Law on Support for Small- and Medium-sized Enterprises
The Law on Support for Small- and Medium-sized Enterprises (the Law), which is the first of its kind in Vietnam, will enter into force on January 1 next year.
The Law establishes various support measures for small- and medium-sized enterprises (SMEs). It also creates a legal framework to mobilize the private sector as well as organizations and individuals at home and abroad to jointly provide support for SMEs.
Consisting of four chapters with 35 articles, the Law regulates principles, contents and resources for support to SMEs, as well as responsibilities of agencies, organizations and individuals involved in the support.
Criteria for SMEs
The Law sets in Article 4 two criteria for identifying SMEs, namely the number of insured employees and capital or turnover.
Specifically, SMEs include micro-sized enterprises, small-sized enterprises and medium-sized enterprises each having no more than 200 employees per year on average who are covered by social insurance. Also, such an enterprise is the one having a total capital amount not exceeding VND 100 billion or a total revenue of the preceding year not exceeding VND 300 billion.
These enterprises may be classified in such fields as agriculture, forestry and fisheries, industry and construction, and trade and services.
Support measures
Under the Law, support for SMEs may take the form of loan provision, credit guarantee, preferential corporate income tax, land rental preferences, technology renewal, training, counseling, or human resource development.
Accordingly, SMEs may gain easier access to credit and credit guarantee via SME Credit Guarantee Funds set up by provincial-level People’s Committees and the SME Development Fund formed by the Prime Minister.
Regarding tax and accounting, SMEs may enjoy a corporate income tax rate lower than the standard tax rate within a certain period of time, while micro-sized enterprises may apply simpler accounting regulations and tax-related administrative procedures.
With respect to land areas for production, SMEs in industrial parks, hi-tech parks and industrial complexes may receive support in terms of land rental for five years at most after signing a land rent contract, except foreign- and state-invested SMEs. This support will be implemented through providing price subsidy for infrastructure investors of industrial parks, hi-tech parks and industrial complexes.
Technologically, the State will adopt policies to support SMEs in researching and innovating technologies, receiving, improving and mastering technologies, as well as establishing, operating, managing, protecting and developing their intellectual property. Incubator facilities, technical establishments and common working areas set up by enterprises or investors will be entitled to exemption from or reduction of land rental, land use levy and non-agricultural land use tax. They will also enjoy exemption from or reduction of corporate income tax for a definite period.
The above exemption or reduction will also apply to enterprises and organizations investing and trading in product distribution chains that involve at least 80 percent of SMEs in the supply chains of locally made products.
The Law also provides conditions and support measures for SMEs transformed from business households, innovative startup SMEs, and production and processing SMEs participating in industrial linkage clusters and value chains.
Support principles
The State will support SMEs in a certain period and within its capacity to balance resources, ensuring that the support complies with market rules and treaties to which Vietnam is a contracting party. The support must also ensure transparency in contents, beneficiaries, procedures, resources, support levels and results.
In cases many SMEs jointly meet the conditions for enjoying support, priority will be given to SMEs owned by women and SMEs employing more female workers.
For a SME satisfying the conditions for enjoyment of different support levels with the same support measure, it may choose the most beneficial support level.
Non-state support provided by organizations and individuals will comply with their regulations rules but must not contravene law.- (VLLF)
Source: vietnamlawmagazine.vn