in Vietnam recovered quickly.

The rest of the paper proceeds as follows. Section 2 introduces the background of household businesses in Vietnam and the main data sets employed in this paper. Section 3 presents our methodology to estimate the impacts of COVID-19 on household business survival. Section 4 discusses the results and Section 5 concludes.

# **2 Household Businesses in Vietnam**

In Vietnam, a household business (HB) is a firm run by a household or family that employs fewer than ten workers and operates in a fixed location (usually at their own residential premises). All HBs must register with the Department of Taxation, which operates under the Ministry of Finance, for a tax identification (tax ID) and pay taxes if their annual revenue exceeds 100 million Vietnam dong (VND), or approximately 4,300 USD.<sup>6</sup> Household businesses do not face stringent financial oversight like enterprises which operate at a larger scale and are required to house an accountant as well as to prepare official accounting documents. Its annual lump-sum tax payment, usually remitted at the beginning of a fiscal year in January, is often calculated as a percentage of annual revenue, and comprises annual license tax, value added tax (VAT), and personal income tax (PIT).<sup>7</sup>

## **2.1 Household business tax data**

We analyze a high-frequency tax census that comprises all tax-registered household businesses in Vietnam since January 2018. We retrieved historical tax filing records of household businesses from the official online portal of the Department of Taxation.<sup>8</sup> Pending reporting delays, this information from the Tax Department allows us to tabulate a complete set of tax filings in the country at the commune-month level, between January 2018 and August 2020.<sup>9</sup> Each household business is responsible to file and pay one annual lump-sum tax within a fiscal year. We use the (change in) tax filing numbers as a proxy for the (changes in) number of tax-registered household businesses each month. For brevity, we refer to this data set as the “household business tax census” (“HBTC”). Beyond the regular annual filings reported in January each year, the tax portal also keeps separate retrievable records of several types of irregular filings. We focus on two such indicators directly related to firm exit: the number of tax fillings for (i) permanent business closure, and (ii) temporary suspension. While the former provides a measure of firm survival

> 6See Article 1, Decree 92/2015/ND-CP.

> 7The license tax is a fixed proportion based on revenue brackets. VAT and PIT rates are set by the central government and vary by revenue and industry. See Le et al. (2020) for further details on household business tax information.

> 8The link to the online portal is `http://www.gdt.gov.vn/wps/portal/home/hct` (accessed January 2022). The records can be retrieved by querying an administrative location up to the commune level (a third-tier administrative unit).

> 9While several provincial tax offices have published household businesses tax records until the end of 2021, there are currently missing records for many provinces after August 2020. To our knowledge, each provincial tax office is responsible for updating the database with monthly tax filings in their province. This results in a heterogeneous lagged reporting times across provinces.

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