Written By PLF Law Firm

Enterprise revenue, average total expenditure, number of workers, etc. are some of the new regulations on the conditions to become a hi-tech enterprise.

The existing 2014 Investment Law and Decision No. 19/2015/QD-TTg have adjusted the content at Article 18 of Law on High Technology No. 21/2008/QH12 concerning the criteria used to evaluate hi-tech enterprises.

First of all, hi-tech products produced by the enterprise must be on the List of hi-tech products prioritized for development investment under the provision of Article 6 of the 2008 High Technology Law. Specifically, such products are required to satisfy the following conditions:

  • Having a high added-value ratio in the product value structure;
  • Being highly competitive and creating great socio-economic benefits;
  • Being exportable or able to substitute imports;
  • Contributing to the improvement of national scientific and technological capacity.

Second, not only is it compulsory for enterprises to apply eco-friendly measures but also energy-efficient production and product quality control, which are required to be carried out in accordance with technical regulations and standards of Viet Nam or those of a specialized international organization (in case Vietnam’s technical regulations and standards are yet to be available).

Furthermore, it has been made mandatory for the turnover earned from hi-tech products to be at least 70% of the total annual net revenue. However under previous provisions, an enterprise’s average turnover from hi-tech products in 3 consecutive years only need to be at least 60% of the total annual turnover and more than 70% from the fourth year onwards.

Additionally, two of the conditions to be qualified as hi-tech enterprises stipulated in Decision No. 19/2015/QD-TTg, namely: total expenditure spent on research and development activities implemented in Viet Nam and the number of qualified employees are applied differently for two type of enterprises: (1) small and medium enterprises and (2) enterprises with total capital of more than 100 billion VND.

  • Regarding the conditions on total expenditure, the new regulations stipulate that the percentage of total expenditure spent on research and development activities conducted in Viet Nam shall be calculated based on the total annual net revenue (instead of the average total expenditure per year).

Small and medium enterprises: such percentage must be at least 1%.

Enterprises with the total capital of more than 100 billion VND and more than 300 employees: such percentage must be at least 0.5%.   

  • Regarding the conditions on the number of employees with technical qualifications, previously, employees who possess a university degree or higher and directly carry out research and development activities must account for at least 5% of the total number of workers.  

Decision No. 19/2015/QD-TTg still have such regulation apply to small and medium enterprises. However, for enterprises with the total capital of more than 100 billion VND and more than 300 employees, such percentage must be at least 2.5% but no fewer than 15 people.

In the event where the dossier requesting for Certificate of High Technology Enterprise is submitted before August 1st 2015 but the Certificate is yet to be granted, enterprises shall comply with the above-mentioned conditions in order to become hi-tech enterprises.

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