Opportunity for Small and Medium businesses (SMEs) post COVID-19

The Ministry of Finance has just proposed the Government to submit to the National Assembly a draft Resolution on income tax policies to support and develop small and medium-sized enterprises (SMEs) at the National Assembly Meeting in May 2020. Notably, the expected effective date of the policy starts right from 1 July 2020 rather than 1 January 2021 as previously proposed.

The proposed reduced tax rates are from 15-17% versus the standard tax rate 20%. Namely:

Tax rate	Annual Revenue	Average number of employees subject to social insurance
15%	< 3 Bil VND	≤10 staff
17%	≥ 3 Bil VND and < 50 Bil VND	≤100 staff

The proposed 15% tax rate will be applicable to enterprises having annual revenue less than 3 Billion VND and having no more than 10 employees subject to social insurance in a year.

The proposed 17% tax rate will be applicable to enterprises having annual revenue from 3 Billion VND to less than 50 Billion VND and no having more than 100 employees subject to social insurance in a year.

In addition, to encourage household businesses converting to enterprises, theses newly converted enterprises shall entitle 2 year tax exemption since being profitable

Should you need more information, feel free to contact us for a free consultation on business setup in Vietnam.