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GENERAL GUIDANCE
Company size in Vietnam: micro, small, medium and large
Company size is determined by headcount in social insurance, total revenue or total capital; the law defines three bands of small and medium enterprise: micro, small and medium. Each band has different thresholds depending on the sector.
What company size means
Company size is a way of classifying a business by the scale of its operations and its financial capacity. The classification is used to determine which support policies apply, the tax obligations, the reporting regime and the borrowing conditions appropriate to each band of enterprise.
The factors used to determine size are: the average annual number of employees participating in social insurance, total capital, and total revenue for the year (article 4 of the Law on Support for Small and Medium Enterprises, article 5 of Nghị định 80/2021/NĐ-CP, Decree 80/2021). The sector is the main business line registered. The thresholds differ by sector: agriculture, forestry and fisheries; industry and construction; and trade and services.
The four size bands
Micro enterprise: no more than 10 employees in social insurance on the annual average, and annual revenue of no more than 3 billion đồng (agriculture, forestry, fisheries; industry, construction) or 10 billion đồng (trade, services), or total capital of no more than 3 billion đồng.
Small enterprise: no more than 100 employees and revenue of no more than 50 billion đồng or total capital of no more than 20 billion đồng (agriculture, forestry, fisheries; industry, construction); no more than 50 employees and revenue of no more than 100 billion đồng or total capital of no more than 50 billion đồng (trade, services).
Medium enterprise: no more than 200 employees and revenue of no more than 200 billion đồng or total capital of no more than 100 billion đồng (agriculture, forestry, fisheries; industry, construction); no more than 100 employees and revenue of no more than 300 billion đồng or total capital of no more than 100 billion đồng (trade, services).
An enterprise above these thresholds is not a small or medium enterprise; the law sets no separate criteria for a large one (article 5 of Decree 80/2021).
Why a new company should settle its size at the outset
Charter capital is not a classification criterion: an enterprise is classed as micro, small or medium on its actual headcount, revenue and total capital. That in turn bears on the accounting regime it applies, its tax declaration obligations, and whether it qualifies for the support policies available to small and medium enterprises.
When registering in Gia Lai, the owner should weigh a level of charter capital that fits the line of business and the actual development plan, rather than registering an amount far above or far below what is needed.
LEGAL BASIS
- Nghị định 80/2021/NĐ-CP quy định chi tiết một số điều của Luật Hỗ trợ doanh nghiệp nhỏ và vừa
Frequently asked questions
Must the charter capital be paid in full as soon as the size band is set?
Charter capital is not used to classify size; the criteria are total capital, revenue and headcount. As for contribution, the Law on Enterprises allows 90 days from the issue of the enterprise registration certificate. The enterprise must contribute the full registered amount within the statutory period, failing which it must reduce its charter capital.
Are micro enterprises exempt from accounting formalities?
No. A micro enterprise still has to keep accounts and file tax returns; it simply applies a simpler accounting regime under Thông tư 132/2018/TT-BTC (the micro enterprise accounting circular). One paying corporate income tax on taxable income must produce annual financial statements; one paying it as a percentage of revenue is not required to prepare financial statements for the tax authority. Using an outside accounting service lets a small business comply properly without an in-house accounting department.
Can company size change after formation?
Yes. Size is redetermined from period to period on the basis of actual headcount, capital and revenue. It is not fixed permanently by the original registration. An increase in charter capital must be registered within ten days; an increase in the workforce is not something to register with the business registry.
Related services
- Company formation
- Business registration certificate
- Full-service accounting
- Amending the business registration certificate