Circular No. 81/1999/TT-BTC guides the implementation of certain measures to encourage foreign direct investment regarding land rent payment according to Decision No. 53/1999/QÐ-TTg dated March 26, 1999 of the Prime Minister.

CIRCULAR

Guidelines for implementing certain measures to encourage foreign direct investment in land rent payments

pursuant to Decision No. 53/1999/QĐ-TTg dated March 26, 1999 of the Prime Minister

Based on the Law on Foreign Investment in Vietnam dated November 23, 1996;

Based on Decree No. 12/CP dated February 18, 1997 of the Government detailing the implementation of the Law on Foreign Investment in Vietnam;

Based on Article 10 and Clause 4, Article 11 of Decision No. 53/1999/QĐ-TTg dated March 26, 1999 of the Prime Minister regarding certain measures to encourage foreign direct investment;

Based on Decision No. 179/1998/QĐ-BTC dated February 24, 1998 of the Minister of Finance promulgating the Regulations on Land Rent, Water Surface Rent, and Sea Surface Rent applicable to foreign investment forms in Vietnam.

The Ministry of Finance provides guidelines for implementing certain provisions on land rent incentives and exemptions from land rent for foreign direct investment projects in Vietnam as follows:

I. SUBJECTS AND SCOPE OF APPLICATION

Joint ventures, wholly foreign-owned enterprises, and foreign parties participating in business cooperation contracts under the Law on Foreign Investment in Vietnam (hereinafter referred to collectively as foreign-invested enterprises) shall be entitled to land rental benefits and exemptions from land rent as follows:

- Foreign-invested enterprises encountering difficulties in project implementation that must temporarily halt construction or operations may have their land rent reduced or exempted corresponding to the duration of the temporary halt in construction or operations;

- Foreign-invested enterprises leasing land at the lowest price for constructing housing for workers and infrastructure outside the boundaries of industrial zones and foreign-invested enterprises (educational facilities, training centers, healthcare facilities, etc.);

II. REGARDING EXEMPTIONS AND REDUCTIONS IN LAND RENT FOR PROJECTS THAT MUST TEMPORARILY HALT CONSTRUCTION

OR TEMPORARILY HALT OPERATIONS

1- Levels of exemption and reduction in land rent:

1.1- Foreign-invested enterprises encountering difficulties and having to halt construction of a project shall be exempted from land rent for the area designated for the construction of that project during the period of temporary halt in construction;

1.2- Foreign-invested enterprises currently engaged in production and business operations, if encountering difficulties and having to temporarily halt operations, shall be exempted from land rent during the period of temporary halt in operations;

1.3- During the period of temporary halt in construction or operations, if a foreign-invested enterprise uses part of the leased land for production and business operations, it shall be granted a 50% reduction in land rent payable for the area used for production and business operations.

2- Procedures and authority for granting exemptions and reductions in land rent.

2.1- Foreign-invested enterprises encountering difficulties in project implementation and having to temporarily halt construction or operations must submit an application for exemption or reduction in land rent to the Provincial Tax Bureau where the enterprise has registered for tax payment, including:

- A letter requesting exemption or reduction in land rent clearly stating the reasons and duration for the temporary halt in construction or operations;

- An approval document from the investment permit issuing agency (Ministry of Planning and Investment or People's Committee of the province/city directly under the Central Government) regarding the period of temporary halt in construction or operations of the foreign-invested enterprise.

2.2- The Director of the Provincial Tax Bureau is responsible for reviewing, determining, and implementing exemptions and reductions in land rent corresponding to the actual period of temporary halt in construction or operations within the timeframe approved by the investment permit issuing agency according to this Circular.

3- For foreign-invested enterprises that have paid land rent in advance for multiple years, the amount of land rent exempted or reduced according to this Circular shall be deducted from subsequent periods; if there are no remaining periods, the State Budget shall refund the exempted or reduced land rent.

4- Foreign-invested enterprises that have been approved by the investment permit issuing agency to temporarily halt construction or operations before the effective date of this Circular shall enjoy the level of exemption or reduction in land rent stipulated in Point 1 of this Section during the permitted period of temporary halt in construction or operations as stated in the approval document from the investment permit issuing agency.

III. LAND RENT PRICES FOR INVESTMENT IN BUILDING HOUSING FOR WORKERS AND INFRASTRUCTURE OUTSIDE THE BOUNDARIES OF INDUSTRIAL ZONES AND FOREIGN-INVESTED ENTERPRISES (EDUCATIONAL FACILITIES, TRAINING CENTERS, HEALTHCARE FACILITIES, ETC.)

1- According to the Regulations on Land Rent, Water Surface Rent, and Sea Surface Rent applicable to foreign investment forms in Vietnam issued with Decision No. 179/1998/QĐ-BTC dated February 24, 1998 of the Minister of Finance, the unit price for land rent for urban land (Clause 1, Article 3) and non-urban land (Clause 2, Article 3) is determined as follows:

These coefficients are applied as follows:

- The location coefficient is set at four different levels (1 or 2; 2.5; 3) depending on the location of the plot of land;

- The infrastructure coefficient is set at four levels (1 or 1.4; 1.7; 2) for urban land and three levels (1 or 1.5; 2) for non-urban land, depending on the infrastructure conditions of the leased plot of land;

- The industry coefficient is set at three levels (1 or 1.5; 2) for urban land and one level of 1 for non-urban land, depending on the production and business activities of the project.

2- The determination of the unit price for leasing land to foreign-invested enterprises for constructing worker housing, schools, hospitals, and other infrastructure outside the boundaries of industrial zones shall be conducted by the competent state agency at the lowest possible price, which is the minimum price stipulated for each group of urban areas for urban land as provided in Clause 1.1, Article 1; and for each type of rural area for non-urban land as provided in Clauses 2.1 and 2.2, Article 2 of the Circular on Land Rent, Water Surface Rent, and Sea Surface Rent applicable to forms of foreign investment in Vietnam issued together with Decision No. 179/1998/QD-BTC dated February 24, 1998 of the Minister of Finance, without considering any coefficients (location coefficient, infrastructure coefficient, and industry coefficient).

3- The authority to determine the lease price as prescribed in Point 2 of this Section shall be decided by the People's Committee of the province or centrally-administered city upon the proposal of the Department of Finance and Price Control.

Based on the determined price, the Department of Land Administration shall record it in the land lease contract in accordance with Article 8 of Decree No. 11/CP dated January 24, 1995 of the Government detailing the implementation of the Ordinance on the rights and obligations of foreign organizations leasing land in Vietnam.

This Circular takes effect from July 1, 1999.

During the implementation process, if any difficulties arise, they should be promptly reported to the Ministry of Finance for consideration and resolution.