Vietnam's commerce group finds loopholes in draft law to support SMEs
'Are all SMEs qualified to receive assistance or do they have to meet certain requirements?'
The Vietnam Chamber of Commerce and Industry has recently given its feedbacks on a draft law designed to extend financial support to small and medium-sized enterprises (SMEs).
The chamber pointed out that a loophole remains in terms of which firms are eligible for the support.
"Are all SMEs qualified to receive assistance or do they need to meet certain requirements?" the chamber questioned in its feedback to the National Assembly, Vietnam's legislature.
The legislature recently decided to focus on “creative start-ups”, considering them a top priority. However, according to the VCCI, the definition of a “creative start-up” proposed in the draft is ambiguous, making it difficult to establish which firms the law is targeting.
To transform Vietnam into a "start-up nation" by 2020, tax incentives have been proposed for SMEs and start-ups to stimulate their businesses, but how much lower the rates are still remains a puzzle, the VCCI said.
Tax breaks for SMEs are “necessary”, Vu Tien Loc, chairman of the VCCI, said at the launch of a report on taxpayer satisfaction in March.
It is noted that approximately 97-98 percent of total registered companies in Vietnam are SMEs, so if tax incentives are applied it will hurt the state budget.
Accordingly, the chamber asked the National Assembly to calculate the deficit these incentives would leave on the state budget before implementing the resolution.
The role of local authorities when it comes to supporting businesses should also be clearly stated in the draft, it said.
Small firms are classsed as those with less than VND20 billion in the agriculture and industry sectors, and less than VND10 billion in the services sector. Medium-sized businesses have capital of less than VND100 billion.
SMEs accounted for 43.2 percent of gross domestic product last year.