This Circular guides the collection, submission, management, and use of fees from the sale of CERs from CDM projects; sets fee rates according to project sectors; provides price support for CDM project products. This Circular takes effect fifteen days after its publication in the Official Gazette.
Scope of application
Investors implementing CDM projects, Vietnam Environment Protection Fund, State Bank of Vietnam
Key points
- The owner of CERs must report to the Ministry of Natural Resources and Environment and register with the Vietnam Environment Protection Fund regarding the division, sale, or transfer of CERs to other countries.
- Fees for selling CERs are collected as a percentage (%) of the total revenue from selling CERs, applicable to each project in different sectors.
- The Vietnam Environment Protection Fund manages and uses the fees from selling CERs to support activities related to climate change and CDM.
- Investors producing electricity from renewable energy or recovering methane gas are subsidized based on actual costs, planned profits, and actual selling prices.
- The Vietnam Environment Protection Fund temporarily provides price subsidies to investors of CDM projects during the fiscal year, followed by settlement.
🌐 Social impact of this document
- Positive impact: Supporting sustainable development of CDM projects, reducing greenhouse gas emissions.
- Negative impact: The cost of fees for selling CERs may increase the burden on businesses.
❓ Frequently asked questions
What percentage is the fee for selling CERs?
The fee for selling CERs is collected at a rate of 1.2% to 2%, depending on the sector of the CDM project.
When must investors pay the fee?
The owner of CERs must report and register with the Ministry of Natural Resources and Environment and the Vietnam Environment Protection Fund within fifteen days after dividing, selling, or transferring CERs to other countries.
How does the Vietnam Environment Protection Fund provide price support for CDM project products?
The Vietnam Environment Protection Fund provides price support for CDM project products if actual costs exceed selling prices, the project has been approved, and there is a purchase and sale contract.
When must the owner of CERs pay the fee for selling CERs?
The owner of CERs must pay the fee before transferring CERs to the buyer or transferring them to another country.
How does the Vietnam Environment Protection Fund provide funding support for CDM projects?
The Vietnam Environment Protection Fund provides funding support for the preparation of project design documentation, but not exceeding 30% of actual costs.
Full text
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MINISTRY OF FINANCE-MINISTRY OF NATURAL RESOURCES AND ENVIRONMENT AND RURAL DEVELOPMENT |
SOCIALIST REPUBLIC OF VIETNAM |
|
No.: 58/2008/TTLT-BTC-BTN&MT |
Hanoi, July 4, 2008 |
JOINT CIRCULAR
Guidelines for Implementationof Certain Provisions of
Decision
No. 130/2007/QĐ-TTg dated August 2, 2007 of the Prime Minister
on Certain Financial Mechanisms and Policies for
Clean Development Mechanism Projects
This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.
Pursuant to Decision No. 130/2007/QĐ-TTg dated August 2, 2007 of the Prime Minister on certain financial mechanisms and policies for clean development mechanism projects (hereinafter referred to as CDM projects), the Ministry of Finance and the Ministry of Natural Resources and Environment jointly issue detailed guidelines for the following provisions:
1. This Circular provides guidance on the collection, payment, management, and use of fees from the sale of Certified Emission Reductions (CERs); the management of CERs obtained from CDM projects funded by official development assistance (ODA); and subsidies for products of CDM projects as stipulated in Articles 5, 9, and 16 of Decision No. 130/2007/QĐ-TTg dated August 2, 2007 of the Prime Minister on certain financial mechanisms and policies for clean development mechanism projects (hereinafter referred to as Decision No. 130/2007/QĐ-TTg).
Within 15 days from the date of issuance, receipt, or division of CERs, the owner of CERs must report to the Ministry of Natural Resources and Environment and register with the Vietnam Environmental Protection Fund regarding the point of reception of CERs, the quantity of CERs issued, received, and divided among project investors.
In case there is any change in the reported or registered information, the investor must re-report and re-register within 10 days from the date of such change.
When selling or transferring CERs back to the country (for foreign investors), the owner of CERs must report to the Ministry of Natural Resources and Environment and the Vietnam Environmental Protection Fund, and complete the payment of the sale fee before transferring CERs to the buyer or transferring them back to the country.
For CDM projects using ODA funds, the CERs obtained belong to the State. The project investor is responsible for selling CERs and depositing the entire proceeds from the sale of CERs, after deducting selling costs (if any), into the Vietnam Environmental Protection Fund.
Products of CDM projects meeting the conditions specified in Article 5 of Decision No. 130/2007/QĐ-TTg shall be subsidized according to the guidelines set out in Section III of this Circular. Investors who are owners of CERs issued from CDM projects with subsidized products must pay the sale fee for CERs according to the guidelines set out in Section II of this Circular.
5. In cases where international treaties to which the Socialist Republic of Vietnam is a party provide different provisions from those in this Circular, the provisions of such treaties shall apply. The application of international treaties shall be carried out in accordance with the Law on the Conclusion and Implementation of International Treaties and guiding documents.
II. COLLECTION, PAYMENT, MANAGEMENT, AND
USE OF FEES FROM THE SALE OF CERs
1. The objects subject to the sale fee for CERs are reductions in emissions that have been issued and sold under signed contracts or transferred back to the country.
2. The rate of the sale fee for CERs:
|
Serial Number |
The rate of the sale fee for CERs is calculated as a percentage (%) of the total amount from the sale of CERs under signed contracts or the value of CERs transferred back to the country by foreign investors, applicable to each CDM project in the following sectors: |
Rate of Collection |
|
1 |
Construction and implementation of projects |
1,2% |
|
2 |
Improving energy efficiency, conservation, and savings. |
1,2% |
|
3 |
Exploitation and application of renewable energy sources. |
1,2% |
|
4 |
Reforestation, afforestation, and forest protection to enhance carbon absorption and reduce greenhouse gas emissions. |
1,5% |
|
5 |
Conversion of fossil fuel usage to reduce greenhouse gas emissions.4Recovery of methane (CH4) from waste disposal sites, coal mines for destruction or electricity generation, and daily use. |
1,5% |
|
6 |
Reduction of methane (CH4) emissions from agricultural and livestock activities through biogas applications.4Recovery and utilization of associated natural gas from oil fields. |
1,5% |
|
7 |
Other sectors that result in significant reductions in greenhouse gas emissions. |
2% |
|
8 |
3. The amount of the sale fee for CERs to be paid is determined as follows: |
2% |
Amount of sale fee for CERs to be paid (
|
Rate of sale fee for CERs (%)VND) |
= |
Quantity of CERs sold or transferred back to the country |
x |
Sale price of CERs ( |
x |
VND/CERThe quantity and sale price of CERs are based on the purchase and sale contract for CERs. If the owner of CERs does not sell but transfers CERs back to the country, the quantity of CERs for calculating the fee is the actual quantity transferred by the owner, and the price of CERs for determining the amount of the fee payable is based on the market price at the time of payment.) |
4. Collection and Payment of Fees for the Sale of CERs
4.1. The owner of CERs is responsible for declaring the quantity of CERs sold or transferred back to the country, calculating and declaring the amount of the sale fee payable (using Form No. 01 attached hereto); and paying the sale fee for CERs into the Vietnam Environmental Protection Fund based on the declared figures before transferring CERs to the buyer or transferring them back to the country.
For CDM projects implemented under the form prescribed in Clause 3, Article 4 of Decision No. 130/2007/QĐ-TTg, if foreign investors or consulting organizations for CDM projects do not have offices in Vietnam, domestic investors are responsible for negotiating and paying the sale fee for CERs on behalf of foreign partners from the outset of project construction.
4.2. The Vietnam Environmental Protection Fund is responsible for reviewing the declaration of the sale fee payment by the owner of CERs, organizing the collection, management, and use of the sale fee for CERs in accordance with this Circular. In cases where the owner fails to pay the fee as required or the amount of the fee declared by the owner of CERs does not match the quantity of CERs sold or transferred back to the country, the Vietnam Environmental Protection Fund will inspect and issue a notice of the amount of the fee payable (using Form No. 02 attached hereto).
4.3. The sale fee for CERs is collected in Vietnamese dong. If the owner of CERs requests payment in foreign currency, it can be paid in foreign currency based on the exchange rate published by the State Bank of Vietnam for inter-bank foreign exchange transactions at the time of collection.
5. Management and Use of Proceeds from the Collection of Fees
5. Management and use of collected advance fees
5.1. The fee for selling CERs is revenue belonging to the state budget, which is entirely retained for the Vietnam Environment Protection Fund to be used for the following activities:
5.1.1. Covering expenses for collecting the fee.
5.1.2. Supporting activities related to disseminating information, raising awareness about climate change and CDM, including: Expenses for disseminating information and raising awareness about climate change and CDM through mass media; expenses for compiling, printing, and distributing materials introducing the United Nations Framework Convention on Climate Change, the Kyoto Protocol, and international guidance on CDM; expenses for seminars, training, and capacity building related to climate change and CDM; expenses for organizing investigations and surveys serving information dissemination and awareness-raising activities.
5.1.3. Supporting the examination and approval of CDM project documentation, management, and supervision of CDM project implementation, including:
- Expenses for the activities of the Steering Committee implementing the United Nations Framework Convention on Climate Change and the Kyoto Protocol.
- Expenses for managing and supervising the implementation of CDM projects.
Specific expenditure levels for the contents mentioned in Point 5.1.2 and Point 5.1.3 shall be implemented according to the established standards and regulations set by the Ministry of Finance; for contents without established standards and regulations, the head of the agency receiving financial support shall determine the expenditure level based on actual conditions and the allocated funds, and bear responsibility for their decision.
Annually, based on the requirements of tasks such as disseminating information, raising awareness about CDM; examining and approving CDM project documentation; managing and supervising the implementation of CDM projects assigned and the budget funds already allocated, relevant agencies and organizations must prepare budgets to submit to the Vietnam Environment Protection Fund for financial support consideration.
5.1.4. Supporting the construction of design documents for CDM projects.
a. Conditions for support:
- Belongs to the list of sectors for constructing and investing in CDM projects as stipulated in Article 3 of Decision No. 130/2007/QĐ-TTg and Point 2, Section II of this Circular.
- There is no other funding source during the process of constructing the design documents for the project.
- The design document has been approved by the Ministry of Natural Resources and Environment.
- The investor must submit a request for financial support along with a summary of the costs for constructing the design document and related payment vouchers to the Vietnam Environment Protection Fund.
b. The level of support will be decided by the Vietnam Environment Protection Fund within the scope of revenue from the fee for selling CERs but not exceeding 30% of the actual cost of constructing the design document.
5.2. The remaining amount of the fee for selling CERs after expenditures for the activities specified in Point 5.1 of Section II of this Circular shall be added to the operational capital of the Vietnam Environment Protection Fund.
5.3. The Vietnam Environment Protection Fund is responsible for managing and using the revenue from the fee for selling CERs, and the revenue from selling CERs by investors implementing CDM projects using ODA funds, properly and in accordance with regulations, and if unused at year-end, it can be carried over to the next year for use as prescribed.
Other matters related to the collection, submission, management, use, and public disclosure of the fee for selling CERs not specified in this Circular shall be implemented in accordance with the regulations of the Ministry of Finance.
III. SUBSIDIES FOR PRODUCTS OF CDM PROJECTS
1. The products eligible for subsidies from the Vietnam Environment Protection Fund are those from the following CDM projects:
1.1. Electricity generated from wind, solar, geothermal, and tidal energy.
1.2. Electricity generated from methane recovery from waste landfills and coal mines.42. Conditions for subsidies:
2.1. Belongs to the products eligible for subsidies as stipulated in Point 1 of Section III of this Circular.
2.2. The pricing plan for the product has been reviewed by the Vietnam Environment Protection Fund, and the result shows that the actual production cost of the product exceeds the contract selling price.
2.3. The sales contract has been signed and is effective, clearly stating the selling price of the product.
2.4. The project has been confirmed or approved by the Ministry of Natural Resources and Environment.
2.5. Investors with subsidized products must submit a subsidy request along with the required documentation as stipulated in Clause 5 of Section III of this Circular to the Vietnam Environment Protection Fund.
3. Subsidy level per unit of product
The subsidy level per unit of product is determined as follows:
Subsidy level per unit of product
|
Actual production cost per unit of product |
= |
Planned profit per unit of product |
+ |
Actual selling price per unit of product |
- |
- The actual production cost per unit of product is a reasonable and valid cost for determining taxable income according to the guidelines of the Ministry of Finance on corporate income tax. |
Where:
- The planned profit per unit of product is determined annually by the investor and submitted to the Vietnam Environment Protection Fund for review and approval by the Management Board of the Fund. The determination of planned profit must be based on the profit level of similar products and cannot exceed the average profit level of producing such products.
- The actual selling price of the product is the actual transaction price.
The Vietnam Environment Protection Fund will base its determination of the subsidy level for each CDM project's product on the results of the pricing plan review and the approved planned profit level, submitting to the Management Board of the Fund for consideration and decision on the subsidy level per unit of product for each project.
4. Annual subsidy amount
The annual subsidy amount is determined as follows:
Annual subsidy amount
|
Subsidy level per unit of product in the year |
= |
Quantity of products sold in the year |
x |
Actual income from selling CERs allocated in the year (if any) |
- |
In which, the actual income from selling CERs (if any) allocated in the year is the total amount of revenue from selling CERs (if any) minus the fee for selling CERs payable and the selling expenses (if any) allocated in the year. |
5. The subsidy period is determined based on the time when the project produces products; the ability to cover the production costs of subsidized products, but not exceeding the actual depreciation period for recovering the capital investment in the main equipment for producing subsidized products.
5. The period for price support shall be determined based on the time when the project has products; the ability to cover production costs of supported products, but not exceeding the actual depreciation period for recovering the capital cost of main equipment for producing the supported products.
6. Based on the project's production plan for the year, the purchase and sale contract for the product is signed, and the level of subsidy is decided by the Management Council of the Fund no later than the 15th day of the first month of each quarter. The Vietnam Environment Protection Fund temporarily grants subsidies to investors with subsidized products, with the total amount temporarily granted in a year not exceeding 70% of the planned subsidy amount according to the annual production plan; at the end of the fiscal year, no later than January 15 of the following year, the investor must settle the temporarily granted subsidy amount. In cases where the temporarily granted amount is insufficient, it will be supplemented; if the temporarily granted amount exceeds the subsidy amount for the year, it will be carried forward and deducted from the temporarily granted amount of the first quarter of the following year if still within the subsidy period, otherwise, it must be returned to the Vietnam Environment Protection Fund.
7. Subsidy application dossier
The subsidy application dossier includes:
- Request for subsidy document.
- Certified copy by the competent state agency regarding the Greenhouse Gas Emission Reduction Certificate issued by the CDM Executive Board (if any) or the Confirmation Letter or Approval Letter of the Ministry of Natural Resources and Environment.
- Purchase and sale contract for subsidized products.
- Calculation and explanation of planned profit.
- Pricing scheme with specific contents as follows:
+ Name of subsidized product.
+ Summary of actual costs incurred in producing the product and the selling price of the subsidized product.
+ Explanation of the expected time for the project to recover production costs.
+ Other related documents (if any).
8. The source of funds for implementing subsidies for CDM project products comes from the Vietnam Environment Protection Fund.
9. The subsidy money must be used for its intended purpose to offset the production costs of subsidized products of the project.
Settlement of subsidy money shall be carried out in accordance with current regulations.
IV. IMPLEMENTATION
1. Investors who establish and implement CDM projects are responsible for paying the fee for selling CERs in accordance with this Circular; in case of violation, they will be subject to administrative penalties in accordance with the Government's regulations on administrative penalties in the field of fees and charges.
2. For CDM projects that have been supported by the Vietnam Environment Protection Fund to build project design documents in accordance with Clause 5.1.4, Section II of this Circular but are not continued due to subjective fault of the parties involved, the investor receiving support must return the entire amount of the supported funds.
3. This Circular takes effect 15 days after its publication in the Official Gazette. In cases where investors establish and implement CDM projects that have been granted and sold CERs or transferred CERs back to the country before the effective date of Decision No. 130/2007/QĐ-TTg, they are not required to pay the fee for selling CERs but must report to the Ministry of Natural Resources and Environment and register the granted CERs with the Vietnam Environment Protection Fund in accordance with Clause 2, Article 17 of Decision No. 130/2007/QĐ-TTg for monitoring and management and may receive subsidies if they meet the conditions stipulated in Clause 2, Section III of this Circular.
During implementation, if there are difficulties or obstacles, please reflect them to the Ministry of Finance and the Ministry of Natural Resources and Environment for prompt resolution or appropriate amendments and supplements.
|
DEPUTY MINISTER |
DEPUTY MINISTER |
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