Decision No. 78/2002/QD-BTC On Issuing Principles and Methods for Calculating Aggregate Production Capacity for Two-Wheeled Motorbike Manufacturing and Assembly

Pursuant to …;

Regarding the issuance of regulations on principles and methods for calculating the combined production capacity for two-wheeled motorbike manufacturing and assembly

THE MINISTER OF FINANCE

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government on the tasks, powers, and responsibilities for state management by Ministries and agencies at the level of Ministries;

BASED ON DECREE NO. 178/CP DATED OCTOBER 28, 1994 OF THE GOVERNMENT ON THE TASKS, POWERS AND ORGANIZATIONAL STRUCTURE OF THE MINISTRY OF FINANCE;

Pursuant to Point 3, Article 2 of Decision No. 38/2002/QD-TTg dated March 14, 2002 of the Prime Minister on the management of two-wheeled motorbike manufacturing and assembly and importation of parts;

After consulting opinions from relevant Ministries and Agencies;

At the proposal of the Director General of the General Department of Taxation.

Pursuant to …;

Article 1: Attached herewith is the "Regulation on Principles and Methods for Calculating the Combined Production Capacity for Two-Wheeled Motorbike Manufacturing and Assembly."

Article 2: This Decision takes effect from the date of signature. The Director of the General Department of Taxation, the Head of the Office of the Ministry of Finance, and enterprises engaged in two-wheeled motorbike manufacturing and assembly shall be responsible for implementing this Decision.

REGULATION ON PRINCIPLES AND METHODS FOR CALCULATING THE COMBINED PRODUCTION CAPACITY FOR TWO-WHEELED MOTORBIKE MANUFACTURING AND ASSEMBLY
(Attached to Decision No. 78/2002/QD/BTC dated June 10, 2002 of the Minister of Finance)

I - SCOPE OF APPLICATION:

All enterprises investing in the production and assembly of two-wheeled motorbikes that meet the standards for enterprises producing and assembling two-wheeled motorbikes as stipulated by the Ministry of Industry (excluding foreign-invested enterprises producing and assembling two-wheeled motorbikes which fully and properly fulfill their responsibilities and obligations as specified in their investment permits).

Enterprises producing and assembling two-wheeled motorbikes for export shall not have their export production and assembly quantities controlled according to the guidelines set forth in this document.

II - METHODS FOR CALCULATING POINTS TO DETERMINE THE COMBINED PRODUCTION CAPACITY FOR EACH ENTERPRISE:

Calculated based on a maximum score of 100 points according to the following criteria:

1. Scale of Investment: Calculated based on a maximum score of 45 points and determined according to the total investment capital according to the following principle:

a- Machinery and equipment invested for production to assemble (including machinery and equipment of the enterprise contributing capital to joint ventures with other enterprises to produce parts and accessories for motorcycles serving motorcycle production and assembly of the enterprise): 35 points.

Capital contributed to joint ventures for producing parts and accessories for two-wheeled motorbikes is calculated as added to the direct production machinery and equipment investment value according to coefficient H = 0.5.

ExampleFor example, Enterprise A invests in machinery and equipment for producing and assembling two-wheeled motorbikes with a value of 10 billion VND. At the same time, Enterprise A contributes capital to joint ventures for producing parts and accessories for two-wheeled motorbikes with a capital of 5 billion VND. According to the above regulation, the total investment capital of Enterprise A will be: 10 billion VND (machinery and equipment) + 5 billion VND (capital contribution to joint ventures) x 0.5 = 12.5 billion VND.

b- Factory buildings (excluding land rental and compensation costs), office equipment, infrastructure construction (electricity, water, drainage, environmental sanitation...): 10 points.

Factory buildings of enterprises participating in capital contributions to joint ventures directly serving the production of parts and accessories for motorcycles under the domestication program of the enterprise are also added to the value of factory buildings of the enterprise.

For enterprises producing and trading multiple products (producing and trading products that are not parts or accessories for motorcycles), the enterprise only declares the value of the machinery and equipment; factory buildings, office equipment, infrastructure construction... directly involved in producing parts and accessories for motorcycles (if they cannot be separated, then based on the ratio of the value of the production volume of parts and accessories for motorcycles to the total value of the production volume produced and purchased by the enterprise to declare).

The total investment capital for producing and assembling motorcycles mentioned above is determined as the remaining value of fixed assets such as machinery and equipment, factory buildings, and other investment capital reflected in the books and accounting documents of the enterprise at the time of registration for review of combined production capacity. (The final figure according to the settlement report of the enterprise at the nearest time point to the registration review time point).

2. Technology and degree of advancement and synchronization of machinery and equipment directly involved in production are based on the value of each type of machinery and equipment to calculate according to a maximum score of 30 points; including:

a- Single motorcycle assembly lines: 3 points.

b- Machinery and equipment for producing frames and fuel tanks: 4 points.

c- Machinery and equipment for producing plastic parts and components (including injection machines, molds, painting equipment, polishing equipment...): 4 points.

d- Machinery and equipment for producing aluminum and cast iron parts and components such as: wheel hubs, cylinders, shock absorbers, engine covers, engines... : 5 points.

e- Machinery and equipment for producing and assembling engines: 5 points.

g- Machinery and equipment for producing and assembling shock absorbers: 3 points.

h- Machinery and equipment for producing electrical equipment (IC clusters, various types of light clusters, high-voltage coils, relays... belonging to Group V of the percentage list of parts and components for two-wheeled motorbikes issued together with Circular Joint No. 92/2001/TTLT-BTC-BCN-TCHQ dated November 20, 2001): 3 points.

i- Other machinery and equipment for producing and assembling: 3 points.

The value of machinery and equipment is calculated based on the remaining value of such machinery and equipment reflected in the enterprise's accounting books (the final period according to the settlement report of the enterprise at the nearest time point). In cases where a piece of machinery or equipment participates in producing or assembling various parts and components, it shall be declared according to the main parts or components produced by that machinery or equipment, or the enterprise may choose to declare if the main parts or components cannot be determined.

3- The localization rate achieved by enterprises through their own investment production for the year registered to implement shall be reviewed by the Inter-Ministerial Working Group (excluding joint venture or joint production parts) according to a maximum scale of: 10 points.

4- The localization rate achieved by enterprises for the year implemented for engines directly invested in production and assembly by enterprises shall be reviewed by the Inter-Ministerial Working Group according to a maximum scale of: 10 points.

5- Technology transfer, license contracts, technical training shall be evaluated according to a maximum scale of: 05 points.

- Having a technology transfer contract (for two-wheeled motorized vehicles produced and assembled by the enterprise): 02 points (regardless of the number of contracts).

- Having a licensed contract (for two-wheeled motorized vehicles produced and assembled by the enterprise) approved: 01 point (regardless of the number of contracts).

- Having foreign technical training and skill development contracts or programs for the enterprise: 02 points.

Based on the scoring principles above, the Inter-Ministerial Working Group will verify and determine the scores achieved by each motorcycle manufacturing and assembly enterprise. Enterprises will be classified into four types to determine the total capacity according to the scores achieved by each enterprise, specifically as follows:

- Type 1 Enterprise: Achieving 80 points or more

- Type 2 Enterprise: Achieving from 60 to 79 points

- Type 3 Enterprise: Achieving from 40 to 59 points

- Type 4 Enterprise: Achieving less than 40 points

III- METHODS FOR DETERMINING THE TOTAL CAPACITY FOR EACH ENTERPRISE:

1 - Based on the annual management policy regarding the total level of imported two-wheeled motorized vehicle component imports by the Government, the Ministry of Finance will announce import quotas for each enterprise according to the following principles:

a- 30% will be evenly distributed among all enterprises permitted to produce and assemble motorcycles.

b- 50% will be additionally allocated to enterprises of Types 1, 2, and 3. The principle of additional allocation for enterprises is specified as follows:

- Additional import quota for Type 1 enterprises = Sl x 2

- Additional import quota for Type 2 enterprises = Sl x 1.5

- Additional import quota for Type 3 enterprises = Sl x 1

Where Sl is calculated according to the following formula:

10% reserved for additional allocation to enterprises that have been notified of import quotas at the beginning of the year but have increased their scores due to additional investment and achieved higher localization rates.

The remaining 10% will be allocated to newly added enterprises that have obtained production and assembly permits for motorcycles after the import quotas have been announced. If there are no new enterprises, this reserve will be reallocated to enterprises based on the total capacity mentioned above.

2. The time for allocating import quotas is determined as follows:

a. The additional allocation of import quotas to enterprises that have achieved additional points will be carried out in June each year together with the review for applying preferential tax policies as stipulated in Point 9, Section IV of Circular Jointly Issued No. 92/TTLT-BTC-BCN-TCHQ dated November 20, 2001. The additional allocation principle will be implemented according to the principles stated above.

b - For the remaining import quotas not allocated up to October 31 each year, they will be allocated to enterprises with the ability and need to increase import quotas for production and assembly during the year; no later than November 10 each year, motorcycle manufacturing and assembly enterprises must compile and submit reports on importation, production and assembly, and sales of motorcycles up to October 31 (with confirmation from local tax authorities) to the Ministry of Finance (General Department of Taxation) for consolidation and determination of supplementary import quotas to notify enterprises. By November 10 each year, enterprises without submitted reports and those that have not reached 70% of the notified import quota by October 31 will not be considered for supplementary import quotas.

1- Annually, along with registering to implement preferential tax policies, enterprises must submit to the Ministry of Finance a report on investment and production status, actual localization rates, license contracts, and technology transfer agreements as stipulated in Part II of this regulation (accompanied by relevant documentation...) for the Inter-Ministerial Working Group to review and score each enterprise. Based on the reports and registration documents for implementing preferential tax policies of each enterprise, the Inter-Ministerial Working Group will organize reviews and score each enterprise together with the review of preferential tax policies. On the basis of the scores and total capacities determined by the Inter-Ministerial Working Group, the Ministry of Finance will issue notifications of total capacities for each enterprise together with notifications of preferential tax rates based on the localization rates that enterprises are entitled to.

IV. IMPLEMENTATION

2. During the implementation year, if enterprises have increased scores due to additional investments in the first two quarters of the year and have a need to increase import quotas, they must present additional investment reports before May 31 for the Ministry of Finance to consider additional import quotas in June each year together with the review for applying preferential tax policies as stipulated in Point 9, Section IV of Circular Jointly Issued No. 92/TTLT-BTC-BCN-TCHQ dated November 20, 2001.

In the registration year of implementation, if a business has additional points due to increased investment in the first two quarters of the year and has a need to increase its import quota limit, it must submit a report on the additional investment before May 31 for the Ministry of Finance to consider allocating an additional import quota in June each year, along with considering the application of preferential tax policies as stipulated in Point 9, Section IV of Circular Joint Circular No. 92/TTLT-BTC-BCN-TCHQ dated November 20, 2001.

In the course of implementation, if there are any difficulties, ministries, sectors, and enterprises shall promptly reflect them to the Ministry of Finance for consideration and resolution.