Determining the time of business activities of business households according to the law

1. What is a business household?

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

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

– 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 locally.

2. How is the right to establish a business household and the obligation to register a business household regulated?

Pursuant to Article 80 of Decree 01/2021/ND-CP stipulating the right to establish a business household and the obligation to register a business household, specifically:

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

+ Minors, people with limited civil act 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, serving prison sentences, serving administrative measures at compulsory drug treatment facilities, compulsory education establishments, or are banned by the Court from holding positions, practicing certain professions or doing certain jobs;

+ Other cases as prescribed by relevant laws official.

– 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.

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

3. When does a business household have the right to do business?

Pursuant to the provisions in Clause 3, Article 82 of Decree 01/2021/ND-CP, the following instructions are recorded: 

“Article 82. Business household registration certificate

[…]

3. The information on the Business Household Registration Certificate is legally valid from the date of issuance of the Business Household Registration Certificate and the business household has the right to operate business from the date of issuance of the Business Household Registration Certificate, except in cases of conditional business investment and business lines. In case a business household registers the start date of business operations after the date of issuance of the Business Household Registration Certificate, the business household has the right to operate business from the date of registration, except in cases of conditional business investment and business lines.

Accordingly, business households have the right to operate business from the date of issuance of the business household registration certificate. Current regulations do not record cases where business households start business operations before being granted a business household registration certificate. Thus, in general principle, for cases prescribed by law, organizations and individuals must register their business households before conducting business activities and the business period is determined from the date of issuance of the Business Household Registration Certificate. 

4. In case a business household must register but does not register, will there be a penalty?

Pursuant to Article 62 of Decree 122/2021/ND-CP stipulating penalties for violations of business household registration as follows: Failure to register to establish a business household in cases where registration is required according to regulations will be subject to administrative sanctions. 

– 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;

+ Do not have the right to establish a business household but still establish a business household;

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

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

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

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

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

+ Continuing to operate conditional business lines when there is a temporary suspension request from the district-level business registration authority.

– Remedial measures:

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

+ Forced registration to change the content of the Business Household Registration Certificate in case it has not been registered for violations specified in Point d, Clause 1 of this Article.

Accordingly, the act of not registering to establish a business household in cases where registration is required according to regulations will be subject to administrative sanctions, fines from 5,000,000 VND to 5,000,000 VND to 10,000,000 VND according to point c, clause 1, Article 62 of Decree 122/2021/ND-CP.