Circular No. 18-TC/CSTC guides the financial regime to be piloted for the Mong Cai border gate area.

CIRCULARPreamble

OF THE MINISTRY OF FINANCE NO. 18 TC/CSTC ON APRIL 9, 1997AM 1997 HPreambleGUIDELINES FOR IMPLEMENTATION - Office of the President of the StateOF THE MINISTRY OF FINANCE APPLYING TRIAL - Office of the President of the StatePOINTS TO THE MONG CÁI BORDER GATE AREA

Implementing Decision No. 675/TTg dated September 18, 1996 of the Prime Minister on applying trial some policies in the Mong Cai border gate area, Quang Ninh Province. đThe Ministry of Finance guides the implementation of financial policies applied to the trial point for the Mong Cai border gate area as follows:amendm 1996 of the Prime MinisterướI. ISSUES đREGARDING RENTAL FEESướFOR LAND AND WATER SURFACE; đISSUES REGARDING TAXES điểm đIn accordance with Clause 1, Article 3 of Decision No. 675/TTg dated September 18, 1996 of the Prime Minister, enterprises renting land and water surface shall be granted a 50% reduction in rental fees compared to the current rates applicable in the Mong Cai border gate area, specifically:concerning the classification and determination of state management authority in the field of crop production as follows:

a - For foreign-invested enterprises: PreambleThe decision to switch the issuance of coats, overcoats, windbreakers, and down jackets to other uniforms for civil servants working at the National Market Management and Development Agency is decided by the Minister of Industry and Trade. - Office of the President of the StateForeign-invested enterprises established and operating in the Mong Cai border gate area shall be granted a 50% reduction in rental fees for land and water surface compared to the rental rates currently applied in the Mong Cai border gate area, in accordance with the provisions on determining rental rates for land and water surface set forth in Decision No. 1417 TC/TCĐN dated December 31, 1994 of the Minister of Finance. - Office of the President of the StateThe aforementioned rate serves as the basis for the Ministry of Planning and Investment to determine the rental fees for land and water surface that foreign-invested enterprises must pay and record in their investment permits.PreambleAll other incentives regarding exemption and reduction of rental fees for land and water surface shall still follow the provisions of Decision No. 1417 TC/TCĐN dated December 31, 1994 of the Minister of Finance, but calculated based on the rental fees determined above.
PreambleThe decision to switch the issuance of coats, overcoats, windbreakers, and down jackets to other uniforms for civil servants working at the National Market Management and Development Agency is decided by the Minister of Industry and Trade. - Office of the President of the Stateb - For domestic enterprises:

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

Domestic enterprises of all economic sectors established and operating in the Mong Cai border gate area shall be granted a 50% reduction in rental fees for land and water surface compared to the rental rates currently applied in the Mong Cai border gate area, in accordance with Decision No. 1357 TC/QĐ/TCT dated December 30, 1995 of the Minister of Finance.

All other incentives regarding exemption and reduction of rental fees for land and water surface shall still follow the provisions of Decision No. 1357 TC/QĐ/TCT dated December 30, 1995 of the Minister of Finance, but calculated based on the rental fees determined above.

a. Income tax:

Foreign-invested enterprises shall pay income tax at the tax rate specified in their investment permit; domestic enterprises shall apply the income tax rate prescribed for each industry under the Law on Income Tax and the Law on Encouraging Domestic Investment during the period of operation of the enterprise.

Within four years from the date when the enterprise begins to pay income tax, the enterprise shall only pay income tax at the lowest tax rate within the tax bracket as stipulated in Clause 2, Article 3 of Decision No. 675/TTg dated September 18, 1996 of the Prime Minister, specifically:

- Foreign-invested enterprises shall apply a corporate income tax rate of 10% (the lowest rate according to the Law on Foreign Investment in Vietnam) for four years from the date when the enterprise begins to pay income tax according to the current regulations of the Law on Foreign Investment in Vietnam.

- Domestic enterprises shall apply a corporate income tax rate of 25% (the lowest rate according to the Law on Income Tax) for four years from the date when the enterprise begins to pay income tax according to the current regulations of the Law on Income Tax.

If domestic enterprises fall under the category eligible for incentives under the Law on Encouraging Domestic Investment, they shall pay income tax at a rate of 25% for four years from the date when the enterprise begins to pay income tax according to the current regulations of the Law on Encouraging Domestic Investment.

2. Incentives on corporate income tax, tax on repatriation of profits, and other taxes:

All incentives for reducing income tax after the expiration of the tax exemption period shall still follow the current provisions of the Laws on Income Tax, Law on Encouraging Domestic Investment, and Law on Foreign Investment in Vietnam, but calculated based on the tax rate determined above during the period it is applied.

After the four-year period of preferential tax rates as provided above, enterprises must pay income tax at the standard tax rate applicable to enterprises in accordance with the provisions of the Law on Income Tax, Law on Encouraging Domestic Investment, and Law on Foreign Investment in Vietnam.

According to Clause 4, Article 3 of Decision No. 675/TTg dated September 18, 1996 of the Prime Minister, foreign investors establishing enterprises and conducting business in the Mong Cai border gate area who repatriate profits abroad shall only pay a 5% withholding tax on repatriated profits (applicable to investors choosing to enjoy investment incentives under the Law on Encouraging Domestic Investment or the Law on Foreign Investment in Vietnam).

The withholding tax rate on repatriated profits as provided above shall serve as the basis for recording in the investment permit for the Mong Cai border gate area.

All incentives for exemption and reduction of other types of taxes shall still follow the current provisions of the Laws on Taxation, Law on Encouraging Domestic Investment, and Law on Foreign Investment in Vietnam.

3. Domestic and foreign investors who have invested in the Mong Cai border gate area before the effective date of Decision No. 675/TTg dated September 18, 1996 of the Prime Minister, if they are currently enjoying investment incentives under existing regulations, shall, upon the effectiveness of this Circular, switch to enjoying the investment incentives prescribed in this Circular for the remaining period.

4. All investment activities of enterprises in the Mong Cai border gate area shall enjoy the incentives prescribed in this Circular.

Upon expiration of the four-year period for preferential tax rates as provided above, enterprises must pay corporate income tax at the standard rate applicable to enterprises in accordance with the provisions of the Corporate Income Tax Law, the Law on Domestic Investment Promotion, and the Law on Foreign Investment in Vietnam.

b. Tax on Repatriation of Profits:

According to Clause 4, Article 3, Decision No. 675/TTg dated September 18, 1996 of the Government, foreign investors when investing to establish enterprises and conducting business in the Mong Cai border gate area, if transferring profits abroad, shall only be subject to a 5% withholding tax on profit repatriation (applicable to investors choosing to enjoy investment incentives under the Law on Domestic Investment Promotion or the Law on Foreign Investment in Vietnam).

The withholding tax rate on profit repatriation as prescribed above shall be recorded in the investment permit for the Mong Cai border gate area.

c. Other Taxes:

All other tax exemptions and reductions shall continue to be governed by the current provisions of the Tax Laws, the Law on Domestic Investment Promotion, and the Law on Foreign Investment in Vietnam.

3. Domestic and foreign investors who have invested in the Mong Cai border gate area prior to the effective date of Decision No. 675/TTg dated September 18, 1996 of the Prime Minister, if they are currently enjoying investment incentives under existing regulations, shall from the date this Circular takes effect, be eligible to enjoy the investment incentives stipulated in this Circular for the remaining duration.

All investment activities of enterprises in the Mong Cai border gate area shall benefit from the incentives provided for in this Circular.

5. The procedures for enjoying investment incentives as prescribed in this Circular shall be carried out in accordance with the current regulations on procedures for enjoying land rent incentives and tax incentives stipulated in existing documents on land leasing, water surface leasing, and tax regimes.

II/ PROVISIONS ON THE - Office of the President of the StateOPERATING CAPITAL - Office of the President of the StateINSIDE AND OUTSIDE THE COUNTRY
INPreambleDOMESTIC ANDPreambleFOREIGN

Pursuant to Article 4 of Decision No. 675/TTg dated September 18, 1996 of the Prime Minister, capital mobilization shall be implemented as follows:

- Enterprises of all economic sectors investing in production, business, and infrastructure construction in the Mong Cai border gate area may mobilize domestic and foreign capital through appropriate forms such as bank loans, borrowing from organizations and individuals, issuing corporate bonds in accordance with current laws to create sources of capital for business development.

The People's Committee of Quang Ninh Province, within its functions, tasks, and powers, is permitted to apply appropriate forms of capital mobilization such as issuing project bonds, issuing special lottery tickets to mobilize capital for projects in the Mong Cai border gate area (after obtaining written agreement from the Ministry of Finance), mobilizing public labor... to build infrastructure in the Mong Cai border gate area in accordance with current legal provisions and must ensure the following conditions:

- Capital mobilization measures and the amount of capital to be mobilized must be approved by the People's Council of Quang Ninh Province;

- The raised capital can only be used to invest in building infrastructure in the Mong Cai border gate area;

- Raised capital must be managed in accordance with current regulations on managing investment capital for basic construction;

- A separate settlement of the raised capital for building infrastructure in the Mong Cai border gate area must be conducted within the general settlement of state budget revenue on the territory of Quang Ninh Province.

III/ PROVISIONS ON THE - Office of the President of the StateFINANCIAL REGIME - Office of the President of the StateFOR THE CONSTRUCTION AND DEVELOPMENT CORPORATION OF INFRASTRUCTURE IN THE MONG CAI BORDER GATE AREA - Office of the President of the StateCOMPARED TO
CONSTRUCTION AND DEVELOPMENT CORPORATION OF INFRASTRUCTURE IN THE MONG CAI BORDER GATE AREABODIESFROM THE STATE BUDGET

1. The corporation engaged in construction and development of infrastructure in the Mong Cai border gate area may lease land in the Mong Cai border gate area to build infrastructure and then sublease it to domestic and foreign investors at agreed prices after the infrastructure has been established.

The corporation is allowed to collect a lump sum payment for subleasing land that has been developed for multiple years, but not exceeding the maximum period specified in the corporation's business license.

2. In the case where the corporation collects a lump sum payment for subleasing land that has been developed for multiple years, it must fulfill the following tax obligations:

- Business income tax: Pay business income tax on the entire business income generated from subleasing land at the time of income generation according to the Law on Business Income Tax.

- Income Tax: Each year, the tax authority will determine the actual rental income from subleasing land, corresponding reasonable and legitimate expenses incurred during the year (wages, depreciation of fixed assets, transaction costs, land rent payable...) in accordance with the provisions of the Law on Income Tax to calculate the income tax payable.

3. The corporation is entitled to all incentives on land rent, water surface rent, tax incentives, and other incentives (if any) as prescribed in this Circular and other current regulations.

IV/ PROVISIONS ON MANAGEMENT OF CAPITAL - Office of the President of the StateFUNDED FROM THE STATE BUDGET - Office of the President of the StateFOR CONSTRUCTION AND DEVELOPMENT OF INFRASTRUCTURE IN THE MONG CAI BORDER GATE AREAPreambleFROM THE STATE BUDGET
FOR THE CONSTRUCTION AND DEVELOPMENT OF INFRASTRUCTURE IN THE MONG CAI BORDER GATE AREAPreambleFOR CONSTRUCTION AND DEVELOPMENTBODIESTHIS

Pursuant to Article 5 of Decision No. 657/TTg dated September 18, 1996 of the Prime Minister, during the period from 1996 to 2000, the State's specific investment in the Mong Cai border gate area annually shall be implemented as follows:

1. Planning capital investment for the Mong Cai border gate area:

Based on the state budget revenue forecast from the Mong Cai border gate area approved by the People's Council of Quang Ninh Province in the annual provincial budget, the People's Committee of Quang Ninh Province proposes the annual specific State investment amount through the provincial budget for the Mong Cai border gate area (detailed for each investment project and prioritized) to be sent to the Ministry of Planning and Investment and the Ministry of Finance for consideration.

Based on the state budget revenue forecast from the Mong Cai border gate area and the proposal of the People's Committee of Quang Ninh Province, the Ministry of Finance determines the total annual specific State investment amount for the Mong Cai border gate area, which must not be less than 50% of the annual state budget revenue in the Mong Cai border gate area. This investment amount will be allocated through the Department of Finance and Price of Quang Ninh Province to invest in the Mong Cai border gate area.

The Ministry of Finance agrees with the Ministry of Planning and Investment on the investment amount for each project, the total investment amount, and related issues before the Ministry of Planning and Investment issues a decision to approve the investment plan for the entire period from 1996 to 2000 and the annual investment plan using the specific budget allocated to Quang Ninh Province.

Based on the notification from the Ministry of Planning and Investment regarding the annual investment amount from the central budget for the Mong Cai border gate area, the People's Committee of Quang Ninh Province is responsible for preparing the quarterly investment usage plan and sending it to the Ministry of Finance (no later than the 20th day of the last month of each quarter).

Based on the annual investment plan, the quarterly investment usage plan prepared by the locality, and the central budget capacity at each point in time, the Ministry of Finance will determine and notify the quarterly capital allocation plan for the People's Committee of Quang Ninh Province.

The State capital invested through the provincial budget for the Mong Cai border economic zone is determined based on the annual revenue forecast from the Mong Cai border economic zone area (excluding revenues not included in the budget balance such as tuition fees, medical expenses, aid, people's contributions...). It will be reviewed annually based on the actual revenue of the previous year to adjust the investment capital plan for the following year. If the actual revenue in a year exceeds or falls short of the initial revenue estimate, the difference will be adjusted into the investment capital for the following year. This investment capital is considered as targeted subsidy from the central budget for the province and does not count towards the local budget expenditure tasks.

For the investment capital in 1996 from the central budget for the Mong Cai border area through the provincial budget, the People's Committee of Quang Ninh Province shall work specifically with the Ministry of Finance and the Ministry of Planning and Investment regarding the amount and specific purpose of this capital so that the Ministry of Finance can make a decision.

2. Procedures, formalities, methods of allocation, reporting system, and settlement of investment capital for the Mong Cai border area:

According to the approved annual and quarterly investment capital utilization plans, the Ministry of Finance (central budget) allocates to the People's Committee of Quang Ninh Province (local budget), which then transfers the capital to investment projects (State capital invested for the Mong Cai border area through the provincial budget).

All central budget funds allocated to the People's Committee of Quang Ninh Province must only be used for constructing infrastructure facilities listed in the plan approved by the Ministry of Planning and Investment and must be managed in accordance with current regulations on investment capital management for basic construction.

The investment capital for the Mong Cai border area through the provincial budget is settled together in the local government budget settlement but recorded separately for investment projects in Mong Cai (including both directly allocated budget funds and those 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 construction investments and capital allocation for each project, and at the end of the year, it reports to the Prime Minister on the overall implementation results for the year.

The procedures, formalities, methods of allocation, reporting system, and settlement of investment capital are implemented according to the current regulations.

V/ IMPLEMENTATION

This Circular takes effect from September 18, 1996, and all previous provisions contrary to this Circular are abolished.

Note:Decision No. đ41/2004/Q- Office of the President of the State-BTC dated April 21, 2004, by the Minister of Financeamendstipulates thatconcerning the classification and determination of state management authority in the field of crop productionPoint 1 of Part IV of this Circular - Office of the President of the Statehas been abolished and is not effective 15 days after its publication in the Official Gazette.concerning the classification and determination of state management authority in the field of crop productionshall be abolished and shall not take effect after fifteen days from the date of decision đized định đconcerning the classification and determination of state management authority in the field of crop productionAID business registration.