(July 18, 2017) Vietnam’s National Assembly passed the Law on Support for Small- and Medium-Sized Enterprises (SME Law) on June 12, 2017; it will enter into force on January 1, 2018. (Angela Koo, Vietnam: Law on Support for Small and Medium-Sized Enterprises (SMEs), TAX NEWS SERVICE (June 28, 2017), International Bureau of Fiscal Documentation online subscription database; Luat Ho Tro Doanh Nghiep Nho Va Vua (SME Act) (June 12, 2017), No. 04/2017/QH14, THU VIEN PHAP LUAT.) SMEs reportedly constitute about 97% of businesses in Vietnam. (NA Passes Law on Supporting SMEs, VIET NAM NEWS (June 12, 2017) (search title in browser if link inoperative).)
The 35-article Law defines SMEs, including micro- , small- and medium-sized enterprises, and medium-sized social insurance enterprises, as enterprises whose average number of employees contributing to social insurance does not exceed 200 per year and that either have a total investment capital that is not more than VND100 billion (about US4.4 million) or a previous year’s total revenue of not more than VND300 billion. Another criterion for defining SMEs under the new Law is being a micro- or small-enterprise newly identified as an enterprise “in the fields of agriculture, forestry, fisheries, and industry and construction, as well as trade and services.” (NA Passes Law on Supporting SMEs, supra; SME Act, art. 4 ¶¶ 1 & 2.) The government will issue details about these criteria. (SME Act, art. 4 ¶ 3.)
The Law further provides that SMEs will be taxed at a lower rate than the prevailing corporate income tax rate and enjoy certain other non-tax incentives, such as lower land use fees and land rents and access to credit. (Koo, supra.) The Law requires, however, that the support for SMEs must respect market rules, be in conformity with international treaties to which Vietnam is a party, and be provided “transparently and openly in terms of contents, beneficiaries, procedures and processes.” (NA Passes Law on Supporting SMEs, supra.) The resources provided, the level of support, and the support results must be in accordance with law. (Id.)