Circular No. 130/1999/TT-BTC guiding the financial regime to be piloted in the Bo Y - Ngoc Hoi border gate area in Kon Tum province.

CIRCULAR

Guidelines for Financial Regime to be Pilot Applied

||at the Border Gate Area of Bo Y - Ngoc Hoi, Kon Tum Province

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Pursuant to Decision No. 06/QĐ-TTg dated January 5, 1999 of the Prime Minister approving the project on economic and social development in the border gate area of Bo Y - Ngoc Hoi, Kon Tum Province, the Ministry of Finance guides the implementation of financial regimes to be pilot applied in the border gate area of Bo Y - Ngoc Hoi, Kon Tum Province as follows:

I. SCOPE AND OBJECTS OF APPLICATION

1. Scope of Application:

In accordance with Article 1 of Decision No. 06/QĐ-TTg dated January 5, 1999 of the Prime Minister approving the project on economic and social development in the border gate area of Bo Y - Ngoc Hoi, Kon Tum Province, the scope of pilot application of certain financial policies stipulated in this Circular includes: Sa Loong, Bo Y, Dak Su, Dak Nong, Dak Duc communes and Plei Kan town under Ngoc Hoi district, Kon Tum Province (hereinafter referred to as the Bo Y border gate area).

2.1. Objects entitled to enjoy financial preferential policies stipulated in this Circular include domestic and foreign investors investing in production, business, and infrastructure construction in the Bo Y border gate area in compliance with the Law on Encouraging Domestic Investment (amended) and the Law on Foreign Investment in Vietnam, specifically as follows:

2. Recipients of incentives:

a) Domestic investors include: Limited liability companies; joint stock companies; partnerships; private enterprises; cooperatives, cooperative unions; state-owned enterprises; private, self-financed, and semi-public educational and training institutions; private health care facilities; ethnic cultural establishments established and operating legally; businesses of political organizations, socio-political organizations, and trade associations registered for business in accordance with the law; individuals and business groups established and operating in accordance with Decree No. 66/HĐBT dated March 2, 1992 of the Council of Ministers (now the Government); Vietnamese citizens, overseas Vietnamese, foreigners permanently residing in Vietnam; purchasing shares or contributing capital to Vietnamese enterprises.

b) Foreign investors include economic organizations and individuals from foreign countries investing in Vietnam in the following forms: joint ventures, wholly foreign-owned enterprises; foreign parties participating in Business Cooperation Contracts, Build-Operate-Transfer (BOT) Contracts, Build-Transfer-Operate (BTO) Contracts, and Build-Transfer (BT) Contracts; overseas Vietnamese investing in Vietnam according to the forms prescribed in the Law on Foreign Investment in Vietnam; and foreign organizations and individuals conducting business not under the Law on Foreign Investment in Vietnam.

2.2. Only production and business activities conducted in the Bo Y border gate area fall within the scope of enjoying preferential treatment guided by this Circular.

In cases where domestic and foreign investors invest in the Bo Y border gate area without establishing an economic entity in this area, they must separately account for their production and business activities and infrastructure construction on the local territory to have a basis for determining preferential treatment.

II. SPECIFIC GUIDELINES.

1. Preferential treatments regarding land rent, water surface rent, and tax.

1.1. Preferential treatment regarding land rent and water surface rent:

Domestic and foreign investors investing in production, business, and infrastructure construction in the Bo Y border gate area, when renting land and water surfaces from the State, besides enjoying existing preferential exemptions and reductions under current State regulations, also receive an additional 50% reduction in land and water surface rents compared to the current rental prices for land and water surfaces in the Bo Y border gate area, in accordance with current regulations on determining rental prices for land and water surfaces. The authority to resolve preferential treatments regarding land and water surface rents is decided by the Chairman of the People's Committee of Kon Tum Province.

1.2. Preferential treatment regarding tax on income repatriation:

Income obtained by foreign investors from investment activities in the Bo Y border gate area (including tax refunds, income from capital transfers, and other income) if transferred abroad or kept outside Vietnam must be subject to a 5% tax on income repatriation.

1.3. Other taxes, fees, and charges:

Other taxes, fees, and charges shall be implemented in accordance with current laws on taxes, the Law on Encouraging Domestic Investment, the Law on Foreign Investment in Vietnam, and other relevant legal documents.

2. Mobilizing domestic and foreign capital.

2.1. Domestic and foreign investors investing in production, business, and infrastructure construction in the Bo Y border gate area are allowed to mobilize domestic and foreign capital through all appropriate means such as borrowing from organizations and individuals, issuing corporate bonds, issuing stocks... in accordance with current Vietnamese laws to create sources of capital for business development.

2.2. Within its functional, task, and authority scope, the People's Committee of Kon Tum Province is permitted to apply appropriate methods to raise funds for infrastructure construction in the Bo Y border gate area, such as issuing special lottery tickets, reporting to the Government for permission to issue construction bonds, mobilizing public labor contributions... in accordance with current legal regulations.

3. Management of state budget investment capital for infrastructure construction and development in the Bo Y border gate area.

3.1. Preparation of annual investment budget for the Bo Y border gate area:

a) Annually (during the period 2000-2004), based on the approved provincial budget revenue forecast (excluding VAT on imported goods) in the Bo Y border gate area by the People's Council of Kon Tum Province and approved by the Ministry of Finance in the annual provincial budget, the People's Committee of Kon Tum Province proposes the amount of state investment capital allocated annually through the provincial budget for the Bo Y border gate area (details for each investment project, classified by group and prioritized) to be submitted to the Ministry of Planning and Investment and the Ministry of Finance for review.

a) Annually (during the period from 2000 to 2004), based on the budget revenue forecast (excluding value-added tax on imported goods) within the border gate area of Bo Y, which has been approved by the People's Council of Kon Tum Province and endorsed by the Ministry of Finance in the annual provincial budget of Kon Tum Province, the People's Committee of Kon Tum Province proposes the annual state capital investment amount for the Bo Y border gate area through the provincial budget (detailed for each project, categorized by group and prioritized) to be submitted for consideration by the Ministry of Planning and Investment and the Ministry of Finance.

b) On the basis of the budget revenue forecast for the border gate area of Bo Y (excluding value-added tax on imported goods) and the proposal of the People's Committee of Kon Tum Province, the Ministry of Finance shall determine the total state budget capital investment annually for the border gate area of Bo Y equal to the entire (100%) budget revenue within the border gate area of Bo Y in that year (excluding value-added tax on imported goods). This investment capital will be provided by the Ministry of Finance through the Department of Finance and Price of Kon Tum Province for investment in the border gate area of Bo Y;

c) The Ministry of Planning and Investment shall coordinate with the Ministry of Finance regarding the total investment capital, the level of capital for each sector of investment projects, and other related issues before issuing a decision to approve the investment budget for the period 2000-2004 and the annual investment budget based on the state budget capital allocated specifically to Kon Tum Province;

d) Based on the notification from the Ministry of Planning and Investment on the annual investment capital from the central budget for the border gate area of Bo Y, the People's Committee of Kon Tum Province shall be responsible for preparing the quarterly investment capital usage budget and submitting it to the Ministry of Finance (no later than the 20th day of the last month of each quarter);

e) On the basis of the annual investment budget, the quarterly investment capital usage budget prepared by the locality, and the capacity of the central budget at each point in time, the Ministry of Finance shall determine and notify the quarterly investment capital budget to the People's Committee of Kon Tum Province;

f) The state investment capital for the border gate area of Bo Y through the provincial budget must be reviewed the following year based on the actual revenue of the previous year to adjust the investment capital budget for the next year. The difference between the actual revenue exceeding or falling short of the initial revenue forecast will be adjusted into the investment capital budget for the next year. This investment capital is determined as targeted assistance from the central budget to the province, not included in the expenditure tasks of the local budget;

3.2. Methods of disbursement, reporting, settlement, and management of investment capital for the border gate area of Bo Y:

a) According to the approved annual and quarterly investment capital usage budgets, the Ministry of Finance (central budget) shall provide capital for approved investment projects funded by the Kon Tum Province budget;

b) All central budget capital allocated to the border gate area of Bo Y through the provincial budget must be used exclusively for the purpose of constructing infrastructure according to the overall planning of the border gate area of Bo Y, which has been approved by the competent authority, and must be managed in accordance with current regulations on investment and construction management. During the implementation process, the locality may proactively adjust the investment capital levels among projects within the approved total capital and report to the Ministry of Planning and Investment and the Ministry of Finance. If there is a change in the project list, a formal written agreement from the Ministry of Planning and Investment is required;

The investment capital for the border gate area of Bo Y through the provincial budget shall be reflected collectively in the monthly financial reports and annual settlement reports of the locality but recorded separately for investment projects in the border gate area of Bo Y (including both specifically allocated budget capital and capital raised by the province);

Quarterly, the People's Committee of Kon Tum Province shall be responsible for reporting to the Ministry of Finance and the Ministry of Planning and Investment on the implementation of capital allocation and construction progress for each project; at the end of the year, report to the Prime Minister (to be sent concurrently to the Ministry of Finance and the Ministry of Planning and Investment) on the results of the year's implementation;

3.3. Management, disbursement, and settlement of investment capital for each investment project in the border gate area of Bo Y must be carried out in accordance with current state regulations;

4. Procedures for enjoying investment incentives:

The procedures for applying for investment incentives as stipulated in this Circular shall be implemented in accordance with current regulations on procedures for enjoying land rental fee incentives and tax incentives as prescribed in existing documents on land leasing, water surface use, and tax regimes;

III. IMPLEMENTATION

1. This Circular takes effect from January 20, 1999 (the date when Decision No. 06/QĐ-TTg comes into force). All previous financial regulations applied in the border gate area of Bo Y contrary to the guidelines set forth in this Circular are hereby abolished;

2. In the course of implementation, if any difficulties arise, please reflect them to the Ministry of Finance for study and resolution./.