Decision No. 130/2007/QD-TTg On certain mechanisms and financial policies for investment projects under the Clean Development Mechanism

 

Pursuant to …;

ON CERTAIN MECHANISMS AND FINANCIAL POLICIES FOR CLEAN DEVELOPMENT MECHANISM PROJECTS

PRIME MINISTER

Based on the Law on the Organization of the Government dated December 25, 2001;

Pursuant to the Investment Law No. 59/2005/QH11 dated November 29, 2005;

Pursuant to the Environmental Protection Law No. 52/2005/QH11 dated November 29, 2005;

Pursuant to Decree on Fees and Charges No. 38/2001/PL-UBTVQH10 dated August 28, 2001;

At the proposal of the Minister of Finance,

DECISION:

Article 1. Scope and Applicability

These regulations stipulate clean development mechanism projects and certain mechanisms and financial policies for clean development mechanism projects (hereinafter referred to as CDM projects).

Article 2. Interpretation of Terms

In this Decision, the following terms shall be understood as follows:

1. A CDM project is an investment production project using new and advanced environmentally friendly technology with greenhouse gas emission reduction results approved for registration and issuance of certified emission reductions certificates by the Clean Development Mechanism Executive Board (a body established and authorized by participating countries under the Climate Convention to oversee CDM projects).

2. Greenhouse gas emissions refer to emissions of gases causing climate change controlled by the Kyoto Protocol including: CO₂, CH₄, N₂O, HFC_{"7. A flexible power plant is a thermal power plant using reciprocating internal combustion engines (RICE) or aeroderivative gas turbines (Aero-GT) with fast start-up capabilities, designed in modular form to generate electricity for balancing capacity and maintaining power system stability."}, PFC_{"7. A flexible power plant is a thermal power plant using reciprocating internal combustion engines (RICE) or aeroderivative gas turbines (Aero-GT) with fast start-up capabilities, designed in modular form to generate electricity for balancing capacity and maintaining power system stability."}, SF₆ and other gases specified in the Kyoto Protocol.

3. Certified Emission Reductions (CERs) are emission reductions certified by the Clean Development Mechanism Executive Board for CDM projects. One CER is equivalent to one ton of CO₂ .

4. The validity period of CERs is determined by the Clean Development Mechanism Executive Board when issuing CERs.

5. The completion time of CERs transfer is the time when all agreements regarding the sale of CERs have been completed and the seller has received payment from the buyer.

6. The national authority responsible for CDM is the Ministry of Natural Resources and Environment.

Article 3. Fields of construction and investment in CDM projects

1. The fields of construction and investment in CDM projects include all economic sectors that result in greenhouse gas emission reductions, including the following:

a) Improving energy efficiency, conservation, and savings;

b) Exploiting and applying renewable energy sources;

c) Switching to fossil fuel usage to reduce greenhouse gas emissions;

d) Recovering and utilizing associated gas from oil fields;

đ) Recovering methane (CH₄) from waste landfills, from coal mines for destruction or power generation and daily use;

e) Planting or replanting forests to increase carbon absorption and reduce greenhouse gas emissions;

f) Reducing methane (CH₄) emissions from agricultural and livestock activities;

g) Other sectors that result in greenhouse gas emission reductions.

2. The Ministry of Natural Resources and Environment shall provide specific guidance on the fields of construction and investment in CDM projects as stipulated in Clause 1 of this Article.

Article 4. Forms of construction and investment in CDM projects

CDM projects are new investment projects, deepened investment projects, or expanded investment projects that result in greenhouse gas emission reductions in the following forms:

1. Domestic investors build CDM projects; they invest capital in the form of money and other lawful assets to implement CDM projects in Vietnam.

2. Foreign investors build CDM projects; they bring in capital or technology to Vietnam to implement CDM projects.

3. Domestic investors and foreign investors use consulting services to build CDM projects and implement or jointly implement CDM projects in Vietnam.

Article 5. Conditions for CDM projects

1. CDM projects must meet the following conditions:

a) They must be constructed in accordance with current laws on investment, consistent with the strategies and plans for development of ministries, sectors, and localities, and contribute to ensuring sustainable development in Vietnam;

b) Investors must construct and implement projects voluntarily, complying with Vietnamese laws and international treaties to which Vietnam is a party;

c) They must ensure feasibility with advanced technology and appropriate financing, not using official development assistance (ODA) funds or state budget investment funds to obtain CERs transferred to foreign CDM project investors;

d) They must achieve actual, additional greenhouse gas emission reductions, calculated and monitored according to specific plans;

đ) They must have an environmental impact assessment report;

e) They must be registered with the Clean Development Mechanism Executive Board and approved by the Clean Development Mechanism Executive Board;

f) The implementation process must not generate any new responsibilities for the Government of Vietnam beyond those already defined in the Kyoto Protocol;

g) They must be implemented in accordance with the procedures and formalities prescribed for CDM projects, and be issued with a confirmation letter or approval letter by the Ministry of Natural Resources and Environment.

2. The Ministry of Natural Resources and Environment shall provide guidance on implementing the provisions of Point g, Clause 1 of this Article.

Article 6. Rights and Obligations of Investors Building and Implementing CDM Projects

1. Investors building and implementing CDM projects in Vietnam have the following rights:

a) Enjoy incentives: tax benefits; land use fees, land lease fees; depreciation of fixed assets; state investment credit as stipulated in this Decision.

b) Be considered for subsidies for products of CDM projects in priority areas.

c) Be considered for financial support in project planning and implementation according to current laws.

d) Sell CERs owned by themselves in accordance with current laws.

đ) Access and provide information related to determining the selling price of CERs.

e) Prioritize consumption of products from CDM projects over similar products not from CDM projects.

2. Investors building and implementing CDM projects in Vietnam have the following obligations:

a) Register with the tax authority when the project starts operation to enjoy tax incentives.

b) Register with the Vietnam Environmental Protection Fund regarding CERs granted by the International Executive Board for CDM projects.

c) Fulfill financial obligations as prescribed for CDM projects, pay fees as stipulated in Article 9 of this Decision and according to laws on fees and charges.

d) Be subject to supervision by competent authorities as prescribed for CDM projects.

đ) Report to the National Authority for CDM about project activities and the point of contact for receiving CERs granted by the International Executive Board for CDM projects as prescribed.

Article 7. Management and Use of CERs

1. CERs owned by investors building and implementing CDM projects are monitored and managed through the Vietnam Environmental Protection Fund.

The Vietnam Environmental Protection Fund is responsible for organizing monitoring and management of CERs granted by the International Executive Board for CDM projects implemented in Vietnam.

2. When receiving, dividing, and selling CERs, the owner of CERs or the point of contact for CERs must register with the Vietnam Environmental Protection Fund and report to the National Authority for CDM.

Article 8. Time of Sale and Selling Price of CERs

1. After receiving CERs, investors building and implementing CDM projects may immediately offer them for sale to interested partners or choose an appropriate time within the validity period of the CERs.

2. The selling price of CERs is determined based on market prices at the time of sale.

3. The Ministry of Natural Resources and Environment is responsible for advising, supporting, and overseeing the sale of CERs.

Article 9. Fees for Selling CERs

1. Investors building and implementing CDM projects must pay fees for selling CERs when selling CERs.

2. The fee for selling CERs is calculated as a percentage of the amount received from selling CERs by investors building and implementing CDM projects.

In cases where the owner of CERs is a foreign investor who does not sell CERs for money but transfers them back to their home country to fulfill greenhouse gas emission reduction obligations, they must pay the fee based on the market value of the CERs held at the time of transfer.

3. The Vietnam Environmental Protection Fund is responsible for collecting fees for selling CERs. The fees for selling CERs are used to cover costs for collecting fees; supporting dissemination and promotional activities on CDM; preparing, constructing, and approving CDM project documentation; managing and supervising the implementation of CDM projects and other purposes related to CDM as prescribed by law; subsidizing products of CDM projects in priority areas.

4. The Ministry of Finance shall specify the collection rate of fees for selling CERs; guide the management and use of funds from fees for selling CERs as stipulated in Clause 3 of this Article.

Article 10. Accounting for Costs and Revenue of CDM Projects

1. The accounting for investment costs, operational costs of CDM projects, and revenue from business operations of CDM projects shall be carried out in accordance with current laws.

2. Revenue from selling CERs shall be accounted for as other income; investors constructing and implementing CDM projects may choose to account for it as income in the year of sale of CERs or allocate it over the years as provided for in Clause 3 of this Article.

3. Allocation of revenue from selling CERs shall be conducted as follows:

a) In cases where CERs are sold immediately upon becoming effective, revenue from selling CERs shall be allocated over the corresponding period of time during which the CERs are effective.

b) In cases where CERs are sold at any point within the period during which they are effective, revenue from selling CERs shall be allocated over the years corresponding to the remaining period of effectiveness of the CERs.

Article 11. Depreciation of Fixed Assets

Fixed assets formed from CDM projects shall apply the accelerated depreciation method as prescribed in the regulations on fixed asset depreciation.

Article 12. Corporate Income Tax for CDM Projects

1. The corporate income tax rate, exemptions, and reductions for CDM projects shall be implemented as for projects in special preferential investment sectors as stipulated in Clause III, Section A, Appendix I of the Investment Priority Sector List issued together with Decree No. 108/2006/NĐ-CP dated September 22, 2006 detailing and guiding the implementation of certain provisions of the Investment Law; the Corporate Income Tax Law, and other guiding documents for the Corporate Income Tax Law.

2. In cases where CDM projects are expansion projects, deepening investment projects, or projects supplementing equipment for operating production and business establishments, additional income generated from new investments shall enjoy corporate income tax incentives as specified in Clause 1 of this Article. Production and business establishments must separately account for the additional income generated from new investments to determine the corporate income tax benefits, exemptions, and reductions.

3. In cases where CDM projects choose to account for all revenue from selling greenhouse gas emission reduction volumes as other income of the year of sale as provided for in Clause 2 of Article 10 of this Decision, investors constructing and implementing CDM projects may choose to pay corporate income tax once or annually according to the Corporate Income Tax Law.

Article 13. Import Duties

CDM projects shall be exempted from import duties on goods imported to form fixed assets of the project, and on raw materials, components, semi-finished products that are not domestically produced and imported for the project's production activities, as stipulated in Clause 6 and Clause 16, Article 16 of Decree No. 149/2005/NĐ-CP dated December 8, 2005 of the Government detailing the implementation of the Export Tax, Import Tax Law, and current laws on Export Tax, Import Tax.

Article 14. Land Use Fees, Land Rent Payments

CDM projects shall be exempted or reduced from land use fees and land rent payments in accordance with current laws applicable to projects in special preferential investment sectors.

Article 15. Mobilization of Investment Capital

1. Investors are permitted to mobilize capital through cooperation and collaboration with other enterprises, economic organizations, financial institutions both within and outside the country to construct CDM projects and invest in implementing CDM projects.

2. CDM projects that meet the conditions stipulated in Decree No. 151/2006/NĐ-CP dated December 20, 2006 of the Government on state investment credit and export credit shall enjoy state investment credit policies.

3. In cases where CDM projects have been registered by the International Executive Board for CDM and contracts for selling CERs have been signed with partners, they shall be given priority for loan consideration.

Article 16. Subsidies for Products of CDM Projects

1. Products of CDM projects shall be subsidized from the Vietnam Environmental Protection Fund when meeting the following conditions:

a) The products of CDM projects fall within the priority sectors.

b) The actual production costs exceed the actual sales price under the signed contract.

2. The subsidy period for products of CDM projects shall be determined based on the time when the project produces products and the ability to offset the production costs of subsidized products.

3. The Vietnam Environmental Protection Fund shall provide subsidies for products of CDM projects according to the provisions of this Decision and the guidance of the Ministry of Finance.

4. The Ministry of Finance shall take the lead in coordinating with the Ministry of Natural Resources and Environment to provide specific guidance on subsidy conditions, subsidy levels, and subsidy periods for products of CDM projects that meet the conditions for receiving subsidies.

Article 17. Implementation Organization

1. This Decision shall take effect fifteen days from the date of publication in the Official Gazette.

2. CDM projects constructed and implemented before the effective date of this Decision must register the issued CERs with the Vietnam Environmental Protection Fund and report to the national competent authority on CDM within ninety days for monitoring and management and to enjoy the rights and fulfill the obligations prescribed in this Decision.

3. The Minister of Finance and the Minister of Natural Resources and Environment shall provide specific guidance on the implementation of this Decision.

4. Ministers, heads of ministerial-level agencies, heads of government-affiliated agencies, Chairpersons of provincial People's Committees directly under the central government, and heads of related organizations and agencies are responsible for enforcing this Decision./.