HÀ NỘI — The government has proposed raising the annual revenue threshold for classifying small- and medium-sized enterprises (SMEs) to VNĐ400 billion (US$15.2 million), from currently VNĐ300 billion, as part of a draft law on the development of SMEs.

Minister of Finance Ngô Văn Tuấn presented the draft law, which is intended to replace the Law on Supporting SMEs 2017, to the National Assembly at a meeting late last week.

Tuấn said SMEs continue to face difficulties accessing capital, business premises, technology, skilled workers and markets, while their management capacity and participation in value chains remain limited despite their role in job creation, promoting innovation and supporting economic development.

The proposed legislation aims to simplify administrative procedures, improve the effectiveness of support and mobilise both public and private resources while shifting the focus from direct assistance towards creating a more favourable business environment and development ecosystem.

Under the draft, the government also proposes increasing the average annual employee threshold for SMEs to 300 from 200.

A longside the increase in the annual revenue ceiling toVNĐ400 billion, the maximum total capital threshold is proposed to VNĐ150 billion from VNĐ100 billion

The draft also proposes tax incentives, including lower corporate income tax rates than standard rates and a three-year corporate income tax exemption for SMEs from the date of their first business registration certificate.

Businesses and resident individuals earning annual business revenue of no more than VNĐ10 billion could also be allowed to choose between a tax calculation method based on revenue minus expenses multiplied by the applicable tax rate, and a method based on a percentage of revenue.

Micro-enterprises would be eligible for simplified accounting rules and tax-related administrative procedures.

However, the National Assembly’s Economic and Financial Committee raised concerns over the proposed classification criteria, saying they could be difficult to apply because the indicators fluctuate annually and depend on financial statements from the previous year.

Committee chairman Phan Văn Mãi said it is necessary to consider using data from two to three consecutive years to improve the consistency of classification and clarify the impact of raising the employee, capital and revenue thresholds on the number of eligible businesses and the availability of public funding.

The committee also supported measures to improve SMEs’ access to public procurement but called for safeguards to ensure compliance with bidding regulations and protect competition and the efficient use of public funds.

Reviews must also be carried to ensure consitence with other established laws, Mãi said.

SMEs currently account for 98 per cent of the total of firms operating in Việt Nam. — BIZHUB/VNS