Licensing fees in Vietnam in 2020: Small- and medium-sized enterprises transformed from household businesses need to understand correctly

Specifically, according to Point c Clause 1 Article 1 of Decree No. 22/2020/NĐ-CP of Vietnam’s Government, “small- and medium-sized enterprises (SMEs) transformed from household businesses (as prescribed in Article 16 of the Law on assistance for small- and medium-sized enterprises of Vietnam) shall be exempted from the license fee within 03 years from the date of issuance of initial enterprise registration certificate”. (This is a completely new regulation compared to Decree No. 139/2016/NĐ-CP of Vietnam’s Government)

Moreover:

- During the exemption period, if a SME establishes a new branch, representative office or business location, the new branch, representative office or business location shall be also exempted from the license fee for the same exemption period granted to that SME.

- The branch, representative office or business location of a SME (that is eligible to be exempted from the license fee as prescribed in Article 16 of the Law on assistance for small- and medium-sized enterprises) established before Decree No. 22/2020/NĐ-CP takes legal effect shall be exempted from the license fee for the period commencing from the effective date of Decree No. 22/2020/NĐ-CP to the end of the period for which that SME is exempted from the license fee.

- SMEs transformed from household businesses before Decree No. 22/2020/NĐ-CP takes legal effect shall be exempted from the license fee according to Article 16 and Article 35 of the Law on assistance for small- and medium-sized enterprises.

According to Point b Clause 2 Article 1 of Decree No. 22/2020/NĐ-CP:

3. Upon the end of the period of exemption from the license fee (from the fourth year from the date of establishment), a SME transformed from a household business (including its branches, representative offices and/or business locations) shall pay the license fee for the whole year if its exemption period ends in the first 6 months of the year or pay 50% of the license fee payable for the whole year if its exemption period ends in the last 6 months of the year.

Thus, Decree No. 22/2020/NĐ-CP stipulates that SMEs transformed from a household business shall be exempted from the license fee within 03 years from the date of issuance of initial enterprise registration certificate, however, upon the end of the period of exemption, a SME transformed from a household business shall pay the license fee for the whole year if its exemption period ends in the first 6 months of the year or pay 50% of the license fee payable for the whole year if its exemption period ends in the last 6 months of the year.

Details of licensing fee rates for organizations producing and trading goods and services are specified in Clause 1 Article 4 of Decree No. 139/2016/NĐ-CP of Vietnam’s Government.

In addition to the above regulations, Decree No. 22/2020/NĐ-CP also stipulates that a household business, an individual or a group of individuals engaging in production/business that resumes its production/business after a suspension period shall pay the license fee for the whole year if it resumes its production/business in the first 6 months of the year or pay 50% of the license fee payable for the whole year if it resumes its production/business in the last 6 months of the year.

View other provisions at Decree No. 22/2020/NĐ-CP of Vietnam’s Government effective from February 25, 2020.

Thu Ba

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