Circular No. 115/2002/TT-BTC guides preferential policies pursuant to Decision No. 1420/QD-TTg dated November 2, 2001 of the Prime Minister for Vietnam Ship Industry Corporation.

 CIRCULAR

Guidelines for preferential policies pursuant to Decision No. 1420/QĐ-TTg dated November 2, 2001 of the Prime Minister for the Vietnam Ship Industry Corporation.

of the Prime Minister regarding the Vietnam Ship Industry CorporationVietnam Ship Industry Corporation

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MINISTRY OF FINANCE

Pursuant to the Law on Corporate Income Tax and current guiding documents on corporate income tax;

Pursuant to the Law on Export Duties and Import Duties and current guiding documents on export duties and import duties;

Pursuant to Decision No. 1420/QĐ-TTg dated November 2, 2001 of the Prime Minister approving the development plan for the Vietnam Ship Industry Corporation for the period 2001-2010;

The Ministry of Finance guides the implementation of financial support policies and tax preferences to develop the Vietnam Ship Industry Corporation for the period 2001-2010 as follows:

I. SCOPE OF APPLICATION

The entities eligible to benefit from financial support policies and tax preferences as stipulated in Decision No. 1420/QĐ-TTg dated November 2, 2001 of the Prime Minister and as detailed in this Circular include:

- Enterprises under the Vietnam Ship Industry Corporation directly engaged in shipbuilding.

- Other enterprises under the Vietnam Ship Industry Corporation assigned to cooperate in production, supply materials, raw materials, semi-finished products serving shipbuilding activities.

II. SPECIFIC CONTENTS OF PREFERENCES

A. ON ENTERPRISE INCOME TAX

1. Enterprises engaged in shipbuilding under the Vietnam Ship Industry Corporation shall be refunded the entire amount of enterprise income tax generated from shipbuilding activities and other activities arising during the period 2002-2010 to supplement investment capital for the Vietnam Ship Industry Corporation to implement the approved development plan as per Decision No. 1420/QĐ-TTg dated November 2, 2001 of the Prime Minister.

2. The refunded enterprise income tax must only be used for investment in projects included in the approved list as per Decision No. 1420/QĐ-TTg dated November 2, 2001 of the Prime Minister and in accordance with the current regulations on investment management and construction.

3. Enterprises engaged in shipbuilding under the Vietnam Ship Industry Corporation shall pay enterprise income tax in accordance with current regulations and report the amounts paid to the Vietnam Ship Industry Corporation (with confirmation from the local Tax Department).

4. Based on the actual enterprise income tax paid annually to the State Budget by shipbuilding enterprises, the Ministry of Finance will process the refund to supplement the investment capital of the Vietnam Ship Industry Corporation.

5. The refunded enterprise income tax to supplement the investment capital of the Vietnam Ship Industry Corporation shall be recorded as an increase in the development fund from state capital of the Vietnam Ship Industry Corporation.

6. Annually, the Vietnam Ship Industry Corporation is responsible for developing business operation plans, basic construction investment plans from enterprise income tax revenue, budgeted tax payments, and projected enterprise income tax liabilities, and submitting them to the Ministry of Finance (Enterprise Financial Department) for inclusion in the supplementary investment capital budget for the Vietnam Ship Industry Corporation.

7. The documents and procedures for refunding enterprise income tax paid by shipbuilding enterprises to the State Budget include:

- A letter from the Vietnam Ship Industry Corporation to the Ministry of Finance requesting a refund of enterprise income tax, specifying the total enterprise income tax paid by shipbuilding enterprises to the State Budget, tax identification number, and bank account number of the Vietnam Ship Industry Corporation.

- Confirmation from the local tax authority regarding the total enterprise income tax payable, paid in the year by shipbuilding enterprises to the State Budget.

- Annual tax settlement.

Refunding enterprise income tax paid to the State Budget for the Vietnam Ship Industry Corporation will be processed after the annual tax settlement of shipbuilding enterprises.

B. ON IMPORT DUTIES

1. Exemption from import duties until December 31, 2010, for machinery, equipment, transportation means (part of the production line) to become fixed assets of shipbuilding enterprises under the Vietnam Ship Industry Corporation that cannot be produced domestically or do not meet domestic quality standards. For other member enterprises under the Vietnam Ship Industry Corporation cooperating in shipbuilding, exemption from import duties applies only to machinery and equipment imported solely for the purpose of producing materials, raw materials, semi-finished products, components, and spare parts for the main shipbuilding enterprise, subject to approval by the Ministry of Industry.

Shipbuilding enterprises must register import plans and commit to customs authorities regarding the importation of machinery, equipment, transportation means (part of the production line) to serve shipbuilding. Customs authorities will base their procedures for duty exemptions on the list of domestically produced equipment issued by the Ministry of Planning and Investment. For equipment listed by the Ministry of Planning and Investment but failing to meet quality standards, a separate approval letter from the Ministry of Industry is required before customs can process the duty exemption.

2. Exemption from import duties until December 31, 2010, for raw materials, semi-finished products imported by enterprises under the Vietnam Ship Industry Corporation to serve shipbuilding that cannot be produced domestically or do not meet domestic quality standards.

The list of materials, semi-finished products imported because they are not yet produced domestically or are not produced to meet the required standards and quality regulations for shipbuilding shall be issued by the Ministry of Industry. In cases where ship products have been initiated but the Ministry of Industry has not yet issued the list of materials and semi-finished products that need to be imported due to non-domestic production or non-compliance with required standards and quality regulations for shipbuilding, the Ministry of Industry shall determine the list of materials and semi-finished products for each specific product.

3. Annually or periodically (quarterly, six-monthly, annually), shipbuilding enterprises under the Vietnam Ship Industry Corporation must develop production plans, compile lists, and import plans for machinery, equipment, transportation means (part of the technological chain) to create fixed assets of the enterprise and materials, semi-finished products that need to be imported because they are not yet produced domestically or are not produced to meet the required standards and quality regulations for shipbuilding, and submit these to the customs authority handling the import procedures for registration of duty-free importation. For joint enterprises participating in shipbuilding, the submitted documents must include contracts for producing or processing materials and semi-finished products with direct shipbuilding enterprises and confirmation documents from the Ministry of Industry regarding their participation.

Based on comparing the lists issued by the Ministry of Planning and Investment and the Ministry of Industry (or confirmed by the Ministry of Industry regarding the list of materials and semi-finished products eligible for duty-free importation for each ship product) and the lists registered by the enterprises, the customs authority will temporarily refrain from collecting import duties according to each actual importation by the enterprise. The importing enterprise must settle the actual amount of duty-free importation to the state budget with the customs authority.

By the end of the year, the importing enterprise must consolidate and submit a final report to the customs authority no later than March 31 of the following year regarding the quantity imported, the quantity used for shipbuilding purposes, the quantity carried over to the next year, the quantity sold or not used for shipbuilding purposes.

The customs authority, in coordination with the local tax office directly managing the enterprise, shall inspect and settle the situation of using imported machinery, equipment, transportation means (part of the technological chain) and materials, semi-finished products eligible for duty-free importation in the aforementioned cases. If misuse of imported goods is detected, taxes previously exempted must be recovered and penalties imposed according to the law.

C. REGARDING THE USE OF FUNDS

Shipbuilding enterprises under the Vietnam Ship Industry Corporation are allowed to retain the entire amount of funds generated from the use of capital during the period 2002-2010 to supplement investment capital and implement Circular No. 30/2002/TT-BTC dated March 27, 2002, of the Ministry of Finance, guiding the temporary use of state-owned enterprise funds.

D. SUPPORT POLICY FOR LAND RENT

New construction projects of the Vietnam Ship Industry Corporation are exempted or reduced from land rent and land tax according to current regulations.

Other support mechanisms to implement the development program of the Vietnam Ship Industry Corporation for the period 2001-2010 as stipulated in Decision No. 1420/QĐ-TTg dated November 2, 2001, of the Prime Minister shall be implemented according to the current system.

III. IMPLEMENTATION

This Circular takes effect from the date Decision No. 1420/QĐ-TTg dated November 2, 2001, of the Prime Minister comes into force.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for timely supplementation to ensure compliance./.