From 2015 onwards, the wave of small and medium-sized startups in Vietnam has been developing rapidly.

1. From 2015 onwards, the wave of small and medium-sized startups in Vietnam has been developing
rapidly. This development is followed by government’s support in forming legal corridors, scheme
to favour startup ecosystem and encourage science and technology organizations, research
institute, technology incubator, etc. To be deemed as a startup, an individual or business must start
their own business along with an innovative idea. Currently, startup is the legal term as recognized
under the laws, especially on Law on Small and Medium Enterprises Assistance 2017.
For clarification, small and medium startups are small and medium enterprise (“SME”) established
to implement its business ideas based on the utilization of intellectual property, technology and
new business models and are able to grow rapidly. These enterprises are in the stage of getting a
business up and running, attaches to science and technology or find out new business models,
provide products and services to new market segmentation, growth rapidly and make a difference
to domestic and foreign enterprises.
Directive 9/CT-TTg dated on February 18th, 2020 of the Prime Minister requires relevant
ministries and agencies such as the Ministry of Planning and Investment, Science and Technology,
etc. to implement solutions, remove barriers and resolve difficulties, issue policies to create
favorable conditions for startups. These include the proposal to amend the Law on Investment in
the direction of facilitating foreign investors to establish, contribute capital, purchase shares, or
contributed capital of startup investment funds in Vietnam. Before establishing an economic
organization, the foreign investor must have an investment project and carry out the procedures
for issuance or amendment of the Investment Registration Certificate, except for the establishment
of small and medium-sized startups and startup investment funds in accordance with the Law on
Small and Medium Enterprises Assistance. Although the Law on Small and Medium Enterprises
Assistance 2017 and guiding decrees have taken effect, it is not clear what procedures the foreign
investors are required to do to set up a SME startup. It is necessary to wait for specific instructions
for startup formation.
Moreover, according to the Law on Investment 2020, startup investment projects are included in
the beneficiaries of investment incentives as recently added. Technology and intellectual property
exploitation are two of subjects which are considered as startup projects. The technology sector,
before the Law on Investment 2020 takes effect, has achieved a number of tax incentives for
eligible enterprises, for example: enjoying enterprise income tax at rate of 10% for 15 year or tax
exemption for four years, 50% reduction of taxable for the next nine years, not subject to value
added tax. Furthermore, SME startups selected for SME support project are entitled to enjoy the
following assistances: (i) consultation on intellectual property, intellectual property utilization and
development; (ii) procedures for technical regulations and standards, quality measurement, testing
and improvement of new products and business model; (iii) technology uses and transfers; (iv)
training, information, trade promotion and commercialization; (v) use of technical facilities,
incubators, and common working areas according to Decree No. 39/2018/ND-CP.
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