Don’t Let Businesses Fear That Growth Brings Endless New Burdens

A business owner who had increasing customers, revenue and opportunities to open more outlets was not celebrating growth. He was worrying about accounting, invoices, taxes and the obligations that would come with a larger operation.

That concern appears broader than one small business. Only 1.8% of household businesses in a Vietnam Chamber of Commerce and Industry survey said they planned to expand over the next two years. The figure suggests that many owners may see growth as a source of new administrative pressure rather than an unqualified opportunity.

Vietnam’s Finance Ministry has proposed a simpler tax method for household businesses and companies with annual revenue of up to 10 billion dong. Under the proposal, household businesses below the threshold could pay tax as a percentage of revenue, use a single accounting book and avoid recording expenses. A similarly simplified system is being considered for companies of comparable size.

The approach could also make it less intimidating for household businesses to become companies. Owners may not be avoiding their obligations, the article argues. They may instead imagine that formalization leads to a much more complicated world of procedures. Bringing businesses with similar revenue levels closer together in their compliance requirements could ease that transition.

The concern begins at the 10 billion dong boundary. A business earning 9.8 billion dong could receive a contract that lifts annual revenue to 10.3 billion dong. The extra sales should signal market acceptance and create room to hire workers, rent space, buy equipment or open another shop. But if crossing the threshold brings substantially more complex tax, accounting and management requirements, the owner must calculate whether the new contract is worth the added cost. The article warns that a line intended to simplify taxation should not become a line that teaches businesses to stop growing.

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I am not afraid of selling less. I am only afraid that growing will bring all sorts of new things to worry about.