Start-ups need more support

Many businesses have faced many difficulties related to administrative procedures and tax payments. Therefore, the administrative reform is necessary to provide favourable conditions for entrepreneurs to improve their competiveness.

Currently, VnTrip is the only firm in Vietnam providing online booking services via both web and mobile applications. But since its inception, this start-up has encountered many difficulties when competing with the international booking service providers such as booking.com and agoda.

Dang Hong Trang, Head of Trade Office of Vntrip Company said: "There are some taxes which many foreign companies providing similar services don’t have to pay. Therefore, their product prices are always lower than ours".

Many start-up entrepreneurs face difficulties in advertising. As one of the largest e-commerce operators in Vietnam, Caganu spends thousands of dollars a month buying advertising services from Facebook and Google. However the invoicing doesn’t match Vietnamese laws. Therefore, according to regulations, the amount spent for advertising will not be regarded as reasonable expenses in the tax calculation.

Nguyen Quang Huy, Chairman of Caganu Group said: "If 2,200 USD is invoiced, it will be allowed to be counted in the cost planning. The company’s profits are equal to total revenue minus total cost. When total costs are higher, the total tax payment will be lower. However, the 2,200 USD in this instance is not counted in the cost planning, then businesses like us have to pay more taxes. It will reduce our profitability".

According to the Vietnam Chamber of Commerce and Industry, the legal frameworks designed for the start-up entrepreneurs are still opaque and overly-complicated.

Dau Anh Tuan, Head of Legal Department, Vietnam Chamber of Commerce and Industry said: "I think that administrative procedures in the early stages for start-ups are very important. Because the entrepreneurs have no experience of business and law, the administrative procedures in the early stages should be transparent and simple. This would help to encourage entrepreneurs to develop their ideas".

The government has set an ambitious target the country will have at least one million enterprises by 2020, doubling the current number. Administrative reforms will further provide favourable conditions for the development of the start-ups.