Joint Circular No. 21/2003/TTLT/BVHTT-BTC guiding the payment of royalties, the establishment and use of the Royalty Fund for certain types of works as stipulated in Decree No. 61/2002/NĐ-CP dated June 11, 2002 of the Government.

JOINT CIRCULAR

Guidelines for the payment of royalties, the establishment and use of the royalty fund for certain types of works as stipulated in Decree No. 61/2002/NĐ-CP dated June 11, 2002 of the Government.

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Pursuant to Decree No. 61/2002/NĐ-CP dated June 11, 2002 of the Government on the system of royalties (hereinafter referred to as Decree No. 61/2002/NĐ-CP);

The Ministry of Culture, Sports and Tourism and the Ministry of Finance jointly issue guidelines for the payment of royalties, the establishment and use of the Royalty Fund for certain types of works as stipulated in Decree No. 61/2002/NĐ-CP dated June 11, 2002 of the Government as follows:

A. GENERAL PROVISIONS:

1. Organizations and individuals when using works in the form of publications; producing sound tapes, sound discs, video tapes, video discs, films, and radio and television programs; performing arts; press works; applied fine art works; and photographic works must sign a work usage contract with the author or the owner of the work, or through a legally authorized representative (hereinafter referred to as the representative) according to the model contract issued together with this Circular.

2. For works that are commissioned, sponsored, or financially supported by the State or other forms of financial support, the author or the owner of the work shall also be entitled to royalties, remuneration, and other material benefits appropriate to each form of work usage.

3. Depending on specific conditions and characteristics of each type of work, the user of the work and the author or the owner of the work shall agree on a specific amount of royalties by means of a work usage contract in accordance with the provisions of the law.

4. Guidance, inspection, and resolution of disputes, complaints, and denunciations regarding the system of royalties shall be carried out in accordance with the current regulations of the State.

B. SPECIFIC PROVISIONS:

I. ROYALTIES FOR STAGE WORKS AND OTHER PERFORMING ART FORMS:

1. Royalties for stage works and other performing art forms shall be implemented in accordance with the provisions of Article 15 and Article 16 of Decree No. 61/2002/NĐ-CP.

When using published music or songs, the royalties paid to the author or the owner of the work shall be implemented in accordance with Article 16 of Decree No. 61/2002/NĐ-CP or Clause 3 of Section A of this Circular.

2. Classification of works:

Based on the content and quality of the work, the Art Council of the work user shall conduct an evaluation and classification in writing to serve as the basis for paying royalties to the author or the owner of the work at the following levels:

Level I - Works of average quality;

Level II - Works of good average quality;

Level III - Works of good quality;

Level IV - Works of excellent quality.

3. The subjects specified in Clause 4 of Article 13 of Decree No. 61/2002/NĐ-CP shall receive remuneration according to the agreement with the work user. The remuneration amount is included in the total production cost.

4. Using published works for performances serving political tasks; serving remote areas, extremely difficult regions; performances for soldiers and civilians at border areas and islands; international exchange performances not for business purposes, without selling tickets for profit, and without receiving performance contracts or sponsorships in any form, no royalties need to be paid. These activities must have a Decision from the Ministry of Culture, Sports and Tourism for central artistic units and the People's Committee of provinces and centrally-administered cities for local artistic units.

II. ROYALTIES FOR FILMS AND VIDEO (VDO) WORKS:

1. Royalties for film and video works shall be based on the royalty framework stipulated in Article 20 and Article 21 of Decree No. 61/2002/NĐ-CP.

The remuneration paid to the subjects specified in Clause 4 of Article 19 of Decree No. 61/2002/NĐ-CP shall be directly included in the total film production costs.

2. Classification of film scripts:

2.1. Based on the content and quality of the script, the Script Review Board at the level assigned by the Ministry of Culture, Sports and Tourism shall conduct an evaluation and classification in writing to serve as the basis for paying royalties to the author as follows:

Level I - Scripts of average quality;

Level II - Scripts of good quality;

Level III - Scripts of excellent quality.

The classification of scripts shall be carried out in accordance with the regulations of the Ministry of Culture, Sports and Tourism.

2.2. For film scripts built from state budget funds and other sources: based on the written evaluation of the Script Review Board, the work user decides the amount of royalties to be paid, but the portion of royalties from the state budget shall not exceed the permitted Royalty Fund, while the portion of royalties from other sources shall be agreed upon by both parties.

2.3. For film scripts not using state budget funds: the decision on the amount of royalties to be paid shall be based on the evaluation of the Art Council of the work user.

3. Classification of film works:

3.1. Based on the content, artistic and technical quality of the film work, the Film Review Board at the level assigned by the Ministry of Culture, Sports and Tourism, after reviewing and allowing publication, shall conduct an evaluation and classification of quality in writing to serve as the basis for paying royalties to the remaining positions specified in Clauses 1, 2, 3, and 4 of Article 20 of Decree No. 61/2002/NĐ-CP:

Level I - Works of average quality;

Level II - Works of good quality;

Level III - Works of excellent quality.

The classification of the quality of film works shall be carried out in accordance with the regulations of the Ministry of Culture, Sports and Tourism.

3.2. For film works using state budget funds and other sources: based on the written evaluation of the Film Review Board, the work user decides the amount of royalties to be paid, but the portion of royalties from the state budget shall not exceed the permitted Royalty Fund, while the portion of royalties from other sources shall be agreed upon by both parties.

3.3. For film works not using state budget funds: the work user shall apply the current regulations or the agreed contract terms for the amount of royalties to be paid.

4. When a work is adapted from a literary work, from a theatrical script, or from another form of performing art into a film script, the adapter author and the original author must have a written agreement. The original author receives royalties equal to 30-40% of the screenplay writer's royalties for works of the same genre and level; the adapter author receives the remaining portion of the screenplay writer's royalties as stipulated in Clause 1 of Article 21 of Decree No. 61/2002/NĐ-CP.

5. For children's films and ethnic minority films: the Councils must evaluate in writing to serve as the basis for additional royalties to encourage the authors.

The additional encouragement royalties for children's works and ethnic minority works are calculated at an additional 5% of the royalties of the film.

Works that both contain children's content and ethnic minority content can only enjoy a maximum encouragement rate of 5%.

6. From the eleventh celluloid film, the authors are entitled to additional encouragement royalties equal to 8% of the total revenue from selling the film. The encouragement royalties are calculated specifically in one of the following two ways:

Method 1: The encouragement royalties (NBKK) are calculated according to the following formula:_KK) shall be calculated according to the following formula:

NBKK = Average selling price per celluloid film x (n - 10) x 8%._KK - NBKK is the total encouragement royalties from the eleventh celluloid film;

Where:

- n is the actual number of celluloid films sold (n ≥ 11);_KK - The average selling price per celluloid film is the price specified in the agreement between the owner of the work and the user of the work, or the price approved by the competent state authority for each type of film.

Method 2: The encouragement royalties (NBKK) are calculated as follows:

NBKK = Σ DTi x 8%, where i ranges from 11 to n.

- DTi is the revenue from selling the ith celluloid film (i ≥ 11)._KK) shall be calculated according to the following formula:

n

NBKK = Average selling price per celluloid film x (n - 10) x 8%._KK = Σ DT_{international} x 8%

i=11

Where:

- n is the actual number of celluloid films sold (n ≥ 11);_KK - The average selling price per celluloid film is the price specified in the agreement between the owner of the work and the user of the work, or the price approved by the competent state authority for each type of film.

Method 2: The encouragement royalties (NBKK) are calculated as follows:

- DT_{international} is the revenue from selling the i-th film copy (i ≥ 11).

7. For films with production costs higher than the average annual production cost approved by the competent authority due to special requirements of equipment and materials rather than artistic creativity, the royalties are calculated using the following formula (but the highest royalty shall not exceed twice the royalties of a film with the average annual production cost of the same genre):

Calculation formula:

n

NB = T x (Σ NBi) x (1 + h/10), where i ranges from 1 to n.

- NB is the royalties of the film with high production costs.

Where:

- T is the average annual production cost of the film approved by the competent authority (excluding royalties).

- (1 + h/10): Takes the value of 2 when h is greater than 10.

- (1 + h/10): Shall take the value 2 when h is greater than 10.

n

- Σ NB i: is the total royalty factor (from 1 to n) of the authors as stipulated in the royalty framework.

i = 1

III. ROYALTIES FOR JOURNALISTIC WORKS (PRINTED PRESS, ELECTRONIC PRESS):

1. Royalties for journalistic works are implemented in accordance with the provisions of Article 24 of Decree No. 61/2002/NĐ-CP.

2. Other provisions:

2.1. Short news items and republished news items from other press and news agencies, the remuneration for the author of short news items and the provider or selector of republished news items is decided by the Chief Editor.

2.2. Outstanding journalistic works of high value or works carried out under special conditions such as natural disasters, wars, or remote areas, the remuneration is decided by the Chief Editor according to the royalty framework for each category and the encouragement royalties stipulated in Clause 5 of Article 25 of Decree No. 61/2002/NĐ-CP.

2.3. Republished journalistic works from other press or works already published at conferences or meetings are paid lower royalties than those used for the first time. The amount of royalties is decided by the Chief Editor but not less than 50% of the royalties of the corresponding category currently applied by the press agency.

2.4. For interview articles, if the interviewee does not make a request regarding the ratio of royalties between the interviewee and the interviewer, the Chief Editor decides the ratio of royalties for the interviewee.

IV. ROYALTIES FOR RADIO AND TELEVISION WORKS (SPOKEN NEWS, TV NEWS):

1. Royalties paid to the author or owner of the work are implemented in accordance with the provisions of Articles 28 and 29 of Decree No. 61/2002/NĐ-CP.

2. For units implementing Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government on financial regulations applicable to self-financing public institutions, the payment of royalties is carried out according to the agreed contract.

V. ROYALTIES FOR CREATIVE WORKS (FINE ARTS), APPLIED ARTS, AND PHOTOGRAPHY:

1. Royalties for creative works (fine arts), applied arts, and photography using state budget funds are the creation sample fees paid to the author or owner of the work. Depending on the artistic quality, value, and utility of the work, the creation sample fee is agreed upon by the user of the work with the author or owner of the work through a usage contract based on a percentage (%) of the work's value as specified in the following tables:

Table 1: Royalties for works valued up to 10 million VND

Unit: million VND

Table 2: Royalties for works valued over 10 million to 100 million VND

Unit: million VND

Table 3: Royalties for works valued over 100 million to 1 billion VND

Unit: million VND

2. For statues and large paintings, the royalties for creating sketches and works are calculated based on the percentage (%) specified in the following table:

Unit: million VND

For works valued over 10,000 million VND, the royalties are calculated based on the royalties of a work valued at 10,000 million VND plus 1% for each additional 1,000 million VND and calculated according to the following formula:

NB = Nb + (n x 1%), where:

Where:

- NB is the royalties of the work valued over 10,000 million VND.

- Nb is the royalties of the work valued at 10,000 million VND (as per point 2, section V).

- n is the number of additional 1,000 million VND after the initial 10,000 million VND.

3. For graphic works (fine arts), statues, and large paintings, when reproduced, copied, or transformed into different materials, royalties paid to the author or the owner of the work shall be calculated at 30% of the cost of creating the prototype or sketch based on the value of the new reproduction work and shall only apply up to the third copy. The sequential numbering is mandatory for reproductions, copies, and transformations to be eligible for royalties.

VI. ROYALTIES FOR WORKS BELONGING TO THE STATE AND WORKS EXPIRED IN TERMS OF COPYRIGHT PROTECTION:

1. Works belonging to the State include:

- Works without heirs, heirs who refuse to accept the inheritance, or those not entitled to inherit as stipulated in Point b, Clause 1, Article 764, Article 765 of the Civil Code and Clause 2, Article 13 of Decree No. 76/1996/ND-CP dated November 29, 1996 of the Government guiding the implementation of certain provisions on copyright in the Civil Code;

- Works with unknown authors or anonymous works as provided for in Clause 5, Article 766 of the Civil Code.

Organizations and individuals using such works must comply with the following regulations:

- Apply for permission and sign a contract with the Copyright Agency regarding the use of the work;

- Indicate the real name or pen name of the author (if available) on the work, correctly state the title of the work, and ensure the integrity of the content of the work.

- Pay royalties (or remuneration) to the Copyright Agency according to the usage contract of the work, but not exceeding the royalty framework for each category.

This portion of the royalties is managed and used by the Copyright Agency according to the following ratio:

+ Deduct 20% of the total royalties collected annually to cover expenses for organizing the collection, serving the dissemination and education of laws related to copyright of the Copyright Agency;

+ Transfer 80% of the remaining royalties to the state budget.

2. For works that have expired their term of copyright protection: organizations and individuals using such works are not required to pay royalties.

VII. ESTABLISHMENT, MANAGEMENT, AND USE OF THE ROYALTY FUND:

1. Establishment of the Royalty Fund:

1.1. For theatrical works and other performing arts: The user of theatrical works and other performing arts shall establish the Royalty Fund according to one of the two methods below:

Method 1: The Royalty Fund is established according to the royalty framework specified in Article 15 of Decree No. 61/2002/ND-CP plus 10% of the royalty rate:

The user of the work bases the establishment of the Royalty Fund on the type and scale of the theatrical work and other performing arts according to the following formula:

||| n n

Article 24_NB = (sum of NB i) x minimum wage + 10% (sum of NB i) x minimum wage

i = 1 i = 1

Where:

- QNB is the Royalty Fund.

- NB i is the highest royalty rate according to each category (as stipulated in Article 15 of Decree No. 61/2002/ND-CP).

n

- (sum of NB i) is the total highest royalties paid for various positions

i = 1 (from 1 to n) according to the categories specified in the royalty framework.

- Minimum wage (TLmin) is the minimum wage prescribed by the State for civil servants and public officials in the administrative and public service sector.

n

- 10% (sum of NB i) x minimum wage is additional costs to pay for remuneration and other material benefits (if any).

i = 1

Example:

The Royalty Fund for theatrical works specified in Clause 1, Article 15 of Decree No. 61/2002/ND-CP for long plays ranging from 105' to 150' is calculated as follows:

Article 24_NB = (royalties for_{director max} + royalties for_{scriptwriter max} + royalties for_{choreographer} + royalties for _composer + royalties for _artist) x minimum wage _{Maximum Downhill Gradient} + 10% (royalties for_{director max} + royalties for_{scriptwriter max} + royalties for_{choreographer} + royalties for _composer + royalties for _artist) x minimum wage _{Maximum Downhill Gradient}

= [81 + 123.8 + (25% x 81) + (60% x 81) + (60% x 81)] x 290,000 VND

+ 10% [81 + 123.8 + (25% x 81) + (60% x 81) + (60% x 81)] x 290,000 VND

= (81 + 123.8 + 20.25 + 48.6 + 48.6) x 290,000 VND + 10% (81 + 123.8 + 20.25

+ 48.6 + 48.6) x 290,000 VND

= 322.25 x 290,000 VND + 10% (322.25 x 290,000 VND)

= 93,452,500 VND + 9,345,250 VND = 102,797,750 VND

Method 2: The Royalty Fund is established from the total revenue of the performance according to the percentages specified in Clauses 1, 2, and 3 of Article 16 of Decree No. 61/2002/ND-CP and calculated according to the following formula:

Article 24_NB = Percentage x sum of revenue_{international}

Where:

- Q_NB is the Royalty Fund.

- DT_{international} is the total revenue of the performance (from ticket sales or from performance service contracts).

- Percentage is the percentage determined for each type of performing art.

1.2. For film works: The agency using film works establishes the Royalty Fund according to the percentage of the highest level of the royalty framework specified in Article 20 of Decree No. 61/2002/ND-CP for each category, plus 30% of that percentage, multiplied by the selling price or the average annual production cost of the film work approved by the competent authority. The calculation formula is as follows:

||| n n

Article 24_NB = [(sum of NB i) + 30% (sum of NB i)] x T

i = 1 i = 1

Where:

- Q_NB is the Royalty Fund.

- NBi: the percentage of the highest level of the royalty framework specified in Article 20 of Decree No. 61/2002/ND-CP.

n

- (sum of NB i): the total percentage of the highest level (from 1 to n)

i = 1 of the positions as specified in the royalty framework.

- T: the selling price or the average annual production cost of the film work approved by the competent authority (excluding royalties).

Example: The Royalty Fund for feature films (Point 1, Article 20 of Decree No. 61/2002/ND-CP) in a year is calculated based on the following factors:

+ The percentage of the highest level of the royalty framework (NBi) for: Director 2.75%, Scriptwriter 2.75%, Cinematographer 1.50%, Film Editor 0.50%, Composer 0.90%, Artist 1.00%.

+ The total percentage of the highest level (Level III) of the six positions as specified in the royalty framework is 9.4% (2.75% + 2.75% + 1.50% + 0.50% + 0.90% + 1.00%).

+ The average annual production cost of feature films (T) approved by the competent authority (excluding royalties) is 250,000,000 VND.

Accordingly: The Royalty Fund

Article 24_NB = (9.4% + (30% x 9.4%)) x 250,000,000 VND

= (9.4% + 2.82%) x 250,000,000 VND

= 12.22% x 250,000,000 VND

= 30,550,000 VND.

In cases where the selling price of the film is higher than the approved production cost, the user of the work may base the establishment of the Royalty Fund on the selling price to pay royalties to the authors.

1.3. Royalty Fund for press (print media, online media):

For press agencies that self-balance their finances and generate profits from press activities, if the percentage of revenue allocated to the Royalty Fund as stipulated in Point b, Clause 1, Article 26 of Decree No. 61/2002/ND-CP is insufficient to pay royalties as prescribed, the unit may supplement from other sources of income of the unit and according to the decision of the management agency.

1.4. The Literary Remuneration Fund for radio and television: Implemented in accordance with Article 30 of Decree No. 61/2002/NĐ-CP.

2. Use and management of the Literary Remuneration Fund:

2.1. Use of the Literary Remuneration Fund:

The Literary Remuneration Fund is established at the maximum level, but the actual remuneration paid to authors or copyright holders must be based on the evaluation and classification of works according to the prescribed criteria. The remaining portion of the Literary Remuneration Fund shall be used to pay compensation and material benefits, organize activities to encourage creativity such as investment in creation, rewarding works that win high awards in competitions (domestic or international), and shall not be used for other purposes.

2.2. Management of the Literary Remuneration Fund:

The preparation of budgets, management, and settlement of accounts for the Literary Remuneration Fund shall be carried out in accordance with current regulations.

Any surplus of the Literary Remuneration Fund at the end of the year shall be carried over to the next year.

C. IMPLEMENTATION

This Circular takes effect fifteen days from the date of publication in the Official Gazette.

Any additional budget expenses incurred in 2003 (if any) when applying the standards set forth in this Circular shall be arranged within the annual budget allocated by the competent authority at the beginning of the year by the relevant agencies, units, and organizations.

In the course of implementation, if there are any difficulties, the Ministries managing the sectors and fields, the People's Committees of provinces and centrally governed cities are requested to report to the Joint Ministry of Culture and Information - Finance for consideration and resolution./.