Circular No. 74/2005/TT-BTC guiding the financial regime and customs procedures applicable at the Special Economic and Trade Zone Lao Bao.

 CIRCULAR
Guidelines on Financial Regime and Customs Procedures Applicable to the Lao Bao Economic Zone - Special Trade Area
Special Trade Lao Bao

Pursuant to the State Budget Law 2002, the Law Amending and Supplementing Certain Articles of the Law on Encouraging Domestic Investment 1998, the Foreign Investment Law 1996, the Amended Foreign Investment Law 2000, the Corporate Income Tax Law, the Special Consumption Tax Law 2003; the Customs Law 2001; the Value Added Tax Law and the Current Export and Import Tax Law;

Pursuant to Decision No. 11/2005/QĐ-TTg dated January 12, 2005 of the Prime Minister promulgating the Regulation on the Lao Bao Economic Zone - Special Trade Area;
The Ministry of Finance issues guidelines on the financial regime and customs procedures applicable to the Lao Bao Economic Zone - Special Trade Area as follows:

I. GENERAL PROVISIONS

1. Scope of Application:

The financial regime and customs procedures (hereinafter referred to as the financial regime) stipulated in this Circular shall be applied within the territorial scope defined in Article 3 of the Regulation on the Lao Bao Economic Zone - Special Trade Area issued together with Decision No. 11/2005/QĐ-TTg dated January 12, 2005 of the Prime Minister, including: the town of Lao Bao, the town of Khe Sanh, and the communes of Tan Thanh, Tan Long, Tan Lien, Tan Lap, Tan Hop in Huong Hoa district, Quang Tri province; collectively referred to as the Lao Bao Economic Zone - Special Trade Area (abbreviated as KKT-TMĐB Lao Bao).

Other areas within the territory of Vietnam (excluding the KKT-TMĐB Lao Bao, duty-free zones, bonded warehouses established in accordance with current laws) are understood to be the domestic territory of Vietnam.

The financial regime stipulated in this Circular shall only apply to business activities conducted within the territory of the KKT-TMĐB Lao Bao. In cases where organizations and individuals have business activities both within the KKT-TMĐB Lao Bao and in the domestic territory of Vietnam, they must separately account for their business activities within the KKT-TMĐB Lao Bao as the basis for determining the applicable financial regime.

For enterprises granted licenses to operate in the KKT-TMĐB Lao Bao before Decision No. 11/2005/QĐ-TTg took effect but have not yet fully enjoyed incentives, the enterprise must request the investment license issuing authority, the investment incentive certificate issuing authority, and the business registration certificate issuing authority to supplement the incentives noted on these certificates as the basis for enjoying incentives under the financial regime stipulated in this Circular.

2. Objectives of Application:

The subjects to which the financial regime stipulated in this Circular applies are:

a. Organizations and individuals conducting business activities in the KKT-TMĐB Lao Bao, including:

- Domestic investors belonging to various economic sectors operating in accordance with the State Enterprise Law, the Enterprise Law, the Cooperative Law; individual households and independent practitioners.

- Foreign organizations and individuals including foreign-invested enterprises; foreign investors participating in joint venture contracts; overseas Vietnamese residing abroad operating in accordance with the Law on Encouraging Domestic Investment, the Foreign Investment Law in Vietnam, and foreign investors operating without being subject to the Foreign Investment Law in Vietnam.

b. Individuals residing and traveling in the KKT-TMĐB Lao Bao.

3. Conditions for Application:

To enjoy the financial regimes stipulated in this Circular, the KKT-TMĐB Lao Bao must ensure isolation of its activities from the domestic territory of Vietnam to facilitate the inspection and control of goods entering and exiting between the KKT-TMĐB and the domestic territory.

4. Some General Provisions on Customs Procedures:

a. Organizations and individuals operating in the KKT-TMĐB Lao Bao are permitted to export to and import from abroad all goods and services that are not prohibited by Vietnamese law. The policy on export and import items shall be implemented according to the regulations of the Prime Minister on managing exports and imports of goods during each period and the implementing guidance documents of relevant ministries and agencies. The export and import of goods listed in the export and import item list subject to conditions and restricted trade goods shall be carried out in accordance with the guidance of the Ministry of Commerce.

b. Every six months, enterprises and individuals with production and business establishments in the KKT-TMĐB Lao Bao are responsible for submitting to the customs authority the final report on materials, raw materials, exported and imported goods in the period and the stock report of products for each period. The customs authority will check and compare these reports and send them to the tax authority for checking and determining the taxes payable.

c. Goods, luggage for export, import, transit; means of transport for departure, arrival, transit at the KKT-TMĐB Lao Bao, depending on the type, shall follow the customs procedures specified for that type.

d. Goods for export, import, transit; means of transport for departure, arrival, transit through the KKT-TMĐB Lao Bao may only pass through the international border gate Lao Bao (gate A) and the border gate adjacent to the KKT-TMĐB Lao Bao with the domestic territory located on National Highway 9 in Tan Hop commune (gate B).

đ. Goods from the domestic territory exported to the KKT-TMĐB Lao Bao and vice versa: Goods from abroad passing through gate B into the KKT-TMĐB Lao Bao shall perform customs procedures at gate B; goods from abroad into the KKT-TMĐB Lao Bao and goods from the KKT-TMĐB Lao Bao to abroad through gate A shall perform customs procedures at gate A.

e. Goods from the domestic territory exported to abroad through gate A or goods from abroad through gate A into the domestic territory shall perform customs procedures according to the current regulations at gate A or at the customs sub-department outside the port. In case the customs procedures are performed at the customs sub-department outside the port, the customs procedures shall be carried out in accordance with the regulations on goods transiting ports.

In addition to the above provisions, the parties concerned must fulfill other obligations prescribed in the Customs Law, the Export and Import Tax Law, and other related documents concerning export and import activities.

II. SPECIFIC PROVISIONS

A. REGARDING GOODS AND SERVICES:

1. On Export Duties and Import Duties:

a/ Goods from abroad, imported into the KKT-TMĐB Lao Bao from the domestic territory are exempt from import duties. However, passenger cars with less than 24 seats not imported into the KKT-TMĐB Lao Bao by enterprises with production and business establishments in the KKT-TMĐB Lao Bao shall pay taxes in accordance with the current laws.

b/ Goods imported into the domestic territory of Vietnam from the KKT-TMĐB Lao Bao:

- Goods originating from foreign countries must be subject to import duties as prescribed by current regulations.

- Goods produced, processed, recycled, or assembled at the Lao Bao Border Economic Zone and International Trade Center, if the value of goods of ASEAN origin constitutes 40% or more, confirmed by the ASEAN Certificate of Origin Form D, and meeting the conditions stipulated by current regulations, shall be eligible for preferential CEPT import tariff rates when imported into Vietnam's domestic market.

- Goods imported from the Lao Bao Border Economic Zone and International Trade Center into Vietnam's domestic market, if they have been manufactured in Laos, shall be subject to reduced import duties based on bilateral agreements and guiding documents between the two governments.

- Goods listed in the Catalogue of Goods with Origin from the Lao Bao Border Economic Zone and International Trade Center issued periodically by the People's Committee of Quang Tri Province (referred to as the Catalogue of Goods with Origin from the Lao Bao Border Economic Zone and International Trade Center) shall not be subject to import duties when imported into Vietnam's domestic market, including: Agricultural products produced by residents within the Lao Bao Border Economic Zone and International Trade Center; Goods produced, processed, recycled, or assembled at the Lao Bao Border Economic Zone and International Trade Center without using imported raw materials or components from foreign countries.

- Goods produced, processed, recycled, or assembled at the Lao Bao Border Economic Zone and International Trade Center that use directly imported raw materials or components from foreign countries (excluding goods imported from Vietnam's domestic market that use imported raw materials or components from foreign countries) shall only be subject to import duties on the portion of imported raw materials or components constituting the goods when imported into Vietnam's domestic market.

The basis for determining the import duty payable on the portion of imported raw materials or components constituting the goods imported into Vietnam's domestic market is: The taxable value determined according to current regulations; The quantity of goods imported into Vietnam's domestic market; The import duty rate applicable to each type of raw material or component. The taxable value and duty rate shall be applied at the time of declaration for importation into the domestic market.

Enterprises and individuals with production and business establishments at the Lao Bao Border Economic Zone and International Trade Center are responsible for registering with customs authorities regarding the catalogue of imported goods used as raw materials for producing imported goods into the domestic market and the quota of raw materials or components used to produce imported goods before importing them into the domestic market.

c/ Goods produced, processed, recycled, or assembled at the Lao Bao Border Economic Zone and International Trade Center when exported abroad are exempt from export duties.

d/ Goods transferred from Vietnam's domestic market to the Lao Bao Border Economic Zone and International Trade Center are exempt from export duties.

đ/ Goods transshipped through the Lao Bao Border Economic Zone and International Trade Center for export abroad must be subject to export duties as prescribed by current regulations.

2. Regarding Value Added Tax (VAT):

Enterprises and individuals with production and business establishments at the Lao Bao Border Economic Zone and International Trade Center may use VAT invoices according to current regulations, and must register, declare, and pay VAT as prescribed in this Circular for cases where VAT is required to be paid. For goods and services that are exempt from VAT, the VAT line in the VAT invoice shall be crossed out (x). Specifically, as follows:

a. Goods and services imported from abroad into the Lao Bao Border Economic Zone and International Trade Center are exempt from VAT. However, passenger cars with less than 24 seats not imported by enterprises with production and business establishments at the Lao Bao Border Economic Zone and International Trade Center are subject to tax according to current laws.

b. Goods and services exported from the Lao Bao Border Economic Zone and International Trade Center to abroad are exempt from VAT; Goods and services from Vietnam's domestic market exported to the Lao Bao Border Economic Zone and International Trade Center are subject to a 0% VAT rate. Refunds of VAT shall be carried out according to current laws.

c. Goods and services circulating internally within the Lao Bao Border Economic Zone and International Trade Center are exempt from VAT.

d. Goods and services from the Lao Bao Border Economic Zone and International Trade Center brought into the domestic market are subject to VAT. Specifically, as follows:

- For goods listed in the Catalogue of Goods with Origin from the Lao Bao Border Economic Zone and International Trade Center, enterprises operating within the Lao Bao Border Economic Zone and International Trade Center must declare and pay VAT to the tax authority according to current regulations as domestic enterprises.

- For other goods, organizations and individuals within Vietnam's domestic market (collectively referred to as domestic enterprises) importing such goods or enterprises operating within the Lao Bao Border Economic Zone and International Trade Center (in cases where they bring goods directly into the domestic market for sale) must complete customs procedures and pay VAT on imported goods according to current regulations.

3. Regarding Special Consumption Tax:

a. Goods and services subject to special consumption tax produced and consumed within the Lao Bao Border Economic Zone and International Trade Center are exempt from special consumption tax.

b. Goods and services subject to special consumption tax imported into the Lao Bao Border Economic Zone and International Trade Center are exempt from special consumption tax, including: Goods and services subject to special consumption tax imported from abroad into the Lao Bao Border Economic Zone and International Trade Center; Goods and services subject to special consumption tax imported from the domestic market into the Lao Bao Border Economic Zone and International Trade Center.

Passenger cars with less than 24 seats are subject to tax according to current laws.

c. Goods and services subject to special consumption tax exported from the Lao Bao Border Economic Zone and International Trade Center to abroad are exempt from special consumption tax..

d. Goods and services subject to special consumption tax imported from the Lao Bao Border Economic Zone and International Trade Center into Vietnam's domestic market are subject to special consumption tax on imported goods according to current regulations.

e. Goods subject to special consumption tax if transported through the Lao Bao Border Economic Zone and International Trade Center's border gates based on bilateral or multilateral agreements already signed or approved by the Prime Minister shall be exempt from special consumption tax.

4. Regarding Customs Procedures:

4.1. For goods imported from abroad into the Lao Bao Border Economic Zone and International Trade Center:

a. Importing into the Lao Bao Border Economic Zone and International Trade Center through Gate A:

- Enterprises and individuals with production and business establishments at the Lao Bao Border Economic Zone and International Trade Center are responsible for declaring customs, submitting customs documents according to current regulations for each type of imported goods based on Clause 4, Section I of this Circular.

- The customs office at gate A shall carry out necessary procedures in accordance with current regulations for each type of goods. In cases where goods are subject to physical inspection, it shall coordinate with the Densavanh Border Gate Customs Office (Laos) to conduct physical inspections at the common inspection site and process clearance in accordance with current regulations.

b. Importing into the Lao Bao SEZ through gate B: Shall be carried out in accordance with current regulations on transshipment imports.

4.2. For goods imported from abroad into the domestic market via gate A and goods exported from the domestic market to foreign countries via gate A: Shall be carried out in accordance with current regulations.

4.3. For goods exported from the domestic market to the Lao Bao SEZ: The customs office will only process formalities upon request. Customs procedures shall be conducted as follows:

a. In the case where domestic enterprises or individuals register to handle customs formalities at the gate B customs office: Domestic enterprises and individuals shall be responsible for declaring customs and submitting customs documents in accordance with the regulations applicable to each export form. In cases of internal transportation of goods between enterprises and their branches within and outside the Lao Bao SEZ, sales contracts may be replaced by warehouse release documents. The gate B customs office shall be responsible for fully processing export formalities for domestic enterprises in accordance with the regulations applicable to each export form.

b. In the case where domestic enterprises or individuals register export declarations at the domestic border gate customs sub-office: Customs procedures for exported goods transferred to another customs gate shall be carried out in accordance with current regulations. The customs authority at Gate B shall perform the duties of the export customs gate for exported goods transferred to another customs gate (except for confirming actual export). 2.4. For goods from bonded zones

4.4. For goods exported from the Lao Bao SEZ to foreign countries:

a. Through gate B: Shall be carried out in accordance with current regulations for exports transferred to different checkpoints.

b. The enterprise shall register with the customs authority at Gate A to handle customs procedures. The customs authority at Gate A shall carry out customs procedures in accordance with current regulations for exported goods. Shall register to handle formalities at the gate A customs office. The gate A customs office shall process customs formalities in accordance with current regulations for exports.

4.5. Bringing goods from the Lao Bao SEZ into the domestic market:

a. For goods originating from the Lao Bao SEZ that are exempted from customs formalities but must declare quantities to the customs office and be subject to customs supervision.

b. For other goods, full customs formalities must be completed as follows:

- Enterprises or individuals with production and business bases in the Lao Bao SEZ (seller) shall provide domestic enterprises or individuals (buyer) with all required documents, invoices, and papers as stipulated by the customs office so that domestic enterprises can declare customs and submit customs documents in accordance with the regulations applicable to each import form at the gate B customs office.

- The gate B customs office shall be responsible for processing customs formalities for imported goods of domestic enterprises or individuals in accordance with the regulations. If it discovers foreign goods being brought into the Lao Bao SEZ for further importation into the domestic market under the same category as goods exempted from customs formalities as announced by the Lao Bao SEZ Management Board, but which have not been declared to customs, the gate B customs office shall require such enterprises or individuals to present proof of origin for the consignment; proceed to handle violations and process import formalities for the consignment in accordance with the law; and simultaneously inform the Lao Bao SEZ Management Board to take management measures or remove the goods from the list of goods originating from the Lao Bao SEZ. 4.6. For processed goods:

Customs formalities for goods processed by enterprises or individuals with production and business bases in the Lao Bao SEZ for foreign traders, enterprises or individuals with production and business bases in the Lao Bao SEZ hiring domestic enterprises for processing, and vice versa, shall be carried out in accordance with current regulations.

4.7. Temporary export-reimport; temporary import-reexport; transshipment; transit and transportation:

Customs formalities for temporary export-reimport; temporary import-reexport; transshipment; transit and transportation shall be carried out in accordance with Article 11 of the Lao Bao SEZ Regulation issued together with Decision 11/2005/QĐ-TTg dated January 12, 2005 of the Prime Minister and guidelines of the Ministry of Trade.

B. FOR INVESTMENT PROJECTS IN THE LAO BAO SEZ:

1. Regarding corporate income tax:

a. Investment projects to establish new production and business facilities in the Lao Bao SEZ shall apply a corporate income tax rate of 10% throughout the project's operational period, be exempted from corporate income tax for 4 years starting from when taxable income begins; and have their corporate income tax reduced by 50% for the next 9 years.

Procedures for enjoying tax exemptions and reductions shall be carried out in accordance with Circular 128/2003/TT-BTC dated December 22, 2003 of the Ministry of Finance.

b. For investment projects to build new production lines, expand scale, update technology, improve ecological environment, and enhance production capacity:

- Corporate income tax rate for additional income generated by the project: Implemented in accordance with Point 5.1.4 of Circular No. 88/2004/TT-BTC dated September 1, 2004 of the Ministry of Finance and other current laws.

- Duration of exemption and reduction of corporate income tax for additional income generated by the project: Investment projects not included in List A issued together with Decree 164/2003/NĐ-CP dated December 22, 2003 of the Government shall be exempted from corporate income tax for 1 year for additional income generated by the investment and have their tax reduced by 50% for the following 2 years. Investment projects included in List A issued together with Decree 164/2003/NĐ-CP dated December 22, 2003 of the Government shall be exempted from corporate income tax for 4 years for additional income generated by the investment and have their tax reduced by 50% for the following 7 years.

- Accounting for additional income generated by building new production lines, expanding scale, updating technology, improving ecological environment, and enhancing production capacity shall be carried out in accordance with Point 7 of Circular No. 88/2004/TT-BTC dated September 1, 2004 of the Ministry of Finance and other current laws.

- The accounting for additional income generated from investing in new production lines, expanding scale, updating technology, improving the ecological environment, and enhancing production capacity shall be carried out in accordance with the provisions of Point 7, Circular No. 88/2004/TT-BTC dated September 1, 2004, issued by the Ministry of Finance, and other current legal regulations.

c. Organizations and individuals producing and trading goods and services; foreign-invested enterprises and foreign parties participating in joint business contracts operating within the Lao Bao Border Economic Zone and Border Trade Area may carry forward losses to subsequent years to offset against taxable income after settling accounts with tax authorities. The period for carrying forward losses shall not exceed five years, starting from the year following the year in which the loss was incurred. Businesses that incur losses must have a plan for carrying forward losses and register such plans with the tax authority in accordance with current regulations.

d. Taxable income from the transfer of land use rights, land lease rights attached to infrastructure and buildings on the land shall be subject to corporate income tax in accordance with the provisions of Section C of Circular No. 128/2003/TT-BTC dated December 22, 2003 guiding the implementation of Decree No. 164/2003/NĐ-CP dated December 22, 2003 of the Government detailing the implementation of the Law on Corporate Income Tax.

2. Preferential land rental fees for investment projects in the Lao Bao Border Economic Zone and Border Trade Area:

Organizations and individuals with investment projects in the Lao Bao Border Economic Zone and Border Trade Area are exempt from land rental fees for the first eleven years from the date of signing the land lease contract and are entitled to pay land rental fees at 30% of the land rental fee applicable to mountainous districts of Quang Tri Province from the twelfth year onwards.

Organizations and individuals are responsible for submitting directly to the direct tax management agency their investment license or investment incentive certificate, business registration certificate issued by the competent authority, clearly stating the period of exemption and reduction of land rental fees to enjoy preferential treatment.

3. Preferential investment loans:

Vietnamese enterprises of all economic sectors investing in production and business activities in the Lao Bao Border Economic Zone and Border Trade Area are eligible for consideration for state credit loans by the Development Support Fund in accordance with current regulations on state investment development credit.

4. Other taxes, fees, and charges:

Other taxes, fees, and charges shall be implemented in accordance with current regulations under the Tax Laws, Domestic Investment Incentive Law (amended), Foreign Investment Law in Vietnam, Fee and Charge Ordinance, and other relevant laws.

C. FOR INDIVIDUALS ENGAGED IN BUSINESS, RESIDENTS, WORKERS IN THE LAO BAO BORDER ECONOMIC ZONE AND BORDER TRADE AREA, AND TOURISTS ENTERING THE LAO BAO BORDER ECONOMIC ZONE AND BORDER TRADE AREA:

1. Individuals working in the Lao Bao Border Economic Zone and Border Trade Area who are subject to high-income personal income tax according to the law shall have their tax payable reduced by 50%.

2. Domestic and international tourists falling under Clause 5, Article 23, Decision No. 11/2005/QD-TTg when entering the Lao Bao Border Economic Zone and Border Trade Area are permitted to purchase duty-free imported goods to bring into the domestic market with a total value of goods not exceeding 500,000 VND/person/day. If the total value of purchased goods exceeds the above limit, the person carrying the goods must pay import duties on the excess amount in accordance with current laws. Customs authorities will directly collect the excess duty by recording it on the payment receipt without requiring a customs declaration form.

3. Residents living and working in the Lao Bao Border Economic Zone and Border Trade Area when purchasing goods of foreign origin to bring into the domestic market must pay import duties in accordance with current regulations. The Management Board of the Lao Bao Border Economic Zone and Border Trade Area promulgates regulations specifying the responsibilities of related agencies in the area to cooperate with customs authorities to monitor and manage the circulation of goods between residents of the Lao Bao Border Economic Zone and Border Trade Area and the domestic market to prevent smuggling.

4. Passengers entering Vietnam through the Lao Bao border gate with passports issued by authorized state agencies in Vietnam or abroad, upon entering the Lao Bao Border Economic Zone and Border Trade Area, are allowed to bring duty-free goods into Vietnam's domestic market in accordance with Decree No. 66/2002/NĐ-CP dated July 1, 2002 of the Government on the quota of luggage for departure and arrival and gifts imported duty-free. Goods, baggage, and foreign currency of passengers departing, arriving, or transiting through the Lao Bao Border Economic Zone and Border Trade Area must go through customs procedures at Gate A's customs office, and at Gate B, they must be monitored by Gate B's customs office.

5. Transport vehicles exiting, entering, or transiting through the Lao Bao Border Economic Zone and Border Trade Area:

a. From the Lao Bao Border Economic Zone and Border Trade Area exiting to another country and from another country entering the Lao Bao Border Economic Zone and Border Trade Area via Gate A:

Customs procedures are carried out in accordance with current regulations as for transport vehicles entering and exiting through Vietnam's land border gates. Specifically, foreign cars entering the Lao Bao Border Economic Zone and Border Trade Area or Vietnamese cars passing through the Densavanh Trading Area (Laos) to deliver and receive goods and return to their country on the same day do not need to declare and submit the cross-border vehicle entry and exit declaration form; the Gate A customs office records these vehicles in the vehicle entry and exit tracking book. In cases where actual inspections are required for outbound transport vehicles, the Gate A customs office will coordinate with the Densavanh (Laos) border gate customs office to conduct actual inspections at the common inspection point for clearance in accordance with regulations. Foreign cars with right-hand drive entering the Lao Bao Border Economic Zone and Border Trade Area must comply with international agreements signed or joined by Vietnam.

b. Entering the domestic market from the Lao Bao Border Economic Zone and Border Trade Area via Gate B: Customs procedures are carried out at the Gate B customs office as follows:

- Customs procedures for transport vehicles are conducted in accordance with the customs office's regulations consistent with current laws.

- The Gate B customs office maintains separate tracking books for each type of transport vehicle to meet management requirements.

c. Road motor vehicles registered with Lao Bao license plates, if sold domestically, must comply with current regulations on importing goods into Vietnam and pay taxes as prescribed by law. Customs procedures for bringing vehicles into the domestic market are handled at the Gate B customs office.

D. POLICIES FOR DEVELOPING INFRASTRUCTURE IN THE LAO BAO BORDER ECONOMIC ZONE AND BORDER TRADE AREA

1. State budget investment for constructing infrastructure in the Lao Bao Border Economic Zone and Border Trade Area:

The Lao Bao Border Economic Zone (KKT-TMĐB Lao Bảo) shall enjoy preferential investment policies for infrastructure construction similar to those applicable to border economic zones. Investment in critical infrastructure projects necessary for the operation of the KKT-TMĐB Lao Bảo from the State budget (hereinafter referred to as the State Budget) shall be carried out in accordance with regulations on investment management and the State Budget Law, specifically as follows:

1.1 Scope and objects of investment from the State Budget:

- The State Budget will only support the construction of common infrastructure facilities for the entire KKT-TMĐB Lao Bảo, excluding infrastructure facilities designated for each functional area within the KKT-TMĐB Lao Bảo, except for essential infrastructure facilities approved by competent authorities for the operation of the KKT-TMĐB Lao Bảo.

- Investment support from the State Budget for constructing infrastructure facilities at the KKT-TMĐB Lao Bảo shall be implemented strictly according to the approved planning project by competent authorities.

- The Management Board of the KKT-TMĐB Lao Bảo serves as the local planning focal point for allocating basic construction funds from the State Budget to build infrastructure facilities at the KKT-TMĐB Lao Bảo; it directly manages and oversees investment projects funded by the State Budget within the KKT-TMĐB Lao Bảo in accordance with current national regulations on investment management.

1.2 Investment from the State Budget for infrastructure construction:

Central government budgetary support for specific purposes allocated to the province of Quảng Trị for constructing infrastructure facilities at the KKT-TMĐB Lao Bảo is detailed in the annual budget estimates assigned to Quảng Trị Province. In conjunction with central government support, Quảng Trị Province arranges its local budget annually to invest in infrastructure facilities at the KKT-TMĐB Lao Bảo as stipulated in Section D, Item 1.1, Point 1.

The preparation, management, utilization, and settlement of State Budget funds shall comply with the State Budget Law and related guiding documents.

2. Land fund usage regime for infrastructure development capital:

The Management Board of the KKT-TMĐB Lao Bảo (referred to as the Management Board) is responsible for receiving annual targets and directly managing investment projects using land funds at the KKT-TMĐB Lao Bảo; it organizes bidding to select financially capable, experienced, and reputable entities to implement infrastructure construction projects funded by land funds at the KKT-TMĐB Lao Bảo.

The Management Board compiles a list of infrastructure construction projects across the entire KKT-TMĐB Lao Bảo that utilize land funds for capital formation to submit to the Prime Minister for approval. The use of land funds for infrastructure construction at the KKT-TMĐB Lao Bảo shall be conducted in accordance with current regulations.

3. Mobilizing capital through bond issuance for infrastructure development at the KKT-TMĐB Lao Bảo:

The People's Committee of Quảng Trị Province may issue domestic bonds to raise funds for constructing infrastructure facilities at the KKT-TMĐB Lao Bảo. The issuance of such bonds by the People's Committee of Quảng Trị Province shall comply with Decree No. 141/2003/ND-CP dated November 20, 2003, issued by the Government on the Regulations on Issuance of Government Bonds, Government-Guaranteed Bonds, and Local Government Bonds, and other forms of capital mobilization as prescribed by law.

4. Infrastructure investment from Official Development Assistance (ODA) funds:

Other infrastructure facilities at the KKT-TMĐB Lao Bảo are included in the list for ODA funding and other forms of capital mobilization as stipulated in Article 7 of the Regulation on the KKT-TMĐB Lao Bảo promulgated by Decision No. 11/2005/QĐ-TTg dated January 12, 2005, issued by the Prime Minister.

D. INCENTIVE REGIME FOR ORGANIZATIONS AND INDIVIDUALS CONTRIBUTING TO CAPITAL RAISING FROM NON-BUDGET FUNDS:

1. Based on the provincial budget capacity and the effectiveness of capital raising, the Chairman of the People's Committee of Quảng Trị Province decides to reward organizations and individuals who contribute to non-budget capital investment in economic and social projects at the KKT-TMĐB Lao Bảo, with higher rewards for non-repayable capital raising than other forms. The maximum reward for non-repayable aid is 1% of the total value of non-repayable aid and not exceeding US$50,000.

The award payment will be made after the project has commenced operations, products have entered the market, and the investor has contributed at least 50% of the committed statutory capital.

2. Funding for rewarding organizations and individuals contributing to capital raising (excluding capital raised from the state budget) for investment in economic and social projects at the KKT-TMĐB Lao Bảo shall be sourced from the local government bonus fund and recorded under extraordinary bonus expenses.

E. FINANCIAL REGIME APPLICABLE TO THE MANAGEMENT BOARD OF THE KKT-TMĐB Lao Bảo:

1. The Management Board is a local budget unit, with operational costs guaranteed by the local budget. All revenues collected in accordance with regulations by the Management Board must be remitted to the state budget as required.

2. The Management Board is permitted to collect fees and charges corresponding to tasks delegated by state management agencies in accordance with current regulations. When authorized by competent state authorities to perform collection duties, the Management Board is responsible for notifying and registering with the tax authority where the Management Board is located to process procedures for remitting collected fees and charges.

III. IMPLEMENTATION

1. The Department of Finance of Quảng Trị, the Taxation Department of Quảng Trị, the Customs Department of Quảng Trị, and relevant units in the locality are responsible for implementing and coordinating the implementation of the provisions of this Circular.

2. The Customs Department of Quảng Trị Province is responsible for organizing anti-smuggling, anti-commercial fraud activities, and preventing illegal imports of goods from the KKT-TMĐB Lao Bảo into the domestic market and other areas within the customs jurisdiction.

3. The customs authority of the KKT-TMĐB Lao Bảo performs the task of inspecting and supervising goods and transport vehicles, preventing smuggling and illegal cross-border transportation of goods; implements tax laws on exported and imported goods; establishes customs stations in accordance with regulations and suitable to the geographical characteristics of the KKT-TMĐB Lao Bảo to effectively fulfill assigned tasks.

4. The General Department of Customs shall base on the customs procedures stipulated in this Circular to develop detailed regulations on the procedures and customs formalities applicable at the Lao Bao Border Economic Zone and Border Trade Area, and report to the Ministry of Finance before promulgation.

5. The General Department of Taxation and the General Department of Customs shall be responsible for directing the Quang Tri Provincial Tax Service and the Quang Tri Provincial Customs Service to establish a cooperation regulation between tax authorities and customs authorities to implement this Circular, ensuring anti-smuggling efforts within the Lao Bao Border Economic Zone and Border Trade Area.

6. The People's Committee of Quang Tri Province shall be responsible for:

- Ensuring that all conditions prescribed in Clause 3, Section I of this Circular are met for the Lao Bao Border Economic Zone and Border Trade Area to apply the financial regime stipulated in this Circular. In cases where the required conditions have not been met, such application shall not be made.

- Directing relevant agencies (border guard forces, border gate police, customs authorities, tax authorities, etc.) to enhance coordination to implement inspection and control measures to combat smuggling and commercial fraud within the Lao Bao Border Economic Zone and Border Trade Area.

- After two years of implementation, coordinate with the Ministry of Finance to conduct a review and assessment of the application of certain financial policies and customs regulations at the Lao Bao Border Economic Zone and Border Trade Area.

7. This Circular shall take effect fifteen days from the date of publication in the Official Gazette and shall replace Circular No. 16/2002/TT-BTC dated February 8, 2002, issued by the Ministry of Finance on guiding the financial regime applicable at the Lao Bao Trading Area, Quang Tri Province; Decision No. 69/2003/QD-BTC dated May 14, 2003, issued by the Minister of Finance on issuing regulations on customs procedures for goods for export, import, and transit; means of transport for exit, entry, and transit at the Lao Bao Economic Encouragement Zone and Trading Area, Quang Tri Province.

Any difficulties encountered during implementation should be reported to the Ministry of Finance for study and resolution./.