How Can a Pho Restaurant Prove Where Its Chicken Came From If There Is No Invoice?

Presenting the government’s proposal, Minister of Finance Ngo Van Tuan said the government plans to upgrade and rename the existing legislation as the Law on Small and Medium-sized Enterprise Development, replacing the 2017 Law on Support for Small and Medium-sized Enterprises.

For any business, the first question is always: Where will the money and capital come from?

The draft law consists of five chapters and 35 articles. It establishes the principle that government support should be targeted, time-limited and tied to specific outcomes.

It also introduces a roadmap for business development — from household businesses transitioning into formal companies, to micro-enterprises growing into small businesses, small businesses becoming medium-sized enterprises, and medium-sized firms eventually developing into large companies.

Most importantly, the approach would shift from “supporting what the government has available” to “supporting what businesses actually need.”

Reviewing the draft, Phan Van Mai, Chairman of the National Assembly’s Economic and Financial Committee, broadly agreed on the need to revise the criteria for identifying small and medium-sized enterprises.

However, he called for further review to ensure that the support system is open and transparent, with clear eligibility criteria and conditions, while avoiding additional administrative procedures and preventing a “request-and-approval” mechanism.

National Assembly Chairman Tran Thanh Man, speaking afterward, stressed that the revised law must deliver a policy breakthrough by shifting from support based on what the government can provide to support based on businesses’ actual needs.

He welcomed the draft’s removal of the total-capital criterion, which he described as difficult to determine and prone to controversy, but said the potential risks needed to be carefully assessed.

For example, a proposed annual revenue threshold of VND400 billion ($15.7 million) could still allow some highly capable companies to qualify for government support, potentially diluting the resources available to businesses that need them most.

“For any business, the first question is always: Where will the money and capital come from?” he said. Capital is needed to secure production facilities, purchase equipment and adopt science and technology.

He also noted that while registering a company is relatively easy, managing and screening businesses is much more difficult.

In practice, some companies have been established with virtually no capital or assets, solely to buy and sell invoices and supporting documents or engage in commercial fraud.

Dau Anh Tuan speaks at the session — Photo: National Assembly

Businesses with revenue below VND10 billion could pay tax based on turnover

Drawing on the experience of other countries, VCCI Deputy Secretary-General Dau Anh Tuan said policymakers should focus on measures that businesses can implement immediately after the law takes effect.

Experience with the 2017 law and other legislation has shown that although many policies offer support in areas such as funding, credit and land, “very little reaches businesses at the local level.”

In particular, Tuan proposed allowing micro-enterprises and household businesses with annual revenue below VND10 billion ($393,000) to pay tax based directly on turnover.

He said businesses with revenue below VND10 billion currently face four different types of accounting records and calculate taxable income based on revenue after deducting expenses.

“But for micro-enterprises and household businesses, calculating expenses is extremely complicated. How can a pho restaurant prove where the chicken it bought came from and produce an invoice or supporting documents?” Tuan said.

He said that allowing these businesses to pay tax based on turnover could affect an estimated 5–6 million household businesses and micro-enterprises, creating a significant social impact.

Responding to the proposal, Minister of Finance Ngo Van Tuan said small and medium-sized enterprises account for approximately 98.4% of all businesses in Vietnam, yet their share of outstanding bank credit is only around 19–20%, a relatively small proportion.

He also noted that existing support funds remain fragmented and, in many cases, inefficient. On average, each locality currently has around 19–20 non-budgetary funds, while there are more than 30 such funds at the central level.

The Credit Guarantee Fund for Small and Medium-sized Enterprises, for example, has operated for 13 years but has provided guarantees worth only around VND4 trillion ($157 million), covering 2,100 guarantee contracts for approximately 1,000 businesses.

“The extremely limited and cautious pace of lending means we need to quickly study and develop a new approach,” the minister said.

Regarding taxation, the minister said that once the new law is enacted, detailed guidance will be issued allowing businesses with annual revenue below VND10 billion to use a simplified tax method based on a percentage of turnover.