Law on Supporting Small and Medium Enterprises No. 04/2017/QH14

 LAW

SUPPORT FOR SMALL AND MEDIUM-SIZED ENTERPRISES 

On the basis of the Constitution of the Socialist Republic of Vietnam;

The National Assembly enacts the Law on Supporting Small and Medium Enterprises. 

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Law stipulates principles, contents, resources for supporting small and medium enterprises; responsibilities of agencies, organizations, and individuals related to supporting small and medium enterprises.

Article 2. Applicability

1. An enterprise established, organized, and operated in accordance with the provisions of the Enterprise Law that meets the criteria for small and medium enterprises as prescribed by this Law.

2. Agencies, organizations, and individuals related to supporting small and medium enterprises.

Article 3. Explanation of Terms

In this Law, the following terms shall be understood as follows:

1. A small and medium enterprise owned by women is a small and medium enterprise where one or more women own at least 51% of the charter capital, including at least one person managing and operating the enterprise.

2. A small and medium enterprise engaged in innovative startups is a small and medium enterprise established to implement ideas based on exploiting intellectual property, technology, new business models, and has the potential for rapid growth.

3. Value chain is a network linking to create added value for products or services, including successive stages from forming ideas, design, production, distribution of products to consumers.

4. Product distribution chain is a network of intermediaries implementing the distribution of small and medium enterprises' products to consumers carried out by businesses and organizations investing and trading.

5. Technical support base for small and medium enterprises (hereinafter referred to as technical support base) is a facility providing shared equipment to assist small and medium enterprises in designing, testing, measuring, analyzing, inspecting, and certifying products, goods, materials.

6. Business incubation base for small and medium enterprises (hereinafter referred to as incubation base) is a facility providing necessary conditions regarding technical infrastructure, resources, and services for organizations and individuals to perfect their business ideas and develop enterprises during the initial establishment phase.

7. Industry cluster is a form of linkage between enterprises within the same industry and related enterprises and organizations cooperating and competing.

8. Co-working space supporting innovative small and medium enterprises (hereinafter referred to as co-working space) is an area providing concentrated working space, product display space, and utilities to support and link innovative small and medium enterprises.

Article 4. Criteria for identifying small and medium enterprises

1. Small and medium enterprises include micro-enterprises, small enterprises, and medium enterprises, having an average number of employees participating in social insurance not exceeding 200 people and meeting one of the following criteria:

a) Total capital not exceeding 100 billion VND;

b) Total revenue of the preceding year not exceeding 300 billion VND.

2. Micro-enterprises, small enterprises, and medium enterprises are determined according to the agricultural, forestry, fishery; industrial and construction; trade and service sectors.

3. The Government shall provide detailed regulations on this Article.

Article 5. Principles of supporting small and medium enterprises

1. Support for small and medium enterprises must respect market laws, be consistent with international treaties to which the Socialist Republic of Vietnam is a member.

2. Ensuring transparency regarding content, subjects, procedures, processes, resources, levels of support, and implementation results.

3. The State supports small and medium enterprises with focus, within a timeframe, consistent with support objectives and the ability to balance resources.

4. Support for small and medium enterprises using non-State resources funded by organizations and individuals shall be implemented in accordance with the regulations of those organizations and individuals but shall not contravene the provisions of the law.

5. In cases where small and medium enterprises simultaneously meet the conditions for different levels of support within the same support content as prescribed by this Law and other relevant laws, the enterprise may choose the most beneficial level of support.

In cases where multiple small and medium enterprises meet the support conditions prescribed by this Law, priority shall be given to small and medium enterprises owned by women and those employing more female workers.

6. Small and medium enterprises are eligible for support when they have fully complied with the provisions of this Law and other relevant laws.

Article 6. Sources of Support for Small and Medium Enterprises

1. The sources of support for small and medium enterprises include:

a) Credit capital with state support and guarantees;

b) Capital support from the state budget;

c) Support capital from tax exemptions, reductions, fees, charges, land rental payments, land use payments, and other amounts payable to the state budget as prescribed by law;

d) Legal capital from organizations and individuals within and outside the country.

2. The sources of support for small and medium enterprises specified in points a, b, and c of Clause 1 of this Article must be budgeted, appraised, approved, and settled according to the provisions of the law.

Article 7. Prohibited Acts in Supporting Small and Medium Enterprises

1. Providing support to small and medium enterprises contrary to principles, objects, authorities, contents, procedures, and formalities as prescribed by law.

2. Misusing positions and powers to violate laws on supporting small and medium enterprises.

3. Discriminating against, delaying, causing inconvenience, hindering, or harassing small and medium enterprises and organizations or individuals supporting such enterprises.

4. Intentionally reporting or providing false or untruthful information related to the support of small and medium enterprises.

5. Using support resources for purposes not committed to.

Chapter II

CONTENT OF SUPPORT FOR SMALL AND MEDIUM ENTERPRISES

Section 1

GENERAL SUPPORT

Article 8. Support for Accessing Credit

1. In each period, the Government decides on policies to support credit institutions in increasing their loan balances for small and medium enterprises; encourages credit institutions to lend to small and medium enterprises based on enterprise credit ratings and appropriate measures; encourages the establishment of independent advisory organizations to rate the creditworthiness of small and medium enterprises.

2. Small and medium enterprises are supported by agencies, organizations, and individuals in developing feasible production and business plans, enhancing management capabilities, management skills, and financial transparency of the enterprise to improve access to credit.

3. Small and medium enterprises are entitled to credit guarantees from the Small and Medium Enterprise Credit Guarantee Fund as stipulated in Article 9 of this Law.

Article 9. Small and Medium Enterprise Credit Guarantee Fund

1. The Small and Medium Enterprise Credit Guarantee Fund is a non-budget state financial fund that operates without profit-making objectives, established by the People's Committee of the province.

2. The Small and Medium Enterprise Credit Guarantee Fund performs the function of providing credit guarantees to small and medium enterprises. Credit guarantees for small and medium enterprises are based on collateral assets, feasible production and business plans, or credit ratings of small and medium enterprises.

3. The Small and Medium Enterprise Credit Guarantee Fund must fulfill its guarantee obligations fully and properly; it may not refuse guarantees to small and medium enterprises meeting the conditions for guarantee.

4. The Government shall provide detailed regulations on this matter.

Article 10. Tax and Accounting Support

1. Small and medium enterprises are subject to a lower corporate income tax rate than the general corporate income tax rate applicable to enterprises, as prescribed by the Corporate Income Tax Law.

2. Very small enterprises are subject to simplified administrative tax procedures and accounting systems as prescribed by the Tax Law and Accounting Law.

Article 11. Support for production premises

1. Based on the actual land fund conditions at the local level, the Provincial People's Committee shall submit to the same-level People's Council for decision on allocating the land fund to form and develop industrial clusters; centralized processing zones for agricultural, forestry, aquatic, and marine products for small and medium-sized enterprises in accordance with the approved land use plan.

2. Based on the local budget conditions, the Provincial People's Committee shall submit to the same-level People's Council for decision on supporting rental fees for production premises for small and medium-sized enterprises in industrial parks, high-tech zones, and industrial clusters within its jurisdiction. The maximum support period is five years from the date of signing the lease agreement.

3. The support for rental fees for production premises for small and medium-sized enterprises stipulated in Clause 2 of this Article shall be implemented through price subsidies to infrastructure investors in industrial parks, high-tech zones, and industrial clusters to reduce rental fees for small and medium-sized enterprises.

The amount of subsidy shall be deducted from the land rent payment or supported from the local budget.

4. The support for production premises stipulated in this Article does not apply to small and medium-sized enterprises with foreign investment capital and those with state-owned capital.

Article 12. Support for technology; support for incubation bases, technical facilities, and shared workspaces

1. The State has policies to support small and medium-sized enterprises in researching, innovating technology, receiving, improving, perfecting, and mastering technology through research activities, training, consulting, searching, decoding, transferring technology; establishing, exploiting, managing, protecting, and developing intellectual property assets of enterprises.

3. Incubation bases, technical facilities, and shared workspaces shall enjoy the following supports:

a) Exemption or reduction of land rental fees, land use fees, and non-agricultural land use tax according to the provisions of the law;

b) Exemption or reduction of corporate income tax for a limited period according to the provisions of the Corporate Income Tax Law.

Article 13. Support for expanding markets

2. Product distribution chain enterprises and organizations that have at least 80% of their participating small and medium-sized enterprises supplying products produced in Vietnam shall enjoy the following supports:

a) Exemption or reduction of land rental fees, land use fees, and non-agricultural land use tax according to the provisions of the law;

b) Exemption or reduction of corporate income tax for a limited period according to the provisions of the Corporate Income Tax Law.

3. Micro-enterprises and small enterprises shall enjoy preferential treatment in selecting contractors according to the provisions of the Public Procurement Law.

Article 14. Support for information, consultation, and legal services

1. The following information shall be published on the National Portal for Supporting Small and Medium-Sized Enterprises, the websites of ministries, ministerial-level agencies, provincial people's committees, social organizations, and occupational associations:

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

b) Business guidance information; information on credit, market, products, technology, and enterprise incubation;

c) Other information as needed by enterprises in accordance with the law.

2. Ministries and ministerial-level agencies, within their respective functions and powers, shall build networks of individuals and organizations providing consulting services to small and medium-sized enterprises (hereinafter referred to as the consultant network). Small and medium-sized enterprises shall be exempted or granted reductions in consulting service fees when using services from the consultant network.

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

a) Building, managing, maintaining, updating, utilizing, and operating databases on laws;

b) Developing and implementing legal support programs to provide information, legal knowledge training, and legal consultation.

4. The Government shall provide detailed regulations on this matter.

Article 15. Support for developing human resources

1. Small and medium-sized enterprises (SMEs) are exempted or granted reductions in costs for participating in training courses funded by the state budget on business start-up and enterprise management, and vocational training for workers employed in SMEs.

2. The State organizes online training programs and other training programs through mass media for SMEs; supports direct training activities at SMEs in production and processing fields.

3. The Government shall provide detailed regulations on this Article.

Section 2

SUPPORT FOR SMEs TRANSITIONING FROM INDIVIDUAL BUSINESS HOUSEHOLDS, INNOVATIVE START-UPS, AND PARTICIPATION IN INDUSTRY CLUSTERS AND VALUE CHAINS

Article 16. Support for SMEs transitioning from individual business households

1. SMEs transitioning from individual business households shall be supported if they meet the following conditions:

a) Before establishing the enterprise, the individual business household has registered and operated in accordance with the law;

b) The individual business household has continuously engaged in production and business operations for at least one year up to the date of issuance of the first Enterprise Registration Certificate.

2. The support includes:

a) Free advisory services and guidance on enterprise establishment documentation and procedures;

b) Exemption from registration fees and information provision fees for the first time; exemption from licensing fees and charges for the first time for businesses operating in regulated industries; exemption from business license fees for a period of three years from the date of issuance of the first Enterprise Registration Certificate;

c) Free advisory services and guidance on tax administrative procedures and accounting systems for a period of three years from the date of issuance of the first Enterprise Registration Certificate;

d) Exemption or reduction of corporate income tax for a limited period as prescribed by the Corporate Income Tax Law;

đ) Exemption or reduction of land use fees for a limited period as prescribed by the Land Law.

3. SMEs transitioning from individual business households inherit all rights, obligations, and legitimate interests of the individual business household according to the law. In cases where a limited liability company or joint-stock company is established based on the transition from an individual business household, the individual business household owner must bear responsibility with their entire assets for any outstanding debts of the individual business household, except in cases where there are different agreements under the law.

4. The individual business household ceases operations from the date the SME transitioning from an individual business household receives its Enterprise Registration Certificate.

5. The Government shall provide detailed regulations for Clause 2 of this Article.

Article 17. Support for innovative start-ups among SMEs

1. Innovative start-ups among SMEs shall be supported if they meet the following conditions:

a) They have been in operation for no more than five years from the date of issuance of the first Enterprise Registration Certificate;

b) They have not issued securities to the public for joint-stock companies.

2. The support includes:

a) Support for technology application and transfer; support for using equipment at technical facilities; support for participation in incubators and co-working spaces; guidance on testing and perfecting new products, services, and business models;

b) Support for specialized training and mentoring on product development; attracting investment; intellectual property counseling; implementing technical standards, measurement, and quality procedures;

c) Support for information dissemination, trade promotion, networking with innovative start-ups, and attracting investments from venture capital funds;

d) Support for commercializing research results and technological development, exploiting and developing intellectual property;

đ) During each period, the Government decides on policies to subsidize interest rates for loans taken by innovative start-ups among SMEs. Interest rate subsidies are implemented through credit organizations.

3. The Government shall provide detailed regulations on this Article.

Article 18. Investment in small and medium-sized enterprises (SMEs) with innovative startups

1. Investors in SMEs with innovative startups include venture capital funds for innovative startups, organizations and individuals, both domestic and foreign, engaging in business operations through capital contribution to establish, purchase shares, or equity stakes in SMEs with innovative startups.

2. Venture capital funds for innovative startups are formed from the contributions of private investors to invest in SMEs with innovative startups according to the following principles:

a) Investing in SMEs with innovative startups not exceeding 50% of the registered capital of the enterprise after receiving investment;

b) Private investors contributing capital to the fund must have financial conditions and be responsible for their own contributions.

3. Investors in SMEs with innovative startups as stipulated in Clause 1 of this Article shall be exempted or granted tax reductions on corporate income tax for income derived from investments in SMEs with innovative startups according to the provisions of the Corporate Income Tax Law.

4. Based on local budget conditions, the People's Committee at the provincial level shall submit to the People's Council at the same level for a decision to assign state financial organizations in the locality to implement investments in SMEs with innovative startups according to the following principles:

a) Selecting venture capital funds for innovative startups that meet the conditions to jointly invest in SMEs with innovative startups;

b) The amount of investment capital from the local budget shall not exceed 30% of the total investment capital raised by the innovative startup enterprises from selected venture capital funds for innovative startups;

c) Transferring the investment capital to private investors within five years from the date of investment capital contribution. The transfer of investment capital shall be carried out in accordance with the regulations on the management and use of state capital invested in production and business activities in enterprises.

5. The Government shall provide detailed regulations on this matter.

Article 19. Support for SMEs Participating in Industry Clusters and Value Chains

1. SMEs participating in industry clusters and value chains in manufacturing and processing sectors shall be supported if they meet one of the following conditions:

a) Producing products with competitive advantages in terms of quality and cost;

b) Innovating in technological processes, materials, components, machinery, and equipment.

2. The support includes:

a) Providing specialized training in technology and production techniques; consulting on technical standards, measurement, quality, and product development strategies according to industry clusters and value chains;

b) Supplying information on connection needs, production, and business operations of SMEs participating in industry clusters and value chains;

c) Supporting brand development and market expansion for products of industry clusters and value chains;

d) Supporting trial production, testing, inspection, and certification of product quality for SMEs participating in industry clusters and value chains;

e) In each period, the Government decides on interest subsidy policies for loans of SMEs participating in industry clusters and value chains. Interest subsidies shall be implemented through credit institutions.

3. The Government shall provide detailed regulations on this matter. Support for SMEs participating in industry clusters and value chains outside the manufacturing and processing sectors shall be regulated by the Government after consultation with the Standing Committee of the National Assembly.

Article 20. Small and Medium Enterprise Development Fund

1. The Small and Medium Enterprise Development Fund is a state financial fund outside the budget, operating without profit objectives, for the purposes of:

a) Providing loans and grants to innovative start-up small and medium enterprises and small and medium enterprises participating in industry clusters and value chains;

b) Receiving and managing loan, grant, aid, contribution, and entrusted funds from organizations and individuals to support small and medium enterprises.

2. The Government shall provide detailed regulations for this Article.

Chapter III

RESPONSIBILITIES IN SUPPORTING SMALL AND MEDIUM ENTERPRISES

Article 21. Responsibilities of the Government

1. To uniformly manage state administration in supporting small and medium enterprises.

2. To prepare the state budget estimate to implement policies supporting small and medium enterprises within the state budget estimate for submission to the National Assembly for consideration and decision in accordance with the State Budget Law.

3. To promulish, within its authority, policies encouraging organizations and individuals to use non-state resources to support small and medium enterprises.

Article 22. Responsibilities of the Ministry of Planning and Investment

1. To assist the Government in uniformly managing state administration in supporting small and medium enterprises. To compile and report to the Government,

2. To coordinate, determine targets, objects, and priorities for support to build and implement national plans, programs, and projects to support small and medium enterprises; to take the lead and coordinate with ministries and equivalent agencies to allocate capital for investment development to support small and medium enterprises in accordance with this Law.

3. To organize training and capacity building for officials, civil servants, and employees implementing tasks to support small and medium enterprises.

4. To take the lead and coordinate with the Ministry of Finance, the State Bank of Vietnam, and other ministries and equivalent agencies to establish information systems to serve credit rating of small and medium enterprises.

Article 23. Responsibilities of the Ministry of Finance

1. To guide administrative procedures for tax, accounting regulations for micro-enterprises; implementation of tax, fee, and surcharge policies for small and medium enterprises.

2. To take the lead and coordinate with ministries and equivalent agencies to allocate capital to support small and medium enterprises in accordance with this Law and other relevant laws.

3. To publish information on compliance with tax and customs laws and fulfillment of other financial obligations by small and medium enterprises to build information systems to serve credit rating of small and medium enterprises.

Article 24. Responsibilities of Ministries and Equivalent Agencies

1. Within their respective duties and powers, ministries and equivalent agencies have the following responsibilities:

a) To issue or submit to competent state authorities for issuance of policies supporting small and medium enterprises;

b) To organize implementation, monitor, inspect, and evaluate the implementation of support for small and medium enterprises;

c) To organize statistics and publication of information on small and medium enterprises;

d) To guide small and medium enterprises to participate in industry clusters and value chains;

e) To prioritize allocation of resources to support small and medium enterprises.

2. The Ministry of Industry and Trade has the responsibility to guide small and medium enterprises to participate in product distribution chains.

3. The Ministry of Science and Technology has the responsibility to guide the establishment of incubation centers, technical bases, and shared workspaces; to support enhancing technological capabilities for small and medium enterprises.

4. The Ministry of Natural Resources and Environment has the responsibility to guide localities in allocating land to form and develop industrial clusters; centralized processing zones for agricultural, forestry, fishery, and marine products for small and medium enterprises.

5. The State Bank of Vietnam has the responsibility to organize implementation of government policies to support financial institutions in increasing lending to small and medium enterprises.

Article 25. Responsibilities of provincial-level local authorities

1. The Provincial People's Council shall have the following responsibilities:

a) Implementing the provisions of Clause 1 and Clause 2, Article 11, and Clause 4, Article 18 of this Law;

b) Issuing policies and allocating resources to support small and medium-sized enterprises (SMEs) at the local level; deciding on the budget estimate for supporting SMEs according to the laws on state budget;

c) Supervising compliance with laws on supporting SMEs at the local level.

2. The People's Committee at provincial level shall have the following responsibilities:

a) Building and organizing the implementation of support for SMEs at the local level; plans and programs to support SMEs transitioning from individual businesses;

b) Inspecting, evaluating the work of supporting SMEs at the local level, and reporting to competent state agencies;

c) Honoring SMEs that have achieved significant results, innovation, and contributed to the economic and social development of the locality.

Article 26. Responsibilities of social organizations and occupational associations in supporting SMEs

1. Representing and protecting the legitimate rights and interests of members who are SMEs, mobilizing resources to support them;

2. Participating in building, providing feedback, and implementing policies related to supporting SMEs; participating in evaluating support programs for SMEs;

3. Providing services to support SMEs in accordance with the law and the charter of social organizations and occupational associations;

4. Promoting collaboration between large enterprises and SMEs.

Article 27. Responsibilities of organizations providing services to support SMEs

1. Providing services to support SMEs in accordance with the conditions and commitments made with supporting agencies and organizations as stipulated by this Law; assisting SMEs in complying with administrative procedures;

2. Timely, fully, and accurately providing information and materials to supporting agencies and organizations to prove and confirm the provision of support services to SMEs;

3. Being liable under the law and being responsible to supporting agencies and organizations according to service support contracts with SMEs;

4. Participating and coordinating with competent state agencies to establish, manage, and operate organizations implementing support for SMEs through public-private partnership models or other forms as prescribed by law.

Article 28. Responsibilities of SMEs

1. Timely, fully, and accurately providing information and materials about the enterprise as required by supporting agencies and organizations, and bearing legal responsibility for the provided information and materials;

2. Adhering to legal regulations; fulfilling obligations towards the State;

3. Fulfilling commitments made with supporting agencies and organizations;

4. Allocating corresponding resources to receive, coordinate, and effectively organize the implementation of support resources.

Article 29. Publicizing Information on Supporting SMEs

1. Supporting agencies for SMEs shall publicly disclose the content, programs, and results of supporting SMEs, as well as other relevant information;

2. Publicizing information on supporting SMEs shall be carried out in the following forms:

a) Publicly posting at the supporting agency for SMEs;

b) Announcing on mass media, the website of the agency implementing support for SMEs, and the national portal for supporting SMEs.

3. Publicizing information on supporting SMEs must be completed no later than thirty days from the date the content and program of supporting SMEs specified in Clause 1 of this Article are approved by competent state agencies.

Article 30. Inspection and Supervision of Support for Small and Medium-sized Enterprises

1. Competent state agencies, funding organizations, and individuals shall inspect and supervise the implementation of support content and programs for small and medium-sized enterprises as prescribed by law.

1. Agencies and organizations primarily responsible for implementing legal support activities for small and medium-sized enterprises have the right to inspect and supervise the implementation of these activities in accordance with the law;

a) The selection of support recipients; the procedures, formalities, and content of support;

b) Compliance with laws in managing and using support and funding funds;

c) Publicizing information on support for small and medium-sized enterprises as stipulated in Article 29 of this Law.

Article 31. Evaluation of Support for Small and Medium-sized Enterprises

1. Agencies and organizations primarily responsible for implementing support content and programs for small and medium-sized enterprises shall organize evaluations of the results of implementation and anticipated impacts on support recipients, and publicly announce evaluation results in accordance with the forms prescribed in Clause 2 of Article 29 of this Law.

2. The Ministry of Planning and Investment shall periodically organize independent evaluations of the impact of support content and programs for small and medium-sized enterprises.

Article 32. Handling Violations of Laws on Support for Small and Medium-sized Enterprises

1. Small and medium-sized enterprises, agencies, organizations, and individuals violating provisions of this Law shall be subject to handling in accordance with the law.

2. Decisions on handling violations against agencies, organizations, and individuals violating laws on support for small and medium-sized enterprises must be published on the website of the agency implementing support and the National Portal for Supporting Small and Medium-sized Enterprises.

Chapter IV

IMPLEMENTING PROVISIONS

Article 33. Amending and Supplementing Certain Provisions of Related Laws

1. Amending and supplementing certain provisions of the Investment Law No. 67/2014/QH13 as follows:

a) Adding point o to Clause 1 of Article 16 as follows:

"o) Investing in operating distribution chains for products of small and medium-sized enterprises; investing in operating technical support bases for small and medium-sized enterprises, incubation bases for small and medium-sized enterprises; investing in operating shared workspaces supporting innovative startups of small and medium-sized enterprises in accordance with the law on support for small and medium-sized enterprises."

b) Amending Clause 2 of Article 19 as follows:

"2. The Government shall provide detailed regulations on the forms of support for investment prescribed in Clause 1 of this Article for high-tech enterprises, science and technology enterprises, science and technology organizations, enterprises investing in agriculture and rural areas, enterprises investing in education, popularizing the law, and other eligible entities in line with the economic and social development orientation during each period."

2. Amending point c of Clause 3 of Article 14 of the Bidding Law No. 43/2013/QH13 as follows:

"c) The bidder is a micro enterprise, a small enterprise."

Article 34. Effective Date

This Law takes effect from January 1, 2018.

Article 35. Transitional Provisions

1. From the date this Law takes effect, activities supporting small and medium-sized enterprises before the effective date of this Law shall continue to be implemented according to the content, programs, and plans that have been approved; if small and medium-sized enterprises meet the conditions for support as prescribed by this Law, they shall be implemented in accordance with this Law.

2. From the date this Law takes effect, commitments made by the Small and Medium-sized Enterprise Development Fund prior to the effective date of this Law shall continue to be implemented, unless the parties agree otherwise.

This Law was adopted by the National Assembly of the Socialist Republic of Vietnam, the 14th term, third session, on June 12, 2017.