Circular No. 162/1998/TT-BTC guides the financial regime to be piloted in the international border gate area of Cau Treo, Ha Tinh province.

CIRCULAR

ISSUED BY THE MINISTRY OF FINANCE DECREE NO. 162/1998/TT-BTC ON DECEMBER 17, 1998
GUIDELINES FOR THE APPLICATION OF FINANCIAL REGIMES IN THE INTERNATIONAL BORDER GATE CAU TREO ZONE, HA TINH PROVINCE

Pursuant to Decision No. 177/1998/QĐ-TTg dated September 15, 1998 of the Prime Minister on the application of certain policies in the international border gate Cau Treo zone, Ha Tinh province, the Ministry of Finance guides the implementation of financial regimes applicable in the international border gate Cau Treo zone, Ha Tinh province as follows:

I. GENERAL PROVISIONS

1. Scope of Application:

In accordance with Article 1 of Decision No. 177/1999/QĐ-TTg dated September 15, 1998 of the Prime Minister, the scope of application for the pilot financial policies stipulated in this Circular includes Kim Son Commune and Tay Son Town, Huong Son District, Ha Tinh Province.

The above area will be referred to in this Circular as the international border gate Cau Treo zone.

2. Beneficiaries of Preferential Treatment:

The beneficiaries of the preferential financial policies prescribed in this Circular are domestic and foreign investors investing in production, business, and infrastructure construction in the international border gate Cau Treo zone in compliance with the Law on Encouraging Domestic Investment and the Law on Foreign Investment in Vietnam, specifically as follows:

a. Domestic investors include enterprises established under the provisions of the Law on State Enterprises, the Law on Private Enterprises, the Law on Joint Stock Companies, the Law on Cooperatives,...

b. Foreign investors include foreign-invested enterprises, foreign investors participating in joint venture contracts, overseas Vietnamese investing in Vietnam according to the forms prescribed in the Law on Foreign Investment in Vietnam, and foreign investors operating without being subject to the Law on Foreign Investment in Vietnam.

Domestic enterprises and foreign-invested enterprises investing in the international border gate Cau Treo zone must separately account for their business activities in that area if they do not form economic entities, in order to determine the basis for preferential treatment.

Only production and business activities conducted in the international border gate Cau Treo zone are eligible for preferential treatment.

3. Investors from both domestic and foreign countries who have invested in the international border gate Cau Treo zone before the effective date of Decision No. 177/1998/QĐ-TTg dated September 15, 1998 of the Prime Minister shall, from the effective date of this Circular, be entitled to switch to enjoying investment incentives as prescribed in this Circular.

II. PREFERENTIAL TREATMENT REGARDING LAND RENT AND WATER SURFACE RENT; TAX PREFERENCES:

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

Foreign investors and domestic investors investing in production, business, and infrastructure construction in the international border gate Cau Treo zone when renting land and water surfaces from the state, in addition to enjoying existing exemptions and reductions under current state regulations, shall also enjoy a further reduction of 50% on land and water surface rents compared to the prevailing rental rates in the international border gate Cau Treo zone, in accordance with current regulations on determining rental prices for land and water surfaces.

2. Preferential treatment regarding tax on repatriation of income and other taxes:

a- Taxes for transferring income abroad:

- Income obtained by foreign investors from investment activities in the international border gate Cau Treo zone (including tax refunds and income from capital transfers) if repatriated or retained outside Vietnam shall be subject to a tax on repatriation of income at a minimum rate of 5%.

b. Other taxes:

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

3. Procedures for Enjoying Investment Preferences:

The procedures for applying for investment preferences as prescribed in this Circular shall be carried out in accordance with current regulations on procedures for enjoying preferential treatment regarding land rent and tax preferences as stipulated in current tax-related documents.

III. REGULATIONS ON MANAGEMENT OF CAPITAL INVESTED FROM THE STATE BUDGET FOR INFRASTRUCTURE CONSTRUCTION AND DEVELOPMENT IN THE INTERNATIONAL BORDER GATE CAU TREO ZONE:

1. Budgeting for Capital Investment in the International Border Gate Cau Treo Zone:

Annually (during the period 1999-2003), based on the budgeted revenue from export and import taxes of the international border gate Cau Treo zone approved by the People's Council of Ha Tinh Province and endorsed by the Ministry of Finance in the annual provincial budget, the People's Committee of Ha Tinh Province proposes the amount of state investment annually through the provincial budget for the international border gate Cau Treo zone (detailed for each project, classified by group and prioritized) to be submitted to the Ministry of Planning and Investment and the Ministry of Finance for review.

Based on the budgeted revenue from export and import taxes of the international border gate Cau Treo zone and the proposal of the People's Committee of Ha Tinh Province, the Ministry of Finance determines the total amount of state budget investment annually for the international border gate Cau Treo zone as 50% of the total annual revenue from export and import taxes in the international border gate Cau Treo zone. This investment fund will be allocated to the People's Committee of Ha Tinh Province through the Department of Finance and Price Control of Ha Tinh Province for investment in the international border gate Cau Treo zone.

The Ministry of Planning and Investment will coordinate with the Ministry of Finance on the investment capital for each project, the total investment capital, and related issues before issuing a decision to approve the investment budget for the entire period 1999-2003 and the annual investment budget based on the state budget allocation for Ha Tinh Province.

Based on the notification from the Ministry of Planning and Investment regarding the annual investment capital from the central budget for the international border gate Cau Treo zone, the People's Committee of Ha Tinh Province is responsible for preparing the quarterly investment budget and submitting it to the Ministry of Finance (no later than the 20th day of the last month of each quarter).

Based on the annual investment budget, the quarterly investment budget prepared by the locality, and the capacity of the central budget at each point in time, the Ministry of Finance will determine and notify the quarterly investment budget allocated to the People's Committee of Ha Tinh Province.

The amount of state capital invested in the international border gate area of Cau Treo through the provincial budget must be reviewed each year based on the actual revenue of the previous year to adjust it into the investment budget for the following year. The difference between the actual revenue exceeding or falling short of the initial annual revenue forecast will be adjusted into the investment capital budget for the following year. This investment capital is determined as the targeted subsidy from the central government's budget for the province, not included in the expenditure tasks of the local budget.

2. Methods of allocation, reporting, settlement, and management of investment capital for the international border gate area of Cau Treo:

According to the approved annual and quarterly budget estimates for capital investment, the Ministry of Finance (central government budget) allocates capital for approved investment projects through the Ha Tinh provincial budget.

All funds allocated by the central government budget to the international border gate area of Cau Treo through the provincial budget must only be used for the purpose of constructing infrastructure facilities according to the overall planning of the international border gate area of Cau Treo 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 among projects within the approved total investment amount and report to the Ministry of Planning and Investment and the Ministry of Finance. If there is a change in the project list, formal agreement by written consent from the Ministry of Planning and Investment is required.

The investment capital for the international border gate area of Cau Treo through the provincial budget is reflected collectively in the monthly financial reports and annual settlement reports of the locality but recorded separately for investment projects in the international border gate area of Cau Treo (including both dedicated budgetary funds and funds raised by the province).

Quarterly, the province is responsible for reporting to the Ministry of Finance and the Ministry of Planning and Investment on the implementation of investment and construction, capital allocation for each project, and at the end of the year, report to the Prime Minister (to be sent to the Ministry of Finance and the Ministry of Planning and Investment) on the results of the entire year's implementation.

3. The management, allocation, and settlement of investment capital for each investment project in the international border gate area of Cau Treo must be carried out in accordance with current national regulations.

VI/ PROVISIONS ON RAISING CAPITAL FROM DOMESTIC AND FOREIGN SOURCES

- Domestic enterprises and foreign-invested enterprises investing in production, business, and infrastructure construction in the international border gate area of Cau Treo can raise all sources of capital from domestic and foreign sources through appropriate forms such as bank loans, borrowing from organizations and individuals, issuing corporate bonds... in accordance with current laws to create development capital.

- The People's Committee of Ha Tinh Province, within its functions, duties, and powers, is permitted to apply appropriate forms of raising capital to build infrastructure for the international border gate area of Cau Treo such as issuing special lottery tickets, reporting to the Government for permission to issue project bonds, mobilizing public welfare labor... in accordance with current legal provisions.

V/ PROVISIONS ON INCENTIVE REGULATIONS FOR ORGANIZATIONS AND INDIVIDUALS WHO HAVE CONTRIBUTED TO CALLING FOR NON-REPAYABLE INVESTMENT CAPITAL (CAPITAL OUTSIDE THE STATE BUDGET)

1. Organizations and individuals who have contributed to calling for non-repayable investment capital (capital outside the state budget), such as direct assistance from organizations and individuals inside and outside the country (outside the central government, ministries, and sectors) to invest in economic and social projects in the international border gate area of Cau Treo, shall be entitled to a bonus amounting to 1-3% of the total value of the non-repayable investment capital, but the maximum bonus amount shall not exceed 100,000 USD. These assistance funds, when implemented, must be included in the state budget's revenue and expenditure.

2. The Chairman of the People's Committee of Ha Tinh Province is the authorized person to consider and decide on incentives for organizations and individuals who have contributed to calling for non-repayable investment capital (capital outside the state budget) to invest in economic and social projects in the international border gate area of Cau Treo.

3. The source of funds used for incentives for organizations and individuals who have contributed to calling for non-repayable investment capital (capital outside the state budget) to invest in economic and social projects in the international border gate area of Cau Treo is taken from the provincial budget of Ha Tinh and is accounted for in the value of the project.

VI/ IMPLEMENTATION

This Circular takes effect from January 1, 1999. All previous financial regulations applied in the international border gate area of Cau Treo that conflict with this Circular are abolished.

In the course of implementation, if any difficulties arise, they should be reported to the Ministry of Finance for study and resolution.

* Note: According to Decision No. 41/2004/QD-BTC dated April 21, 2004, of the Minister of Finance, Point 1 of Part III of this Circular has been abolished and is not effective 15 days after the date of publication in the Official Gazette./.