specific business operations are carried out. A household business may carry out business operations at multiple locations but must select a location as its headquarters and notify it to tax authorities and market surveillance authorities at places of other business locations.
Previously, according to Article 72 of the Decree No. 78/2015/NĐ-CP, business households doing mobile business are entitled to do business outside the registered location. The registered location and the actual business locations must be notified to the tax authority and market surveillance authority.
Thus, from January 04, 2021, not only business households doing mobile business but also all businesses may carry out business operations at multiple locations.
7. Time limit for registration of change of business household
According to Clause 1 Article 90 of the Decree No. 01/2021/NĐ-CP, the owner of the household business shall apply for registration of changes to the certificate of household business registration with the business registration authority within 10 days from the occurrence of such changes.
Compared to Article 75 of the Decree No. 78/2015/NĐ-CP, there are only provisions on order and procedures without the time limit for registration of change of business household registration information.
Thus, from 2021, within 10 days from the occurrence of such changes, the owner of the household business shall apply for registration of changes to the certificate of household business registration with the district-level People’s Committee to which the business household is relocated.
8. Household businesses can suspend their business indefinitely.
According to Clause 1 Article 91 of the Decree No. 01/2021/NĐ-CP, if the suspension period is 30 days or longer, the household business must send a notification to the business registration authority of the district where it was registered and its supervisory tax authority.
Compared to provisions at Clause 1 Article 76 of the Decree No. 78/2015/NĐ-CP, if the suspension period is from 30 days and longer, the business household must send a notification to the business registration authority of the district and the supervisory tax authority. In particular, the suspension period must not exceed one year.
It can be seen that, the Decree No. 01/2021/NĐ-CP of the Government of Vietnam has abolished provision on the suspension period, which means that from 2021, household businesses can suspend their business indefinitely.
Le Vy
