Circular No. 151/2010/TT-BTC guides the application of various taxes and payments to the State budget for the Land Development Fund as stipulated in Article 34 of Decree No. 69/2009/NĐ-CP dated August 13, 2009, of the Government on additional provisions regarding land planning, land prices, land recovery, compensation, support, and resettlement.

CIRCULAR

Guidelines on the application of taxes and budget contributions to land development funds as stipulated in Article 34

Decree No. 69/2009/NĐ-CP dated August 13, 2009 of the Government detailing additional provisions on land planning, land prices, land recovery, compensation, support, and resettlement

land, land price, land recovery, compensation, support, and resettlement

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Based on current laws and ordinances on taxes, fees, and charges, and detailed implementing decrees of the Government for such laws and ordinances;

Based on Decree No. 118/2008/NĐ-CP dated November 27, 2008 of the Government detailing the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decree No. 69/2009/NĐ-CP dated August 13, 2009 of the Government on additional provisions regarding land use planning, land prices, land recovery, compensation, support, and resettlement;

Based on Decision No. 40/2010/QĐ-TTg dated May 12, 2010 of the Prime Minister on the issuance of a model regulation on the management and use of land development funds;

The Ministry of Finance hereby provides guidelines on the exemption of taxes and budget contributions for land development funds as follows:

Article 1. Scope and Applicability

This Circular guides on the types of taxes and budget contributions applicable to land development funds as stipulated in Article 34 of Decree No. 69/2009/NĐ-CP dated August 13, 2009 of the Government detailing additional provisions on land planning, land prices, land recovery, compensation, support, and resettlement (hereinafter referred to as Decree No. 69/2009/NĐ-CP) and Decision No. 40/2010/QĐ-TTg dated May 12, 2010 of the Prime Minister on the issuance of a model regulation on the management and use of land development funds (hereinafter referred to as Decision No. 40/2010/QĐ-TTg and the accompanying model regulation issued pursuant to Decision No. 40/2010/QĐ-TTg). Prime Minister's Decision on the issuance of the Model Regulation on the management and use of the Land Development Fund (hereinafter referred to as Decision No. 40/2010/QD-TTg and the Model Regulation issued together with Decision No. 40/2010/QD-TTg).

Article 2. Types of Taxes and Budget Contributions Applicable to Land Development Funds

1. Regarding Corporate Income Tax

a) Any surplus revenue over expenses (if any) from activities carried out under Clause 1 of Article 34 of Decree No. 69/2009/NĐ-CP and Clause 1 of Article 11 of the Model Regulation on the Management and Use of Land Development Funds shall not be subject to corporate income tax.

b) Income from other activities outside those specified in Clause 1 of Article 34 of Decree No. 69/2009/NĐ-CP and Clause 1 of Article 11 of the Model Regulation on the Management and Use of Land Development Funds shall be subject to corporate income tax at a rate of 25% as prescribed by the Law on Corporate Income Tax and related guiding documents.

Where:

Revenue for calculating taxable income includes revenues specified in Points b, c, d, and đ of Clause 1 of Article 18 of the Model Regulation on the Management and Use of Land Development Funds.

Deductible expenses when determining corporate income tax for land development funds include actual expenses incurred, related to activities generating taxable revenue during the tax period, with valid and lawful invoices and documents in accordance with the Law on Corporate Income Tax and related guiding documents, excluding expenses funded by state budgets.

In cases where land development funds have income from activities subject to corporate income tax but record revenue without identifying corresponding costs and business income, they shall declare and pay corporate income tax based on a percentage of sales revenue and service revenue, specifically as follows:

- For services: 5%;

- For goods trading: 1%;

- For other activities: 2%.

2. Regarding Value Added Tax

a) Activities of providing capital loans and support provided by land development funds in accordance with Clause 1 of Article 34 of Decree No. 69/2009/NĐ-CP and Clause 1 of Article 11 of the Model Regulation on the Management and Use of Land Development Funds are exempt from value added tax.

b) Where provincial People's Committees decide to entrust land development funds or other local financial funds to manage land development funds or where land development funds accept entrusted management and use of capital from domestic and foreign organizations and individuals, the service fee for entrusting/receiving entrusting (excluding service fees for entrusting/receiving entrusting loans) shall be subject to value added tax.

c) Land development funds providing services not covered by Point a of Clause 2 of this Article or purchasing/importing goods/services subject to value added tax for fund operations shall pay value added tax according to current regulations.

d) Land development funds shall declare, deduct, pay, and refund value added tax in accordance with the Law on Value Added Tax and related guiding documents.

Fixed assets formed from state budget funds shall not be deductible for value added tax and shall be included in the original cost of fixed assets.

Where fixed assets are partially formed from state budget funds, the input value added tax deduction shall not apply in proportion to the percentage of state budget funds on the total capital forming the fixed assets. In cases where land development funds operate under the financial mechanism for public service units that self-finance part of their operational costs as stipulated in Clause 1 of Article 14 of Decree No. 43/2006/NĐ-CP dated April 25, 2006 of the Government on the rights of self-management, self-responsibility for performing tasks, organizational structures, staffing, and finance for public service units, they shall not declare deductions for value added tax on goods and services purchased using state-provided funding.

3. Regarding stamp duty, import duty, special consumption tax, indirect taxes, and other budget contributions (if any), land development funds shall comply with current laws and regulations.

Article 3. Implementation Organization

This Circular takes effect 45 days from the date of signature. Other matters not addressed in this Circular shall be implemented in accordance with current laws and regulations on taxation and finance. In case of difficulties during implementation, units are advised to report to the Ministry of Finance for consideration and decision.