Conditions for enterprises directly serving national defence and security functions in Vietnam

Conditions for enterprises directly serving national defence and security functions in Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Conditions for enterprises directly serving national defence and security functions in Vietnam

According to Article 3 of Decree 16/2023/ND-CP, to qualify as an enterprise directly serving national defence and security functions, an enterprise must satisfy all of the conditions mentioned hereunder:

- It may be:

= A single-member limited liability company with its charter capital wholly owned by the State that is controlled by the Ministry of National Defence or the Ministry of Public Security;

= A single-member limited liability company with its charter capital wholly owned by an enterprise specified in point a of clause 1 of Article 3 of Decree 16/2023/ND-CP; or

= A multiple-member limited liability company with its charter capital wholly owned by single-member limited liability companies with their charter capital wholly owned by the State, including at least a company that is defined in point a of clause 1 of Article 3 of Decree 16/2023/ND-CP.

- Its business line or sector and location conform to regulations laid down in the Appendix pertaining to the List of business lines, sectors or locations of direct support for national defence and security activities to Decree 16/2023/ND-CP.  

- It is assigned directly by the Ministry of National Defence or the Ministry of Public Security, or by the competent body or the managing body immediately under the Ministry of National Defence, the Ministry of Public Security, or by its parent company that is an enterprise with its charter capital wholly owned by the State under the control of the Ministry of National Defence or the Ministry of Public Security, to produce and supply national defence and security products and services, and to perform national defence and security tasks through use of funding of the state budget or other enterprises according to investment and establishment objectives.  

2. Policies applied to enterprises directly serving national defence and security functions, and their employees in Vietnam

Policies applied to enterprises directly serving national defence and security functions, and their employees in Vietnam according to Article 7 of Decree 16/2023/ND-CP are as follows:

- Enterprises directly serving national defence and security functions may apply the following policies:

a) Receiving incentives related to land rents, land use fees and levies imposed on plots that they are authorized to manage and use for national defence and security tasks in accordance with laws on land, taxes and other relevant laws.  

b) Receiving the State funding and other resources to meet normed expenditures defined in laws, including those on military equipment for officers, professional soldiers, defense workers, defense officers, non-commissioned officers, public security workers, and cipher workers; maneuvers, combat training, reserve training; defense and security work, defence support work, military-civilian relations. Where the state budget funding is not sufficient enough to meet these expenditures, any expenditure exceeding the state budget funding shall be counted as the deductible from the income subject to corporate income tax in accordance with Law on Corporate Income Tax and instructional documents thereof; shall not be taken into account as a factor in the performance evaluation or corporate rating process under the Government’s regulations.

c) Receiving the State funding and other resources to finance expenditures on maintenance, repair and operation of production lines and equipment, and repair of defense and security products during the period of temporary suspension of production of defense and security products according to plans and tasks assigned or orders placed directly by the Ministry of National Defense or the Ministry of Public Security, or by specialized agencies or managing bodies immediately under the Ministry of National Defense or the Ministry of Public Security.

d) Receiving the State funding and other resources used for supporting operation of 02 bonus and welfare funds which are as much as 02 months' pay of employees if an enterprise does not have enough budget to support these funds.

dd) Receiving the State funding and other resources intended to finance expenditures on operation of kindergartens and education affairs in areas without schools under the public education system; health expenditures in areas where sick bays remain due to special conditions; or expenditures on operation of kindergartens and sick bays in localities where continued operation of sick bays is necessary according to decisions of the Ministry of National Defense or the Ministry of Public Security.

e) Carrying out the depreciation of fixed assets, including production lines, and the repair of weapons, military equipment, infrastructure and other dedicated and special assets needed for national defense and security tasks under the guidance of the Ministry of Finance.

2. Employees of enterprises directly serving national defence and security functions may have access to the following policies:

a) Wages and salaries of employees who are officers, professional soldiers, defense workers, defense officers, non-commissioned officers, public security workers, and cipher personnel shall be calculated in accordance with regulations on compensation policies for officers, professional soldiers, defense workers, defense officers, non-commissioned officers, public security workers, cipher workers, and based on labor productivity and annual business results of each enterprise

b) With regard to an employee that is injured or dies on duty, if he/she fully meets the prescribed conditions and standards of revolutionary contributors, he/she shall be considered and certified as a revolutionary contributor in accordance with the regulatory provisions of laws on preferential treatment for revolutionary contributors; if an employee suffers an occupational accident, he/she may be considered to be eligible for occupational accident benefits according to the regulatory provisions of labor law.

c) The State shall allocate funds to ensure payment of wages, salaries and social insurance premiums for officers, professional soldiers, defense workers, defense officers, public security workers and cipher personnel during the pre-retirement period; to pay expenses for demobilization, discharge, and job termination according to the policies in force; to support payment of wages and salaries to employees on the payroll working at production lines and repairing defense and security products during the period of temporary shutdown according to plans and tasks assigned or orders placed directly by the Ministry of National Defense or the Ministry of Public Security, or by specialized agencies or managing bodies immediately under the Ministry of National Defense or the Ministry of Public Security.

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