LAW

On Support for Small- and Medium-sized Enterprises

Pursuant to the Constitution of the Socialist Republic of Vietnam;

The National Assembly promulgates the Law on Support for Small- and Medium-Sized Enterprises.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Law prescribes principles, contents and resources of support for small- and medium-sized enterprises; and responsibilities of agencies, organizations and individuals involved in supporting small- and medium-sized enterprises.

Article 2. Subjects of application

1. Enterprises established, organized and operating in accordance with the law on enterprises, and meeting the criteria for identifying small- and medium-sized enterprises prescribed in this Law.

2. Agencies, organizations and individuals involved in supporting small- and medium-sized enterprises.

Article 3. Interpretation of terms

In this Law, the terms below are construed as follows:

1. Woman-owned small- or medium-sized enterprise means a small- or medium-sized enterprise having one or more than one woman holding 51% or more of its charter capital and at least one of whom being its manager.

2. Innovative startup small- or medium-sized enterprise means a small- or medium-sized enterprise that is established to realize an idea by exploiting intellectual property, technology and/or new business model and capable of growing fast.

3. Value chain means a linked network that adds value to a product or service, including consecutive stages from formation of an idea, designing, production to distribution of products to consumers.

4. Product distribution chain means a network of intermediaries being enterprises, investors and traders that distribute products of small- and medium-sized enterprises to consumers.

5. Technical establishment supporting small- and medium-sized enterprises (below referred to as technical establishment) means an establishment providing common-use equipment to support small- and medium-sized enterprises in design, testing, measurement, analysis, assessment and inspection of products, goods and materials.

6. Small- and medium-sized enterprise incubator (below referred to as incubator) means an establishment providing technical infrastructure, resources and services necessary for organizations and individuals to complete their business ideas and develop enterprises in the initial period of establishment.

7. Industrial linkage cluster means a form of linkage among enterprises in the same industry and related enterprises and organizations for mutual cooperation and competition.

8. Common working area supporting innovative startup small- and medium-sized enterprises (below referred to as common working area) means an area providing space for concentrated working and product display, and utilities for supporting and linking innovative startup small- and medium-sized enterprises.

Article 4. Criteria for identifying small- and medium-sized enterprises

1. Small- and medium-sized enterprises include micro-, small- and medium-sized enterprises, each having an average number of employees covered by social insurance not exceeding 200 a year and satisfying either of the following two criteria:

a/ The total capital amount does not exceed VND 100 billion;

b/ The total revenue of the preceding year does not exceed VND 300 billion.

2. Micro-, small- and medium-sized enterprises shall be identified by sector: agriculture, forestry and fisheries; industry and construction; trade and service.

3. The Government shall detail this Article.

Article 5. Principles of support for small- and medium-sized enterprises

1. Support for small- and medium-sized enterprises must respect market rules and conform with treaties to which the Socialist Republic of Vietnam is a contracting party.

2. Transparency and publicity in contents, beneficiaries, order, procedures, resources, support levels and implementation results must be ensured.

3. The State shall support small- and medium-sized enterprises with focus for a specified period of time in line with support objectives and resource-balancing ability.

4. Small- and medium-sized enterprises may use non-state resources provided by organizations and individuals under the latter’s regulations but not in violation of law.

5. In case a small- or medium-sized enterprise is concurrently eligible for different support levels for the same content prescribed in this Law and relevant laws, it may opt for the most beneficial support level.

In case many small- and medium-sized enterprises are eligible for support prescribed in this Law, priority shall be given to those owned by women or employing more female workers.

6. Small- and medium-sized enterprises shall be provided with support after fully complying with this Law and relevant laws.

Article 6. Funding sources for supporting small- and medium-sized enterprises

1. Funding sources for supporting small- and medium-sized enterprises include:

a/ Credit supported and guaranteed by the State;

b/ State budget funds;

c/ Funds from exemption from and reduction of taxes, charges, fees, land rental, land use levy and other amounts payable to the state budget in accordance with law;

d/ Lawful funds of domestic and foreign organizations and individuals.

2. Estimates and final accounts of funding sources for supporting small- and medium-sized enterprises specified at Points a, b and c, Clause 1 of this Article shall be prepared, appraised and approved in accordance with law.

Article 7. Prohibited acts in supporting small- and medium-sized enterprises

1. Supporting small- and medium-sized enterprises not according to the principles, contents and order and procedures prescribed by law, supporting ineligible ones, and supporting ultra vires.

2. Abusing positions and powers to act in violation of the law on support for small- and medium-sized enterprises.

3. Discriminating, causing delays to, harassing and obstructing small- and medium-sized enterprises and organizations and individuals supporting small- and medium-sized enterprises.

4. Intentionally reporting and providing fake and untruthful information on support for small- and medium-sized enterprises.

5. Using supporting resources not for committed purposes.

Chapter II

CONTENTS OF SUPPORT FOR SMALL- AND MEDIUM-SIZED ENTERPRISES

Section 1

GENERAL SUPPORT

Article 8. Support in credit access

1. In each period, the Government shall decide on policies to support credit institutions to increase the outstanding balance of loans for small- and medium-sized enterprises; encourage credit institutions to provide loans to small- and medium-sized enterprises based on their credit ratings and apply other suitable measures; and encourage the establishment of independent consultancy organizations to rate small- and medium-sized enterprises.

2. Small- and medium-sized enterprises shall be assisted in developing feasible production and business plans, increasing governance capacity, management skills and financial transparency in order to raise their credit accessibility.

3. Small- and medium-sized enterprises may be granted credit guarantee by small- and medium-sized enterprise credit guarantee funds referred to in Article 9 of this Law.

Article 9. Small- and medium-sized enterprise credit guarantee funds

1. A small- and medium-sized enterprise credit guarantee fund is an extrabudgetary and not-for-profit state financial fund set up by a provincial-level People’s Committee.

2. Small- and medium-sized enterprise credit guarantee funds have the function of granting credit guarantee for small- and medium-sized enterprises.

Credit guarantee for small- and medium-sized enterprises shall be based on their security assets or feasible production and business plans or credit ratings.

3. Small- and medium-sized enterprise credit guarantee funds shall properly and fully perform their committed guarantee obligations and may not refuse to provide guarantee for small- and medium-sized enterprises that are eligible for guarantee.

4. The Government shall detail this Article.

Article 10. Support in tax and accounting

1. Small- and medium-sized enterprises may enjoy for a specified period of time an enterprise income tax rate lower than the ordinary tax rate applied to enterprises in accordance with the law on enterprise income tax.

2. Micro-sized enterprises may apply simple tax-related administrative procedures and accounting regime in accordance with the tax and accounting laws.

Article 11. Support in ground areas for production

1. Based on practical conditions of local land funds, provincial-level People’s Committees shall submit to People’s Councils of the same level decisions on allocation of land areas for the establishment and development of industrial clusters; agricultural, forest, aquatic and marine product processing zones for small and medium-sized enterprises in line with approved land use master plans.

2. Based on local budget capability, provincial-level People’s Committees shall submit to People’s Councils of the same level decisions on support in ground area rentals in local industrial parks, hi-tech parks and industrial clusters for small- and medium-sized enterprises. The maximum period of support is five years after a ground area lease contract is signed.

3. Ground area rental support for small- and medium-sized enterprises referred to in Clause 2 of this Article shall be provided through subsidizing investors of industrial park, hi-tech park and industrial cluster infrastructure so as to reduce ground area rental for such enterprises.

Subsidies shall be deducted from land rental or allocated from local budgets.

4. Support in ground areas for production prescribed in this Article shall not be applied to foreign-invested or state-invested small- and medium-sized enterprises.

Article 12. Support in technologies, incubators, technical establishments and common working areas

1. The State shall adopt policies to support small- and medium-sized enterprises in studying and innovating technologies, receiving, perfecting and mastering technologies through technological research, training, counseling, seeking, decoding and transfer; and establishing, exploiting, managing, protecting and developing their intellectual property.

2. Ministries, ministerial-level agencies and provincial-level People’s Committees shall establish incubators, technical establishments and common working areas or joining in establishing them in the form of private-public partnership. Enterprises and other investment and business entities may establish incubators, technical establishments and common working areas.

3. Incubators, technical establishments and common working areas are entitled to the following supports:

a/ Exemption from or reduction of land rental, land use levy and non-agricultural land use tax in accordance with law;

b/ Exemption from or reduction of enterprise income tax for a specified period of time in accordance with the law on enterprise income tax.

Article 13. Support in market expansion

1. Ministries, ministerial-level agencies and provincial-level People’s Committees shall set up product distribution chains or join in setting up product distribution chains in the form of public private partnership. Other enterprises, investors and traders may set up product distribution chains.

2. Enterprises and organizations investing in and operating product distribution chains that involve at least 80% of small- and medium-sized enterprises supplying made-in-Vietnam products are entitled to the following supports:

a/ Exemption from or reduction of land rental, land use levy and non-agricultural land use tax in accordance with law;

b/ Exemption from or reduction of enterprise income tax for a specified period of time in accordance with the law on enterprise income tax.

3. Micro- and small-sized enterprises shall be prioritized in contractor selection in accordance with the bidding law.

Article 14. Information, counseling and legal support

1. The following information shall be posted on the national portal on support for small- and medium-sized enterprises and websites of ministries, ministerial-level agencies, provincial-level People’s Committees, social organizations and socio-professional organizations:

a/ Information on plans, programs, projects and activities to support small- and medium-sized enterprises;

b/ Business guidance information; information on credit, market, products, technologies and enterprise incubation;

c/ Other information requested by enterprises in accordance with law.

2. Ministries and ministerial-level agencies shall, within the ambit of their tasks and powers, develop a network of organizations and individuals providing counseling services to small- and medium-sized enterprises (below referred to as consultant network). When using counseling services of the consultants network, small- and medium-sized enterprises are entitled to counseling fee exemption or reduction.

3. Ministries, ministerial-level agencies, agencies and organizations shall, within the ambit of their tasks and powers, carry out the following activities to provide legal support to small- and medium-sized enterprises:

a/ Developing, managing, maintaining, updating, exploiting and using the legal database;

b/ Formulating, and organizing the implementation of, legal support programs to provide legal information, update legal knowledge and provide legal counseling.

4. The Government shall detail this Article.

Article 15. Human resource development support

1. Small- and medium-sized enterprises are entitled to exemption from or reduction of expenses for attending state budget-funded training courses on business startup and corporate governance and for vocational training courses for their workers.

2. The State shall organize online training programs and training programs in other mass media for small- and medium-sized enterprises; and support direct training for small- and medium-sized enterprises in the manufacturing and processing industries.

3. The Government shall detail this Article.

Section 2

SUPPORT FOR SMALL- AND MEDIUM-SIZED ENTERPRISES TRANSFORMED FROM BUSINESS HOUSEHOLDS, INNOVATIVE STARTUP SMALL- AND MEDIUM-SIZED ENTERPRISES, AND SMALL- AND MEDIUM-SIZED ENTERPRISES TO PARTICIPATE IN INDUSTRIAL LINKAGE CLUSTERS AND VALUE CHAINS

Article 16. Support for small- and medium-sized enterprises transformed from business households

1. A small- or medium-sized enterprise transformed from a business household may receive support if satisfying the following conditions:

a/ Before transformed into an enterprise, the business household already registered and operated in accordance with law;

b/ The business household has continuously engaged in production and business activities for at least one year by the date of being granted the first-time business registration certificate.

2. Contents of support include:

a/ Free counseling and guidance on dossiers and procedures for enterprise establishment;

b/ Exemption from enterprise registration fees and charge for first-time provision of enterprise information; charge for appraisal and fee and charge for first-time grant of business licenses for conditional business lines; and business license fee for three years after being granted the first-time enterprise registration certificate;

c/ Free counseling and guidance on tax-related administrative procedures and accounting regime for three years after being granted the first-time enterprise registration certificate;

d/ Exemption from or reduction of enterprise income tax for a specified period of time in accordance with the law on enterprise income tax;

dd/ Exemption from or reduction of land use levy for a specified period of time in accordance with the land law.

3. Small- and medium-sized enterprises transformed from business households shall take over from the latter all of their lawful rights, obligations and interests in accordance with law. In case a limited liability company or joint stock company is established from a business household, the owner of the business household shall be responsible for unpayable debts with all his/her assets, unless otherwise agreed in accordance with law.

4. A business household shall terminate its operation since a small- or medium-sized enterprise transformed there is granted an enterprise registration certificate.

5. The Government shall detail Clause 2 of this Article.

Article 17. Support for innovative startup small- and medium-sized enterprises

1. An innovative startup small- or medium-sized enterprise may receive support if meeting the following conditions:

a/ Having operated for no more than 5 years after being granted the first-time enterprise registration certificate;

b/ Having not yet made an initial public offering, if it is a joint stock company.

2. Contents of support include:

a/ Technology application and transfer; use of equipment at technical establishments; participation in incubators and common working areas; guidance on the testing and perfection of new products, business services and models;

b/ In-depth training in making and developing products; attraction of investment; counseling on intellectual property; performance of procedures for technical, metrology and quality standards and regulations;

c/ Information, communication, trade promotion, connection to the innovative startup network, attraction of investment from innovative startup investment funds;

d/ Commercialization of scientific research and technological development results, exploiting and developing intellectual property;

dd/ In each period, the Government shall decide on policies on interest rate subsidy for loans borrowed by innovative startup small- and medium-sized enterprises. Interest rate subsidy shall be provided via credit institutions.

3. The Government shall detail this Article.

Article 18. Investment in innovative startup small- and medium-sized enterprises

1. Investors of innovative startup small- and medium-sized enterprises include innovative startup investment funds, domestic and foreign organizations and individuals doing business through capital contribution for establishment or purchase of shares or contributed capital amounts of innovative startup small- and medium-sized enterprises.

2. An innovative startup investment fund shall be set up from private investors’ contributed capital so as to invest in innovative startup small- and medium-sized enterprises on the following principles:

a/ Investing in an innovative startup small- or medium-sized enterprise less than 50% of its charter capital after receiving the investment;

b/ A private investor contributing capital to the fund must