07 general assistance for small and medium enterprises in Vietnam

07 general assistance for small and medium enterprises in Vietnam (Image from the Internet)

1. What is a small and medium enterprise?

According to Clause 1, Article 4 of the Law on providing assistance for small and medium-sized enterprises 2017, an small and medium enterprise (hereafter referred to as SME) is either a micro-enterprise, small enterprise or medium-sized enterprise having the annual average number of employees who participate in social insurance is not greater than 200 and satisfying one of the following criteria:

- The total capital is not greater than 100 billion dong;

- The enterprise’s revenue of the previous year is not greater than 300 billion dong;

Micro-, small and medium-sized enterprises are identified according to each industry such as agriculture, forestry, aquaculture; industry and construction and trade and services.

(Clause 2, Article 4 of the Law on providing assistance for small and medium-sized enterprises 2017)

2. 07 general assistance for small and medium enterprises in Vietnam

(1) Assistance in the access to credit in Vietnam

- In each period, the Government shall introduce policies on provision of assistance for credit institutions in increasing maximum loans granted to SMEs; encouraging credit institutions to provide loans for SMEs according to their credit ratings and other criteria; encouraging the establishment of independent consulting firms that assign credit ratings to SMEs

- SMEs will be assisted in formulating their feasible plans for business operation, intensifying their management capacity and skills and financial transparency to increase the opportunities for the access to credit

- SMEs will be provided with the credit guarantee from the credit guarantee funds for SMEs according to regulations in Article 9 of Law on providing assistance for small and medium-sized enterprises 2017.

(Article 8 of Law on providing assistance for small and medium-sized enterprises 2017)

(2) The assistance in tax and accounting regimes in Vietnam

The assistance in tax and accounting regimes for small and medium-sized enterprises shall comply with the provisions of Article 10 of the Law on providing assistance for small and medium-sized enterprises 2017, specifically as follows:

- SMEs may apply the corporate income tax rate lower than the common tax rate applied to enterprises for a limited period of time according to regulations of law on corporate income tax.

- Micro- enterprises may apply tax administrative procedures and simple accounting regimes in accordance with the law on tax and accounting.

(3) Assistance in production areas in Vietnam

Small and medium-sized enterprises are supported in production areas as follows:

- According to the available land area of the province, the People’s Committee of the province shall send People’s Council of the province a request for the decision on distribution of land for construction and development of industrial clusters and processing zones for agricultural, forestry, fishery and seafood products serving the SMEs in accordance with the approved land use planning.

- According to the local budget, the People’s Committee of the province shall send the People’s Committee of the province a request for the decision on the assistance in rent subsidies for SMEs in industrial zones, hi-tech zones and industrial clusters in the province.

- The assistance in site rental for SMEs prescribed in Clause 2 of Article 11 of Law on providing assistance for small and medium-sized enterprises 2017 shall be carried out via the subsidy for investors constructing infrastructures of idustrial zones, hi-tech zones and industrial clusters to reduce the site rental paid by SMEs.

The maximum period of the assistance is 5 years from the day on which the land lease agreement is signed.

- The subsidy shall be deducted from the land rent or covered by the local budget.

- The assistance in production site prescribed in this Article shall not apply to foreign-invested or state-invested SMEs.

(Article 11 of Law on providing assistance for small and medium-sized enterprises 2017)

(4) Assistance in terms of technologies, assistance for incubators, technical establishments and coworking space in Vietnam

Assistance in terms of technologies, assistance for incubators, technical establishments and coworking space for small and medium-sized enterprises specified in Article 12 of the Law on providing assistance for small and medium-sized enterprises 2017 is as follows:

-  The State shall introduce policies on providing assistance for SMEs in researching, innovating, receiving, improving, completing and mastering technologies through the research, training, consultancy, searching, decipher and transfer of technology and in establishing, exploiting, managing, protecting and developing the intellectual property of the SMEs.

- Ministries, ministerial authorities and People’s Committees of provinces shall establish or join public–private partnership to establish incubators, technical establishments and coworking spaces.

Other enterprises and investors may establish their incubators, technical establishments and coworking spaces.

- Incubators, technical establishments and coworking spaces are entitled to:

+ Remission of land rental, land levy and the levy on non-farming land in accordance with regulations of law.

+ Remission of corporate income tax for a limited period of time in accordance with regulations of law on corporate income tax.

(5) Assistance in expansion into markets in Vietnam

-  Ministries, ministerial authorities and People’s Committees of provinces shall establish or join the public–private partnership to establish a distribution chain. Enterprises and other business investment organizations may establish their distribution chains.

- Enterprises and business investment organizations joining the distribution chain of products manufactured in Vietnam having at least 80% of members that are SMEs are entitled to:

+ Remission of land rental, land levy and the levy on non-farming land in accordance with regulations of law.

+ Remission of corporate income tax for a limited period of time in accordance with regulations of law on corporate income tax.

- Micro-enterprises and small enterprises will be given priority during contractor selection in accordance with regulations of law on bidding.

(Article 13 of Law on providing assistance for small and medium-sized enterprises 2017)

(6) Assistance in access to information, consultancy and legal issues in Vietnam

The following information shall be published on the national SMEs website portal, websites of ministries, ministerial authorities, People's Committees of provinces, social organizations and socio-professional organizations:

- Information about plans, programs, projects and activities related to the assistance for SMEs;

- Business guidelines, credit, markets, products, technologies and enterprise incubation;

- Other information requested by the SMEs in accordance with regulations of law.

Ministries and ministerial authorities, within their power and duties, shall set up a system of organizations and individuals providing consulting service for SMEs (hereinafter referred to as “consultant system”). SMEs will be entitled to remission of consulting fees if they use consulting services provided by the consultant system.

Ministries, ministerial authorities, authorities and organizations, within their duties and power, shall carry out the following activities to provide the legal assistance for SMEs:

- Establishment, management, maintenance, updating, exploitation and use of databases of law;

- Formulation and execution of programs for the legal assistance to provide information improve legal knowledge and provide legal consultancy.

(Article 14 of Law on providing assistance for small and medium-sized enterprises 2017)

(7) Assistance in developing human resources in Vietnam

- SMEs are entitled to reduction or exemption of charges for training courses funded by the state budget on entrepreneurship, enterprise administration and job training for employees working in SMEs.

- The State shall provide online training programs and training programs through mass media for SMEs and provide training courses at premises of SMEs engaged in production and processing area.

(Clause 1, 2, Article 15 of Law on providing assistance for small and medium-sized enterprises 2017)

Thanh Rin

>> CLICK HERE TO READ THIS ARTICLE IN VIETNAMESE