Science-technology Development Fund effectively used for digital transformation

The Science-technology Development Fund for Businesses (SDF) has been launched lately, achieving impressive results. In order to make the best use of this fund and avoid waste, it is necessary to remove certain limitations and inadequacies related to procedures and processes.

A business making good use of SDF can upgrade its devices and machines. (Photo: SGGP)

SDF is a useful resource for the development of science-technology in businesses and the society in general, yet the attraction of enterprises contributing to or accessing this fund is rather limited. In 2017 in Ho Chi Minh City, 113 businesses contributed to this fund to raise around VND1.9 trillion (US$80 million), but only VND384 billion ($16.1 million) was used.

Statistics from the HCMC Department of Science and Technology reveal that currently, 79 state-owned enterprises and 45 private ones make contribution to SDF, raising about VND4.4 trillion ($185 million), only 30.7 percent of which has been used.

Therefore, on May 31, 2022, the Science and Technology Ministry issued Circular No.05/2022 about guidance for the use of SDF. The circular stipulates general guidelines, standards for businesses to build, exploit, and use SDF effectively.

However, SDF still possesses certain limitations, leading to low and inefficient disbursement. For instance, some businesses contributing to this fund only make declaration to tax authorities but not to the HCMC Science and Technology Department in accordance with Circular No.5 above; some others are hesitant about using this fund as they do not know the financial settlement procedure when using it, partially due to different interpretations of tax authorities.

Representative of the HCMC Tax Department Hoang Xuan Nam informed that the contribution to SDF is an encouragement policy of the State for businesses to upgrade their technologies. Accordingly, any enterprise formed and working in Vietnam can deliver no more than 10 percent of its annual taxable income to SDF, while state-owned ones must send 3-10 percent to this fund.

When the demands from scientific-technological activities exceed the existing amount, companies are allowed to advance the fund of following years or declare this cost in the expenses when calculating corporate income tax in the tax period. In contrast, when the fund is not used up within a year, state-owned companies must send back at least 20 percent of the surplus money or 70 percent of the set-up amount to the national, ministerial, or local SDF, including transfer.

According to Article 35 of the Law on Technology Transfer, SDF is used to invest, reciprocate capital, receive reciprocal capital for investment in technological innovation, technology incubation, scientific-technological startup incubation, research result commercialization, technology development.

To better use SDF, the HCMC Department of Science and Technology proposed the focus on digital transformation. In other words, businesses can use this money to equip materials and technological facilities for science-technology activities, to develop suitable technologies for information security and cyber safety, to research applications of advanced technologies (virtual reality, 4G and 5G mobile network, cloud computing, remote sensing, geographic information system, speech recognition).

It is hoped that in the near future, SDF will be better exploited to boost science-technologies activities in businesses in HCMC.

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