Circular No. 29/2001/TT-BTC guiding certain financial mechanisms applicable in Duong Dong town, Phu Quoc district, Kien Giang province.

CIRCULAR

Guidelines for some financial mechanisms applicable in the town area of Duong Dong, Phu Quoc district, Kien Giang province

Duong Dong, Phu Quoc district, Kien Giang province

Pursuant to Decree No. 178/CP dated October 28, 1994 of the Government stipulating tasks, powers, and organizational structure of the Ministry of Finance.

Pursuant to Decision No. 97/2000/QD-TTg dated August 16, 2000 of the Prime Minister on applying certain policies at the Duong Dong town area, Phu Quoc district, Kien Giang province.

The Ministry of Finance guides the implementation of the financial regime applicable in the Duong Dong town area, Phu Quoc district, Kien Giang province as follows:

Production facilities under the Vietnam Import-Export Construction Corporation (Ministry of Construction) producing building components and materials for housing sold to households in flood-prone areas in the Mekong Delta on deferred payment terms (as per Decision No. 105/2002/QD-TTg dated August 2, 2002) and to ethnic minority households in place in the Central Highlands provinces on deferred payment terms (as per Announcement No. 144/TB-VPCP dated September 12, 2002 of the Government Office).

Vietnamese investors and foreign investors investing in production, business, and infrastructure construction in the Duong Dong town area (excluding Phu Quoc airport), Phu Quoc district, Kien Giang province fall within the scope of application of this Circular including:

1. Vietnamese enterprises regardless of ownership form: Limited liability companies; joint stock companies; joint ventures; private enterprises; cooperatives; cooperative unions; state-owned enterprises;

2. Enterprises with foreign investment capital, parties involved in business cooperation contracts under the Law on Foreign Investment in Vietnam; foreign organizations and individuals engaged in business activities in Vietnam not falling under the forms of investment under the Law on Foreign Investment in Vietnam.

3. Private, self-financed, and semi-public educational and training institutions; private health care facilities; cultural establishments established and operating legally in accordance with the law;

4. Enterprises of political organizations, political social organizations, social organizations, social-professional organizations, and armed forces registered for business operations in accordance with the law;

5. Individuals and business groups established and operating in accordance with Decree No. 66/HĐBT dated March 2, 1992 of the Council of Ministers (now the Government);

6. Overseas economic and financial organizations, economic organizations currently having investment capital in Vietnam; Vietnamese citizens and overseas Vietnamese; foreigners residing in Vietnam and abroad purchasing shares or contributing capital to enterprises in the Duong Dong town area.

II- GUIDELINES FOR TAX AND OTHER BUDGET PAYMENTS ADVANTAGES:

1. Business projects investing in tourism in the Duong Dong town area shall enjoy investment incentives according to Appendix A attached to Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government. Business projects investing in tourism established before September 1, 2000 shall only enjoy investment incentives according to Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government for the remaining period. The procedures for enjoying investment incentives shall be carried out in accordance with current regulations.

2. In addition to the preferential policies under the Law on Foreign Investment in Vietnam, Decree No. 24/2000/NĐ-CP dated July 31, 2000 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam; the Law on Encouraging Domestic Investment (amended); and Decree No. 51/1999/NĐ-CP dated July 8, 1999 of the Government detailing the implementation of the Law on Encouraging Domestic Investment (amended), investment projects in the Duong Dong town area (including tourism business projects mentioned above in point 1) shall also enjoy the following advantages:

a/ A reduction of 50% in land rental fees and water surface rental fees compared to the current price range set by the State in the Phu Quoc district.

b/ Exported goods produced in the Duong Dong town area shall apply a zero percent export tax rate.

For exported goods produced in the Duong Dong town area with an export tax rate of 1% or higher under the Export Tax Tariff, to enjoy a zero percent export tax rate, the following conditions must be met:

These exported goods must be produced in the Duong Dong town area by economic organizations exporting them or entrusted to export them. In addition to the export goods documentation required by the Law on Export Duties and Import Duties, the exporting organization or the organization entrusted to export the goods must present to the customs authority documents serving as evidence that the goods were produced in the Duong Dong town area: Sales invoices from production establishments in the Duong Dong town area or lists of goods accompanying purchase contracts without sales invoices from production establishments in the Duong Dong town area; lists of exported goods with an export tax rate of 1% or higher under the Export Tax Tariff enjoying a zero percent export tax rate according to the guidelines in this Circular. The director of the exporting organization or the organization entrusted to export signs and bears responsibility before the law for the accuracy and honesty of the list prepared by their own organization.

c/ Foreign investors and overseas Vietnamese investing in the Duong Dong town area under the Law on Foreign Investment in Vietnam, when transferring income abroad, shall pay a tax of 3% on the transferred income.

d/ Foreign organizations and individuals engaged in business activities in the Duong Dong town area not under the Law on Foreign Investment in Vietnam; overseas economic and financial organizations, foreign economic organizations currently having investment capital in Vietnam, foreigners residing in Vietnam and abroad, and overseas Vietnamese purchasing shares of Vietnamese enterprises in the Duong Dong town area, when transferring income abroad, shall pay a tax of 5% on the transferred income.

3. Other taxes and budget revenues shall be implemented in accordance with current regulations.

III- GUIDELINES FOR MANAGING CAPITAL INVESTMENT FROM THE STATE BUDGET FOR PROJECTS DEVELOPING TECHNICAL INFRASTRUCTURE AND SOCIAL INFRASTRUCTURE IN THE DUONG DONG TOWN AREA:

1. Budgeting investment capital for the Duong Dong town area:

Annually, based on the provincial budget revenue forecast for the Kien Giang province provided by the People's Committee of Kien Giang Province (excluding non-budgetary revenue items such as school fees, medical fees, aid, and contributions from the public,...) in the annual provincial budget, the People's Committee of Kien Giang Province proposes a separate investment capital amount for the Duong Dong town area and sends it to the Ministry of Finance.

BASED ON THE PROPOSAL OF THE PEOPLE'S COMMITTEE OF KIEN GIANG PROVINCE, THE MINISTRY OF FINANCE WILL CONSIDER AND DETERMINE THE TOTAL STATE BUDGET CAPITAL TO BE INVESTED EXCLUSIVELY FOR THE DƯƠNG ĐÔNG TOWN AREA IN THE CENTRAL BUDGET EXPENDITURE TASKS AND WILL ANNOUNCE THIS TO THE PROVINCE ALONG WITH THE GOVERNMENT'S ANNUAL BUDGET ASSIGNMENT.

BASED ON THE ANNOUNCED CAPITAL LEVEL AND THE ZONING PLAN OF THE DƯƠNG ĐÔNG TOWN AREA, THE PROVINCE WILL SPECIFICALLY DECIDE THE LIST AND CAPITAL LEVELS OF INFRASTRUCTURE PROJECTS TO BE INVESTED ACCORDING TO THE CAPITAL INVESTMENT GRADING SYSTEM SUITABLE WITH THE APPROVED PLANS AND REGISTERS THE LIST OF THESE PROJECTS WITH THE MINISTRY OF PLANNING AND INVESTMENT AND THE MINISTRY OF FINANCE FOR CAPITAL DISTRIBUTION AND MONITORING.

2. MANAGEMENT METHODS, CAPITAL DISTRIBUTION, REPORTING REGIMES, AND FINAL ACCOUNTING FOR CAPITAL INVESTMENTS IN THE DƯƠNG ĐÔNG TOWN AREA:

THE MINISTRY OF FINANCE WILL PROVIDE TARGETED SUBSIDIES FROM LOCAL REVENUES IN PHÚ QUỐC DISTRICT TO THE PROVINCE THROUGH THE DEPARTMENT OF FINANCE AND PRICE CONTROL OF KIEN GIANG PROVINCE TO INVEST IN THE DƯƠNG ĐÔNG TOWN AREA.

PRINCIPALLY, THE CAPITAL REINVESTED IN THE DƯƠNG ĐÔNG TOWN AREA MUST BE BASED ON THE ACTUAL ANNUAL STATE BUDGET REVENUE IN PHÚ QUỐC DISTRICT. HOWEVER, TO MAINTAIN CONTROLLABILITY, THE DISTRIBUTION PROCESS WILL BE BASED ON THE ANNOUNCED BUDGET. ANY INCREASE OR DECREASE IN ACTUAL REVENUE COMPARED TO THE BUDGET WILL BE ADJUSTED IN THE FOLLOWING YEAR'S BUDGET.

BASED ON THE APPROVED ANNUAL CAPITAL INVESTMENT BUDGET FOR DƯƠNG ĐÔNG TOWN AND THE LOCALITY'S PROPOSAL REGARDING THE IMPLEMENTATION SCHEDULE OF THE BASIC CONSTRUCTION WORKLOAD OF THE INVESTMENT PROJECTS, THE MINISTRY OF FINANCE WILL TEMPORARILY ADVANCE OR ISSUE CAPITAL THROUGH THE KIEN GIANG PROVINCE BUDGET FOR PAYMENT.

THE CENTRAL BUDGET CAPITAL FUNDED FOR THE DƯƠNG ĐÔNG TOWN AREA SHALL BE USED SOLELY FOR THE PURPOSE OF BUILDING INFRASTRUCTURE IN THE DƯƠNG ĐÔNG TOWN AREA ACCORDING TO THE OVERALL ZONING PLAN OF DƯƠNG ĐÔNG TOWN APPROVED BY THE AUTHORIZED BODY. DURING THE IMPLEMENTATION PROCESS, THE LOCALITY CAN AUTOMATICALLY ADJUST THE CAPITAL INVESTMENT AMOUNT BETWEEN GROUP B AND GROUP C PROJECTS WITHIN THE APPROVED TOTAL CAPITAL LIMIT. IF THERE IS A CHANGE IN THE PROJECT LIST, IT MUST BE REGISTERED AGAIN WITH THE MINISTRY OF PLANNING AND INVESTMENT AND THE MINISTRY OF FINANCE.

EACH QUARTER, THE PROVINCE HAS THE RESPONSIBILITY TO REPORT TO THE MINISTRY OF FINANCE AND THE MINISTRY OF PLANNING AND INVESTMENT ON THE IMPLEMENTATION OF INVESTMENT CONSTRUCTION AND CAPITAL DISTRIBUTION FOR EACH PROJECT, AND AT THE END OF THE YEAR, REPORT TO THE PRIME MINISTER (COPIES TO THE MINISTRY OF FINANCE AND THE MINISTRY OF PLANNING AND INVESTMENT) ON THE YEARLY IMPLEMENTATION RESULTS.

CAPITAL INVESTED IN PROJECTS WILL BE SETTLED INTO THE LOCAL BUDGET ANNUALLY, BUT A SEPARATE PORTION WILL BE DESIGNATED FOR PROJECTS INVESTED IN THE DƯƠNG ĐÔNG TOWN AREA.

THE MANAGEMENT, DISTRIBUTION, AND FINAL ACCOUNTING OF CAPITAL INVESTMENTS FOR EACH PROJECT INVESTED IN THE DƯƠNG ĐÔNG TOWN AREA MUST BE CONDUCTED IN ACCORDANCE WITH THE CURRENT NATIONAL REGULATIONS ON BASIC CONSTRUCTION MANAGEMENT.

IV. IMPLEMENTATION ORGANIZATION:

THIS CIRCULAR TAKES EFFECT FROM THE DATE OF SIGNATURE, AND FINANCIAL INCENTIVES WILL BE APPLIED FROM SEPTEMBER 1, 2000. IN CASES WHERE ENTITIES BENEFITING FROM TAX INCENTIVES ACCORDING TO THIS CIRCULAR CANNOT SEPARATELY RECORD THE AMOUNT OF TAX REDUCTIONS ACCORDING TO THE INCENTIVE LEVELS OR HAVE ALREADY COMPLETED THE 2000 TAX FINAL ACCOUNTING, NO RECALCULATION OF TAXES WILL BE PERFORMED. ALL PREVIOUS REGULATIONS ON FINANCIAL REGIMES AND TAXES APPLICABLE TO THE ENTITIES STIPULATED IN THIS CIRCULAR THAT CONTRADICT THIS CIRCULAR ARE ABOLISHED.