Provisions amended on supporting small and medium enterprises under decree 39/2018/ND-CP

On 11 March 2018 the Government issued Decree No. 39/2018/ND-CP guiding the Law on Assistance to Small- and Medium-sized Enterprises to replace Decree No. 56/2009/ND-CP dated 30 June 2009, clearly defines criteria for determining small and medium enterprises and the support for conversion from business households, creative start-ups.

Accordingly, the Decree classifies small and medium enterprises into the sizes of micro enterprises, small enterprises and medium enterprises. The classification of scale is based on the average number of employees participating in social insurance in the year, revenue and the capital level of the enterprise, previously, only criteria for total number of employees and capital. In different business areas, the level of the criterion is different. For example, in the area of ​​trade and services, the criteria are defined below:

i. Micro enterprises: The average number of employees participating in social insurance does not exceed  ten (10) persons and the total yearly revenue does not exceed VND 10,000,000,000 (ten billion Vietnamese dongs) or the total capital does not exceed VND 3,000,000,00 (three billion Vietnamese dongs) (previously not classified based on capital).

ii. Small enterprises: The average number of employees participating in social insurance does not exceed fifty (50) persons and the total yearly revenue does not exceed VND 100,000,000,000 (one hunderd billion Vietnamese dongs) or the total capital does not exceed VND 50,000,000,000 (fifty billion Vietnamese dongs)  (formerly VND VND 10,000,000,000 (ten billion Vietnamese dongs) or less).

iii. Medium enterprises: The average number of employees participating in social insurance does not exceed one hunderd (100) persons and the total yearly revenue does not exceed VND 300 billion or the total capital does not exceed VND 100,000,000,000 (one hunderd billion Vietnamese dongs).

In addition, the Decree provides detailed guidelines for supporting small and medium enterprises switching from business households, startup innovative businesses, join industrial and value chain to encourage its regulated, which makes it easier to access capital and the external market, helping businesses to be more proactive in their business. Small and medium enterprises transformed from business households meeting the prescribed dossier conditions will be exempt from the enterprise registration fee for the first time at the business registration office; exempt from disclosing information of enterprise registration for the first time at the National Business Registration Portal; exemption of license tax for the first three (03) years....

The provisions on the form of support for small and medium enterprises have changed as compared with the past. In the past, provisions on supporting local and general characteristics were difficult to implement, such as support for land, borrowing policies and trade promotion activities, because these supports depend on the capacity of each locality and performance of the authorities for each event. In the new Decree, the assistance in terms of orientation, consultation and reorganization of the enterprise network is clearly shown, more uniform throughout the country and better incorporated in the legal policy than the previous provisions.

Decree No. 39/2018/ND-CP is effective from 11 March 2018.