If I had to choose the most beneficial policy for Vietnamese small businesses in the past few years, I think it would be the continuously extended 2% VAT reduction, along with the previous abolition of thousands of business conditions.
Both have common characteristics: no business has to apply, no one has to prove they are eligible, no official has to sign approval. Once the policy is issued, it will automatically reach more than one million businesses at the same time.
Meanwhile, support policies that are more elaborately designed, have clearer goals, and have pre-arranged money, often have very low disbursement. The Small and Medium Enterprise Development Fund is an example that has been talked about for many years.
The gap between those two policy groups lies neither in money nor in the goodwill of the drafters. It lies in the structure. And that is exactly what I hope the National Assembly will discuss most carefully when discussing the Small and Medium Enterprise Development Law these days.
The first thing worth noting about the draft is the name. The 2017 law was called "support", this time it is "development". It sounds like a matter of words, but in legal thinking, it is a real shift. When reviewing the legal system, we found that about 1/4 of the laws of Japan and Korea have the spirit of promotion, encouragement, and development right in their names. In Vietnam, the statistics of 227 existing laws are mostly oriented towards management and regulation, with very few laws being constructive.
But changing your name is easy. The more difficult thing is to change the support philosophy, and that philosophy must be right in the structure of each clause.
The Law on Support for Small and Medium Enterprises took effect in 2018 with many beautiful policies on paper. Looking back nearly eight years, some lie dormant, most of them belong to the give and grant group: monetary support, capital support, land incentives, credit guarantees. To run a policy of this type, it must have an organizational structure, an allocated budget, someone who dares to take responsibility for signing and approval, and must be in the local priority group. Missing one link, the policy stops. Not to mention, the executor must always consider the risks to himself or herself when deciding who will receive benefits and how much.
In light of the new support philosophy, in my opinion, provisions should be redesigned based on three questions: Does this require a new fund? Is there a need for new agencies or human resources? Do businesses have to submit documents to apply?
If all three answers are no, the policy has a chance to live. Conversely, every clause containing the phrases "under consideration", "in preference", "on recommendation" is setting itself to a breakpoint.
The policy that most clearly demonstrates the new philosophy in the current draft is to allow small and medium-sized enterprises with a revenue of less than 10 billion VND to choose to pay tax according to the ratio of revenue. The government is considering adding this content to the draft, and I hope it is kept until the last minute.
Its context is very topical. From the beginning of 2026, presumptive tax on business households has ended, millions of households have switched to declaring. A grocery store or a restaurant with three employees now has to open books, account for expenses, and prove that each purchase is valid. While they buy vegetables at the market, buy fish from fishermen, hire seasonal workers - expenses that are real but not easy to get documents for. Expenses that cannot be proven cannot be deducted, and taxes must be paid at a higher rate than actual income. That's why many households are hesitant to start a business: they're not afraid of paying taxes, they're afraid of paperwork obligations, and afraid of the risk of being seen as doing something wrong.
Paying tax according to revenue removes exactly that bottleneck. Revenue is an easy number to determine and difficult to argue with, especially when electronic invoices generated from cash registers are widespread. Business people do not have to explain or argue with tax officials. If opened to all business households, almost the entire group will benefit. The level of impact is very high and the implementation is simple. And most importantly, in accordance with the spirit: businesses receive benefits right at the settlement stage, no application, no approval, no one has the right to give or not.
There is an opinion that this regulation belongs to tax law, and placing it here is encroaching. I think differently. This is a law about a group of subjects, and tax is the tool that has the strongest impact on that group of subjects. Keeping it has three clear benefits: it takes effect right from the first settlement period, ensures the integrity of a law on business development, and carries a huge political message to more than five million people doing business.
By the same logic, there are four more policies worth including, and all four do not spend a dime of the budget.
One is to allow quick deduction of investment costs. Businesses spend 300 million VND to buy a machine. According to normal depreciation calculation, it will be many years before they can count that amount in their expenses. They should be allowed, with investments below a certain threshold, to calculate the full cost in the year of purchase. The government adjusts the threshold from time to time. Businesses will reduce taxes payable in the first year, have more money to invest and rotate capital. The state does not lose this tax, but only collects it more slowly.
Second, attach the obligation to pay on time into the buyer's tax policy. Appropriating capital by extending payment terms is a persistent disease. Small businesses are in a weak position and often do not dare to aggressively collect debts for fear of losing customers. Another approach is to stipulate: expenses for purchasing goods and services can only be included in deductible expenses when the buyer pays within the legal time limit. If you pay late, you will have to pay higher taxes in that period. Pressure happens automatically, no agency has to intervene, no small business has to sue. India has put a similar provision into law from 2023 to favor small and micro enterprises.
Third, we must consider the benefits of small businesses right from when making policies. The same regulations but the compliance burden is very different: a corporation has specialized departments, while with a business with several people, sometimes the director has to do everything himself. Therefore, right from the time of drafting, related documents need to assess the impact on small businesses and by default consider exemption or reduction of obligations according to scale. Instead of waiting for problems to arise and then meeting to discuss solutions, the law prevents diseases right from the source.
And if the new philosophy is to support the rules of the game, then there is one part of the rules that has long been almost left blank: the way out. This is the fourth very important group of solutions.
Vietnam is in the group of countries that open the market fastest in the world, registering businesses online, many places return results within 24 hours. But every year hundreds of thousands of businesses withdraw from the market, while the number of officially dissolved businesses is very modest, and the number of bankruptcy cases processed is only a few hundred. International assessments have recorded that the processing time for a bankruptcy case in Vietnam takes many years, placing it at the bottom of the world. In other words, the majority of Vietnamese businesses do not terminate operations in a legal way. They closed their doors, abandoned their registered addresses, and left their tax codes hanging in the balance. The owner was stuck for many years in an unfinished state, while assets, premises and people were imprisoned in a clinically dead organization.
Therefore, I believe that a shortened bankruptcy and dissolution process specifically for small and medium-sized enterprises is something that needs to be discussed carefully and should not be considered a side issue. This group has modest assets and debt relationships that are often not complicated, but must go through a procedure designed for large, long and expensive cases.
This is essentially a development policy. The state doesn't need to spend money, it just needs to remove a trap. Stuck capital, space and people will be freed up to return to the economy, and more importantly, business people will dare to take reasonable risks knowing that failure does not mean losing everything. The easier it is to close the door, the more people will dare to open it.
Small and medium-sized enterprises account for about 97% of the total number of Vietnamese enterprises. Through many years of surveying the business environment, I have rarely heard them ask for money. What they talk about most is to pay taxes in a simple way, to be paid on time, to be remembered when making policies, and to leave with dignity if they unfortunately fail.
None of this requires a dollar of budget, just a change of thinking: the best support is support so businesses don't have to ask.
