Lower corporate income tax rates and other incentives for small and medium enterprises
Small and Medium Enterprises (SMEs) are going to enjoy lower corporate income tax rates and other incentives. This content comes into effect from January 1st, 2018.
SMEs Criteria:
According to Law 04/2017/QH14, passed on June 12, 2017
SMEs are enterprises which comprise super small enterprises, small enterprises, Medium Enterprises having no more than 200 employees registered in the state social insurance scheme in a year and which meet one of the following conditions:
- Total “capital” (not defined) not exceeding VND100 billion.
- Total revenue of the preceding financial year not exceeding VND 300 billion.
SMEs are dentified in the fields of Agriculture, Forestry and Fishery; Industry and Construction; Trade and Services.
The Government regulates this Article in a detail way.
The key incentives for SMEs:
SMEs will be entitled to a CIT rate lower than the standard rate for a finite period. The rate and period will thus be provided in a guiding regulation due to the Law does not specify the rate or the period, but its previous draft in May proposed a rate lower by 5% for a maximum 5 years.
SMEs can apply a simplified accounting system as stipulated in the accounting regulations.
SMEs can receive credit guarantees by a fund set up by provincial People’s Committees.
Domestic SMEs located in industrial zones or high-tech zones can enjoy land lease support by provincial People’s Committees.
SMEs can also receive support in human resource development and legal consultancy.
Additional incentives can be granted to start-up SMEs and SMEs participating in value chains. We would be pleased to discuss with you the implications of these changes for your businesses.
CIT exemption and reduction are available to enterprises investing in distribution chains in which at least 80% SMEs supply goods produced in Vietnam.
Ministries and provincial People’s Committees must support and/or cooperate with SMEs in technology research and development, technology transfer/training/consulting, intellectual protection, or in establishment of common technology working units.