New criteria for evaluating advanced tech enterprises

Enterprise revenue, average total expenditure and number of workers are some of the factors considered in new regulations for becoming a hi-tech enterprise.

The existing 2014 Investment Law and Decision No 19/2015/QĐ-TTg have adjusted the content of Article 18 of the 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 prioritised 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’s value structure;

● Being highly competitive and creating great socio-economic benefits;

● Being exportable or able to substitute imports; and

● Contributing to the improvement of national scientific and technological capacity.

Second, not only is it compulsory for enterprises to apply eco-friendly measures but they must also ensure energy-efficient production and product quality control, which must be carried out in accordance with the technical regulations and standards of Việt Nam or those of a specialised international organization (where Việt Nam’s technical regulations and standards have yet to be issued).

Further, it has been made mandatory for the turnover earned from hi-tech products to be at least 70 per cent of the company’s total annual net revenue. Under previous provisions, the enterprise’s average turnover from hi-tech products for three consecutive years only needed to be at least 60 per cent of the total annual turnover and more than 70 per cent from the fourth year onwards.

In addition, two of the factors for being qualified as a hi-tech enterprise are stipulated in Decision No 19/2015/QĐ-TTg: total expenditure on research and development activities in Việt Nam and the number of qualified employees, based on whether the company is a small or medium enterprise or has total capital of more than VNĐ100 billion (US$4.5 million).

● Regarding the conditions on total expenditure, the new regulations stipulate that the percentage of total expenditure on research and development activities in Việt Nam shall be calculated based on the total annual net revenue, instead of the average total expenditure per year.

For small and medium enterprises, this percentage must be at least 1 per cent.

For enterprises with total capital of more than VNĐ100 billion and more than 300 employees, this percentage must be at least 0.5 per cent.

● Regarding the conditions on the number of employees with technical qualifications, previously, employees who possessed a university degree or higher and personally conducted research and development activities had to account for at least 5 per cent of the total number of workers.

Decision No 19/2015/QĐ-TTg still applies this regulation to small and medium enterprises. However, for enterprises with total capital exceeding VNĐ100 billion and with more than 300 employees, this percentage must be at least 2.5 per cent, but there should be no fewer than 15 people.

In the event that an application for a Certificate of High Technology Enterprise is submitted before August 1, 2015, but the certificate has yet to be granted, enterprises must comply with the abovementioned conditions to be recognised as hi-tech enterprises. — PLF – LAW FIRM