Who has the right to establish business households? Is there a penalty for not registering to establish a business household?

1. What is a business household?

According to Article 79 of Decree 01/2021/ND-CP regulating business households as follows:

“Article 79. Business households

1. A business household is registered by an individual or household members and is responsible for all of their assets for the household’s business activities. In case household members register a business household, one member shall be authorized to act as the business representative. The individual who registers the business household, the person authorized by the household members to act as the business household representative, is the business household owner.

2. Households engaged in agricultural, forestry, fishery, salt production and street vendors, snacks, traders, mobile businesses, seasonal businesses, and low-income service providers do not have to register as business households, except in the case of doing business in conditional business investment sectors. The People’s Committees of provinces and centrally run cities regulate low income levels applicable on a local scale.”

Accordingly, a business household is established by an individual or household members and is responsible for all of their assets for the household’s business activities. In case household members register a business household, one member shall be authorized to act as the business representative. The individual who registers the business household, the person authorized by the household members to act as the business household representative, is the business household owner.

2. Who has the right to establish business households?

According to Article 80 of Decree 01/2021/ND-CP stipulating the right to establish business households and the obligation to register business households as follows:

“Article 80. Right to establish business households and obligation to register business households

1. Individuals and household members who are Vietnamese citizens with full civil act capacity according to the provisions of the Civil Code have the right to establish business households according to the provisions of this Chapter, except for the following cases:

a) Minors, people with limited civil capacity; people who have lost their civil act capacity; people with difficulty in cognition and behavior control;

b) People who are being prosecuted for criminal liability, detained, are serving prison sentences, are serving administrative measures at compulsory drug treatment facilities, compulsory education establishments or are banned by the Court from holding certain positions, practicing professions or doing certain jobs;

c) Other cases as prescribed by relevant laws.

2. Individuals and household members specified in Clause 1 of this Article are only allowed to register one business household nationwide and are entitled to contribute capital, buy shares, and purchase capital contributions in the enterprise as individuals.

3. An individual or household member registering a business household cannot simultaneously be the owner of a private enterprise or a general partner of a partnership unless otherwise agreed by the remaining partners.”

Accordingly, individuals and household members who are Vietnamese citizens with full civil act capacity according to the provisions of the Civil Code have the right to establish business households according to the provisions of this Chapter, except for the following cases:

+ Minors and people with limited civil capacity; people who have lost their civil act capacity; people with difficulty in cognition and behavior control;

+ People who are being prosecuted for criminal liability, detained, are serving prison sentences, are serving administrative measures at compulsory drug treatment facilities, compulsory education establishments or are banned by the Court from holding certain positions, practicing professions or doing certain jobs;

+ Other cases as prescribed by relevant laws.

3. Is there a penalty for not registering to establish a business household?

According to Article 62 of Decree 122/2021/ND-CP stipulating fines for violations of business household registration as follows:

– Fine from 5,000,000 VND to 10,000,000 VND for one of the following acts:

+ Individuals and household members registering more than one business household;

+ Not allowed to establish business households but still establish business households;

+ Do not register to establish a business household in cases where registration is required according to regulations;

+ Do not register changes to the content of the Business Household Registration Certificate with the district business registration authority within 10 days from the date of change.

– Fine from 10,000,000 VND to 20,000,000 VND for one of the following acts:

+ Untruthful or inaccurate declaration in business household registration dossier or registration dossier to change the content of business household registration.

In case there is a violation of tax laws, it will be handled according to regulations on sanctioning administrative violations in the tax field;

+ Continue doing business in conditional business lines when there is a temporary suspension request from the district business registration authority.

– Remedial measures:

+ Forced registration of establishment of business households according to regulations for violations specified in Point c, Clause 1 of this Article;

+ Compulsory registration to change the content of the Business Household Registration Certificate in case of unregistered violations specified in Point d, Clause 1 of this Article.

Accordingly, failure to register to establish a business household in cases where registration is required according to regulations may result in a fine from 5,000,000 VND to 10,000,000 VND, and forced registration of establishment of a business household according to regulations.