Circular No. 36 TC/TCT GUIDING IMPLEMENTATION OF Decision No. 154/TTG dated April 4, 1994 OF THE PRIME MINISTER ON THE MANAGEMENT REGIME FOR RECEIVING FUNDS FROM TRANSFER OF LAND USE RIGHTS AND SALE OF OTHER ASSETS BELONGING TO STATE OWNERSHIP

CIRCULAR

Guidelines for Directive No. 154/TTG dated April 4, 1994 of the Prime Minister on

 the management regime for collecting money from transferring land use rights and selling other state-owned assets

 

Implementing Point 3 of Directive No. 154/TTg dated April 4, 1994 of the Prime Minister regarding the resolution of urgent issues to increase revenue and reduce expenditure, combat corruption and smuggling;

After the implementation period of Circular No. 60 TC/TCT dated July 16, 1993, the Ministry of Finance continues to guide the management regime for collecting money from transferring land use rights and selling other state-owned assets according to Point 3 of Directive 154/TTg as follows:

I/ SUBJECTS TO BE APPLIED FOR THE COLLECTION AND PAYMENT OF MONEY FROM TRANSFERRING LAND USE RIGHTS AND SELLING OTHER STATE-OWNED ASSETS

1/ All fixed assets belonging to the State, including: land, natural forests, houses and other structures, machinery and equipment, etc., which have been transferred or sold land use rights (hereinafter referred to collectively as selling land use rights), paid in any form (money, gold, foreign currency, exchanging other assets or paying construction projects, joint ventures including those with foreign countries) must determine the actual value of the transferred asset, the amount of money received from the transfer of the asset must be deposited into the State Budget for centralized and unified management in accordance with the guidelines set forth in this Circular.

Fixed assets belonging to the State are those assets created using State Budget funds or funds of State origin under the current system. Some specific types of assets are defined as follows:

- Land and natural forests currently being used or managed by units, regardless of whether they are production and business units or not, all belong to the entire people, managed by the State and considered as assets belonging to the State.

- Houses belonging to the State shall be implemented in accordance with the guidance provided in Section I of Circular No. 06 LB/TT dated February 10, 1993 issued by the Ministry of Construction and the Ministry of Finance. Houses and other structures used for work and production and business built with State Budget funds or funds of State origin (including houses confiscated by the State when implementing land reform policies, houses donated by international organizations to the Government, etc.) are all houses belonging to the State.

2/ All administrative and public service agencies of the State, Party organizations, mass organizations, armed forces, enterprises, companies, State Corporations, businesses, etc. (hereinafter referred to collectively as units) that have carried out the transfer of land use rights before the new Land Law was enacted, sold the right to exploit natural forest products, and sold state-owned assets as mentioned in Point 1 of this section, must deposit into the State Budget the proceeds from selling land use rights as stipulated in this Circular, including mainly the following subjects:

a) Units transferring land use rights (including land managed by production and business units), selling the right to exploit standing trees in natural forests, selling houses and other fixed assets belonging to the State.

b) State agencies managing land, issuing land use rights and directly collecting money from organizations and individuals granted land use rights, must deposit the collected money into the State Budget.

In cases where land is allocated to an organization or individual who has invested capital in constructing a project, the unit receiving the management and use of the project upon handover is the subject required to pay the land use fee when granted land.

c) When the State allocates land to organizations or individuals for lease or to contribute capital in joint ventures, with payment made either in one lump sum or gradually over time, the organization or individual receiving the land is the subject required to pay the land use fee.

In cases where production and business units need capital for reinvestment in fixed assets and to replenish working capital to develop production and business activities, they must prepare economic and technical justifications along with budget reports to submit to the Ministry of Finance for the Government's decision to allow such reinvestment in each specific case. The additional capital proposed for reinvestment in fixed assets in this case can only be determined from the proceeds of selling fixed assets (without using the proceeds from transferring land use rights) and must be recorded through the State Budget management.

3/ While waiting for the Government to issue a Decree detailing the implementation of Article 79 of the Land Law on collecting land use fees when allocating land, organizations, households, and individuals receiving land from the State (hereinafter referred to collectively as recipients of land allocation from the State) since the date the Land Law took effect on July 14, 1993, must pay the land use fee into the State Budget, except in the following cases:

a) Land allocated for agricultural, forestry, aquaculture, and salt production purposes;

b) Land allocated for public use as specified in Article 58 of the Land Law;

c) Land allocated for mineral exploration and exploitation, historical sites, cemeteries, and other cases as prescribed by the Government;

d) Land leased to organizations and individuals by the State where the land lease fees have already been paid into the State Budget;

e) Land with houses owned by the State sold to tenants who have included the land cost in the purchase price and paid it into the State Budget;

g) Land allocated for exclusive use for national defense and security purposes as specified in Article 65 of the Land Law.

If land allocated to organizations and individuals for the purposes listed in Subparagraphs a, b, c, and g of this point is changed in purpose, then the land use fee must be paid when allocating land like in other cases.

Recipients of land allocation from the State who have paid the land use fee directly into the State Budget as stipulated herein, do not need to pay the land use fee to the State agency managing land.

II/ METHODS FOR DETERMINING THE AMOUNT OF MONEY COLLECTED FROM TRANSFERRING LAND USE RIGHTS AND SELLING OTHER FIXED ASSETS BELONGING TO THE STATE THAT MUST BE DEPOSITED INTO THE STATE BUDGET

As a general principle, all revenues from transferring land use rights and selling state-owned assets must be fully remitted to the State Budget. However, to ensure funding for covering costs associated with organizing and implementing transfer procedures, entities that are required to pay for transferring land use rights and selling assets as stipulated in Point 2, Section I may temporarily retain 2% (two percent) of the total revenue from transferring land use rights and selling assets (excluding cases where land is allocated to settle the value of completed and handed-over projects) to cover expenses related to investigation, valuation, declaration, and payment into the State Budget. At year-end, units must settle accounts regarding the retained amount (2%) with the directly managing Finance-Tax authority, and if not fully utilized, the remaining amount must be remitted to the State Budget.

The Total Amount of Revenue from Transferring Land Use Rights and Selling Assets Retained (2%) = The Amount of Revenue from Transferring Land Use Rights and Selling Assets to be Remitted to the State Budget.

The method for determining the revenue from transferring land use rights and state-owned assets is as follows:

A/ METHODS FOR DETERMINING REVENUE FROM TRANSFERRING RIGHTS, ALLOCATING LAND USE RIGHTS, AND HANDLING LAND:

1/ Regarding transferring land use rights.

Revenue from transferring land use rights = Actual area of land transferred (m2) x Actual price per square meter of land (đ/m2).

Wherein:

a) The actual area of land transferred must correspond with the cadastral map and land book of the plot of land already allocated to the entity for management and use.

b) The actual price for transferring land use rights is the agreed price between the transferor and transferee, but it must be at least equal to the standard price list set by the Provincial People's Committee at the time, or based on the minimum standard price range prescribed in Decree 80/CP dated November 5, 1993, and detailed in Circular No. 32/TT-LB issued by the Ministry of Finance, Construction, General Department of Land Administration, and the Government Price Commission.

In cases where the Government has different policies on transferring land use rights, the price for transferring land use rights shall be applied according to the specific provisions of such policies.

If, prior to transferring land use rights, the entity had paid the State Budget for compensation for agricultural land, forested land, and other losses as per Decision No. 186/HĐBT dated May 31, 1990, including compensation for crop damage, property on the land, and underground assets, using its own supplementary funds (not from the State Budget), then this amount can be deducted from the total revenue from transferring land use rights to be remitted to the State Budget, based on actual expenditures supported by valid invoices and receipts.

2/ Regarding transferring or allocating land use rights to settle the value of construction works:

In principle, when exchanging land for another asset or project, the specific area, land price, and budget estimate or final settlement value of the construction work or exchanged asset must be clearly defined and recorded in the contract, ensuring fair exchange or equivalence. The method for determining revenue from transferring or allocating land use rights in this case is similar to the method for transferring land use rights as specified in Point 1 of this section. However, in practice, many entities have not determined the specific land price at the time of settlement, so the revenue from transferring or allocating land use rights is calculated as the total actual value of the completed and handed-over construction work (or the remaining actual value of the exchanged asset at the time of settlement).

3/ For cases of allocating land for joint venture capital contribution:

Here, the price per square meter of land at the time of allocation is set by the Provincial People's Committee based on the minimum standard price range prescribed by the Government in Decree 80/CP dated November 5, 1993, and detailed in Circular No. 32/TT-LB issued by the Ministry of Finance, Construction, General Department of Land Administration, and the Government Price Commission, adjusted to local conditions and multiplied by the number of years of contribution.

4/ For state agencies responsible for land management directly collecting money from organizations and individuals receiving land, the revenue from allocating land use rights equals the total amount collected from organizations and individuals receiving land during the period, as recorded on tax invoices and receipts (issued by the Ministry of Finance).

The amount each organization or individual receiving land must pay to the allocating agency is based on the actual area of land allocated multiplied by the rate of collection per square meter (đ/m2).

The rate of collection per square meter is set by the Provincial People's Committee for each type of entity receiving land.

The basis for calculating land use fees when the State allocates land from the date the Land Law comes into effect (to be paid directly by the recipient to the State Budget) is the actual area of land allocated and the price per square meter of land (m2), calculated according to the following formula:

The price per square meter of land allocated is set by the Provincial People's Committee as in the case of allocating land for joint venture capital contribution as specified in Point 3 of this section.

B/ METHODS FOR DETERMINING REVENUE (SALE PRICE) FROM SELLING FOREST PRODUCT HARVESTING RIGHTS AND OTHER ASSETS

1/ Revenue from selling forest product harvesting rights is the revenue from selling standing trees in natural forests actually paid by the exploiting units to the forest management units, reflected in the payment invoices and accounting books of the selling unit.

2/ For houses and other assets, the sale price must be based on the remaining actual value (quality, utility value, and remaining capital value) of the asset. The sale price of a house includes the remaining actual value of the house and the land value with the house.

In principle, the minimum sale price of fixed assets must ensure compensation for the remaining capital value of the fixed assets before depreciation. However, in certain specific cases, the sale price may be lower than the remaining capital value of the asset:

- If the State has different regulations, the sale price of the asset shall be implemented according to the specific provisions of such policy.

- Assets that have deteriorated or become technologically obsolete, but the depreciation rate has not been commensurate with the actual wear and tear value of the asset.

In this case, the Asset Valuation Committee must prepare a record, clearly stating the reasons, and all members of the committee must sign to confirm, along with the asset's history file.

If an asset is established through multiple sources of capital, it is necessary to determine the proportion (%) of state budget capital initially invested, to calculate the amount of money from selling the asset that must be remitted to the state budget.

Example: Unit A constructs a factory, with the total completed project value handed over being 2 billion VND, of which the state budget capital provided and capital with a state budget origin is 1 billion VND (50%). Now, it sells to another unit for 4 billion VND (including house price at 1 billion VND and land price at 3 billion VND), then the amount of money from selling the house that must be remitted to the state budget, after temporarily retaining 2%, is:

[3.000 tr.đ + (1.000 x 50%)] x 98% = 3.430 tr.đ

III/ DECLARATION OF FUNDS TRANSFERRED TO THE STATE BUDGET FROM THE SALE OF LAND USE RIGHTS AND ASSETS

1/ Declaration:

a) All entities required to declare funds from transferring land use rights and selling state assets as stipulated in Point 2, Section I of this Circular must declare the proceeds from transferring land use rights and selling state assets to the tax authority of the province or city where the entity is headquartered, starting from January 1, 1991, according to the following main contents:

- Name of the asset, area of land and house, actual location of the transferred property or granted to each organization or individual; area of forest or volume of timber sold for exploitation rights.

- Grade, quality of the asset, transfer price or sale price per unit, total amount received from transferring land use rights (including grants) and selling assets. If payment is made through asset exchange or completion of construction projects, the actual value of the exchanged asset or the value of the completed project according to the approved final account must be declared.

- Actual expenses (including those already paid to the state budget) related to the asset that can be deducted from the amount payable (if applicable) and necessary expenses for implementing the transfer or sale of the asset.

- Relevant documents such as economic contracts, asset history, final accounts accompanied by project acceptance records, asset evaluation records of the committee, receipts and vouchers for collected funds.

b) All organizations and individuals receiving land when the state allocates land as stipulated in Point 3, Section I of this Circular must declare to the tax authority regarding the area and location of the allocated land and other relevant documents for land allocation (if any).

The declaration deadline specified herein shall be no later than one month from the date of issuance of this Circular for cases of transferring land use rights or selling assets before the issuance of this Circular, and no later than fifteen days from the date of transfer for cases of transfers after the issuance of this Circular.

2/ Procedures for declaring funds from transferring land use rights and selling assets:

a. After receiving the declaration form and relevant documents, the tax authority will verify the valuation, calculate the amount payable to the state budget from transferring land use rights and selling assets, and notify the entity to proceed accordingly.

b. Based on the notification from the tax authority, the entity must pay the amount (if in gold or foreign currency, it must be converted into Vietnamese dong at the buying rate published by the State Bank of Vietnam at the time of payment) into the local Treasury, recorded under the corresponding chapter, type, item, and sub-item, Item 30 of the State Budget if it is revenue from transferring land use rights; Item 09 for revenue from selling natural forest exploitation rights, houses, and other assets.

The tax authority and financial department will cooperate with the competent sector to only process "record income" for the state budget under the corresponding chapter, type, item, and sub-item, Item 30 of the State Budget for revenue from transferring land use rights, and "record expenditure" for basic construction investment capital for the entity under the corresponding chapter, type, item, and sub-item, Item 53 of the State Budget in the following specific cases:

- Transferring land use rights or allocating land use rights to settle completed basic construction projects. The amount recorded as income and expenditure equals the value of the completed project according to the approved final account if the project value is equal to or less than the allocated land use rights amount. If the allocated land use rights amount exceeds the project value, the entity receiving the land use rights must remit the excess amount to the state budget.

- An entity approved by the Government (or Ministry of Finance) to use proceeds from selling fixed assets to supplement investment capital for basic construction aimed at developing production and business operations, the amount recorded as income and expenditure equals the additional investment capital decided by the Government (or Ministry of Finance), but not exceeding the amount of revenue from selling the entity's assets that must be remitted to the state budget (excluding the land use rights amount). If the revenue from selling the assets exceeds the additional investment capital decided by the Government (or Ministry of Finance), the entity must remit the remaining amount to the state budget.

For entities selling assets before the Prime Minister issued Directive No. 154/TTg and the guidance in this Circular, if they have already reinvested the proceeds from selling fixed assets as prescribed in Article 2 of Decision No. 332/HĐBT dated October 23, 1991 of the Council of Ministers (now the Government), they must now implement the procedure of "record income, record expenditure" through the state budget. At the same time, they are required to manage the capital according to the regulations of the Ministry of Finance and from the date of Directive No. 154/TTg of the Prime Minister, entities may not use the proceeds from selling assets without a decision from the Government (or Ministry of Finance). Any remaining proceeds from selling fixed assets that have not been used, the entity must remit the entire amount to the state budget as mentioned above.

In cases where taxes on business income and profits were previously paid to the state budget upon selling assets, these amounts can be deducted from the remaining proceeds from selling the assets that still need to be remitted to the state budget.

- State organizations that are allocated land for joint venture capital contributions (including foreign joint ventures) shall have the state budget record revenue from land use fees, while simultaneously recording expenditures for investment capital construction grants to the entity receiving the land for capital contribution according to corresponding chapters, types, clauses, and categories. The entity must manage the capital in accordance with the prescribed regulations. In cases where the state allocates land to individuals, companies, or private enterprises for joint venture capital contributions, these entities must pay the land use fee when the state allocates the land as stipulated in Point 3, Section I of this Circular.

3/ Organizations and individuals receiving land from the state allocation from the date the new Land Law takes effect shall directly pay the land use fee to the National Treasury according to the notification of the tax authority, recorded under corresponding chapters, types, clauses, and categories in Item 30 of the State Budget Revenue and Expenditure Schedule. The agency collecting the land use fee must issue a receipt for the payment (issued by the Ministry of Finance) to the payer. The state management agency for land shall only issue the land use right certificate after the recipient has completed all procedures for paying the land use fee to the tax authority.

4/ The revenues from transferring land use rights and selling state assets from 1991 to the present, if discovered and recovered during the year 1994, shall be considered as state budget revenue for 1994 and shall be distributed as follows:

- Allocate 100% of the revenue from transferring land use rights and selling the right to exploit natural forest products to the local state budget.

- The proceeds from selling houses and other assets, which belong to units managed by a certain level, shall be fully refunded to the budget at that level.

5/ All revenues from transferring land use rights and selling state assets already submitted to the state budget, the unit must account for reducing the corresponding state budget capital according to the remaining value of the asset currently managed by the unit.

For revenues from the transfer of state assets, if recorded as both income and expenditure, the unit must increase the corresponding state budget capital according to the value of the fixed assets invested and manage the capital and assets in accordance with the regulations set by the Ministry of Finance.

III/ VIOLATIONS HANDLING

All organizations and individuals who carry out the transfer of land use rights or receive land use rights, sell the right to exploit natural forest products (standing trees), or sell state-owned assets, if they fail to declare or make false declarations, do not comply with regulations, or do not pay or underpay the required state budget revenue as stipulated in this Circular, in addition to being required to recover the full amount of the sale proceeds due to the state budget, will also be subject to penalties as provided in Government Decree No. 01/CP dated October 18, 1992 on administrative penalties in the field of taxation and Circular No. 11TC/TCT dated February 24, 1993 issued by the Ministry of Finance guiding the implementation of the aforementioned Decree.

IV/ IMPLEMENTATION ORGANIZATION

1/ Tax authorities at all levels are responsible for organizing the collection, guiding units to declare and pay revenues from the sale of assets in accordance with the provisions of this Circular. At the same time, they must coordinate with financial agencies and relevant agencies at the local level to properly record revenues and expenditures through the state budget for the transferred land use rights and assets of units.

2/ Financial agencies at all levels are responsible for guiding and coordinating with the competent authorities and units to implement the management of state budget capital through the form of recording revenues and expenditures from the sale of assets in accordance with the capital management regulations set by the Ministry of Finance.

3/ It is requested that the People's Committees of provinces and centrally governed cities direct the tax, finance, land management, construction, and other relevant agencies at the local level to conduct inspections of the implementation of Prime Minister's Directive No. 154/TTg for all units within their jurisdiction in accordance with the guidance provided in this Circular.

4/ It is requested that ministries, State Committees, and other agencies directly under the Government, central Party bodies, and mass organizations guide and direct subordinate units to strictly follow Prime Minister's Directive No. 154/TTg and the guidance provided in this Circular.

5/ This Circular takes effect from the date of issuance. The provisions in Circular No. 60 TC/TCT dated July 16, 1993 shall be implemented in accordance with this Circular. Any previous regulations contrary to Prime Minister's Directive No. 154/TTg and this Circular are hereby abolished.

During the implementation process, if there are any difficulties, it is requested that sectors and localities promptly report them to the Ministry of Finance for research and resolution. /