What is a micro enterprise? What criteria to determine?

Micro enterprises is one of three types of small and medium-sized enterprises, defined by Vietnamese law through specific criteria on labor, revenue and capital. Regulations related to micro enterprises play an important role in ensuring support and incentives from the State. This article will provide detailed information about applicable legal criteria and policies.

What is a micro-enterprise?

Micro enterprises are defined by sectors such as agriculture, industry, construction, trade and services. Pursuant to Article 4 and Article 5 of Decree 80/2021/ND-CP, micro enterprises have an average annual number of employees participating in social insurance of no more than 10 people. In addition, depending on the field of activity, criteria for revenue or capital are also specified.

• In agriculture, industry, construction: Total revenue or total capital does not exceed 3 billion VND/year.
• In trade and services: Maximum total revenue is 10 billion VND, or total capital is not more than 3 billion VND/year.

These criteria create a legal basis for classifying and determining objects of support from the State.

Criteria for determining micro enterprises

Vietnamese law clearly stipulates the criteria to identify micro enterprises depending on the following 3 factors:

Number of employees participating in social insurance (social insurance):

• Micro-enterprises have an average annual number of employees participating in social insurance that does not exceed 10 people.
• Calculation method: Total number of employees participating in social insurance in the year divided by 12 (or the number of months of actual operation if the business is newly established).

Total average annual revenue:

• In agriculture, industry, construction: Not more than 3 billion VND/year.
• In trade and services: Maximum 10 billion VND/year.

Total capital of the enterprise:

• All fields: Not exceeding 3 billion VND.
• This data is extracted from the balance sheet of the immediately preceding year reported by the enterprise.

The above criteria not only determine scale but also directly affect the rights and obligations of businesses in receiving support.

Compare micro enterprises with other types

Business classification in Vietnam includes three groups: micro enterprises, small enterprises and medium enterprises.

Small businesses:

• Employees participating in social insurance: Maximum 50 people.
• Revenue: From 10 to 50 billion VND/year (depending on field).
• Capital source: Maximum 20 billion VND.

Medium enterprises:

• Employees participating in social insurance: Maximum 200 people.
• Revenue: From 50 to 300 billion VND/year (depending on field).
• Capital source: Maximum 100 billion VND.

The main difference lies in the scale of labor, revenue and capital. This affects tax policy, loan support and other incentives that businesses enjoy.

Some legal support and preferential policies for micro enterprises

Micro-enterprises in Vietnam receive many supports from the law, including:

• Tax incentives: Corporate income tax rates are lower than those of large enterprises.
• Simplify administrative procedures: Shorten registration documents and financial reports.
• Training and consulting support: State agencies and private organizations provide business development consulting services.
• Access to preferential loans: Policy on borrowing capital from support funds or banks at low interest rates.

These detailed regulations are clearly stated in the Law Provision of Assístance for Small and Medium Sized Enterprises 2017 and guiding documents.

Establishment consulting services and preferential policies for micro enterprises in Long Phan

For micro-enterprises, a smooth start is an important factor for sustainable development. Long Phan is proud to provide professional establishment consulting services and attractive incentive policies, helping micro-enterprises minimize costs, optimize procedures and maximize support opportunities from the state. Our services include:

• Instructions for preparing business registration documents according to regulations.
• Consulting on choosing the appropriate business type: limited liability company, private enterprise, cooperative,…
• Consulting on naming businesses and registering business lines according to Vietnam’s economic industry system.
• The representative submits documents at the business registration agency.
• Monitor and handle issues that arise during the registration process.
• Receive business registration certificate and legal seal.
• Register for a tax code and instructions for initial tax declaration.
• Consulting on choosing the appropriate accounting form for micro enterprises.
• Instructions for using electronic invoices and basic financial reports.
• Develop company charter and operating regulations.
• Consulting on human resource and labor management suitable for micro enterprises.

If you need detailed advice about micro enterprises, please contact us 0906735386 or visit Long Phan. We are ready to support solutions and in-depth consulting to help you develop your business effectively.