Decree No. 88/2005/ND-CP on certain support policies and incentives for the development of cooperatives

DECREE

On certain support policies to encourage the development of cooperatives

_______________________

THE GOVERNMENT

Pursuant to the Government Organization Law dated December 25, 2001;

Pursuant to the Law on Cooperatives dated November 26, 2003;

At the proposal of the Minister of Planning and Investment,

DECREE:

PART I

GENERAL PROVISIONS

Article 1. Scope of Regulation

This Decree stipulates certain support policies to encourage the development of cooperatives regarding: establishment; training and education; land; finance; credit; trade promotion; technology application; investment in infrastructure serving production of cooperatives, community life of members, and participation in economic and social development programs.

Article 2. Applicability

1. Cooperatives and cooperative unions (hereinafter referred to collectively as cooperatives) registered for operation under the Law on Cooperatives 1996 and supplementing the Charter according to the provisions of the Law on Cooperatives 2003.

2. Cooperatives established and registered for operation in accordance with the Law on Cooperatives 2003.

Chapter II

MAIN POLICIES

Article 3. Support and encouragement for the establishment of cooperatives

1. Cooperatives preparing to be established and founders shall be supported as follows:

a) Information and advisory knowledge about cooperatives;

b) Advisory services for drafting the Charter of cooperatives, completing procedures for establishment, registration for business, and organizing operations of cooperatives.

2. The People's Committee of districts, counties, towns, provincial cities (collectively referred to as district level) shall consider and decide on support based on the application of founders and confirmation from the People's Committee of communes, wards, townships (collectively referred to as commune level) where the cooperatives are preparing to be established.

Article 4. Training and Education

1. The subjects of training and education within cooperatives are defined as follows:

a) Positions in the Management Board, Executive Board, Supervisory Board, Chief Accountant;

b) Members engaged in specialized technical and vocational work of cooperatives.

2. For positions in cooperatives as specified in point a, Clause 1 of this Article when participating in training and education, they shall be supported as follows:

a) Support for travel expenses for round-trip public transportation (excluding air travel) from the cooperative headquarters to the training institution;

b) Costs for purchasing course materials;

c) Organizational and management costs for classes; rental of conference halls; remuneration for lecturers; field trips, surveys.

3. For positions in agricultural, forestry, fishery, salt-making cooperatives (collectively referred to as agricultural cooperatives) as specified in point a, Clause 1 of this Article, in addition to being supported as provided in Clause 2 of this Article, they shall also be supported 50% of accommodation and food expenses at the level prescribed by the training institution.

4. Subjects as specified in Clause 1 of this Article who are sent by cooperatives for full-time or part-time study at universities, colleges, vocational high schools, vocational training institutions shall be supported a minimum of 50% of tuition fees according to the regulations of the institution, while meeting the following conditions:

a) Age not exceeding 40 years old;

b) Meeting the admission requirements of the training institution;

c) Having a decision to send for study from the Management Board;

d) Committing in writing to work for the cooperative for at least five years after graduation.

The People's Committees of provinces and centrally governed cities shall specify the specific levels of support for these subjects.

5. The financial resources for supporting the contents stipulated in Clause 1 of Article 3; Clauses 2, 3, and 4 of Article 4 of this Decree shall be sourced from the annual local budget, central government budget, and other lawful sources.

The Ministry of Finance shall provide detailed guidance on the levels of support and financial mechanisms for supporting founders of cooperatives preparing to be established and training and education subjects of cooperatives.

6. The Ministry of Planning and Investment shall compile the needs and plans for training and education of cooperative subjects nationwide and allocate financial resources from the state budget annually for relevant ministries, sectors, and People's Committees of provinces and centrally governed cities to implement the plan.

Article 5. Land

1. For agricultural cooperatives, the following provisions apply:

a) If a cooperative has a need to use land for constructing headquarters, warehouses, drying yards, service facilities directly serving agricultural, forestry, aquaculture, and salt production activities but has not yet been allocated land, it shall proceed with the procedures to request land allocation. The provincial People's Committee will consider and decide on the allocation of land without payment of land use fees and issuance of the Land Use Right Certificate based on the local land fund.

b) Cooperatives currently using land for purposes such as constructing headquarters, warehouses, drying yards, and service facilities directly serving agricultural, forestry, aquaculture, and salt production activities shall be issued the Land Use Right Certificate according to Article 53 of Decree No. 181/2004/ND-CP dated October 29, 2004, of the Government on implementing the Law on Land.

c) In addition to the area of land allocated without payment of land use fees, agricultural cooperatives may also be allocated land with payment of land use fees or lease land with annual rent payments in accordance with the laws on land, and they shall enjoy preferential policies on exemption or reduction of land use fees and land rental fees as prescribed by the Government.

d) The State encourages and creates favorable conditions for cooperatives to lease land or legally use land belonging to organizations or individuals to develop production and business activities.

2. For non-agricultural cooperatives, the following provisions apply:

a) Cooperatives may choose either the form of land allocation with payment of land use fees or the form of leasing land with annual rent payments in accordance with the laws on land.

b) The area of land leased with annual rent payments for cooperatives to serve the construction of production and business bases and direct services to members shall be determined according to the project approved by the competent state authorities in accordance with the laws on investment, construction, and land.

c) In cases where cooperatives are currently using land that has not yet been issued a Land Use Right Certificate, they shall be considered for issuance of the Land Use Right Certificate according to Article 53 of Decree No. 181/2004/ND-CP dated October 29, 2004, of the Government on implementing the Law on Land.

Article 6. On Taxation

1. Cooperatives shall enjoy preferential treatment on corporate income tax for income from service activities directly serving the production and business activities of members in accordance with the laws on taxation.

2. In addition to the preferential treatment stipulated in Clause 1 of this Article, agricultural cooperatives shall also be exempted from corporate income tax on income generated from direct service activities serving the living standards of members.

Article 7. Cooperative Development Support Fund

1. Establish the Cooperative Development Support Fund in accordance with point a, Clause 1, Article 3 of the Law on Cooperatives 2003.

2. The Ministry of Finance shall take the lead and coordinate with the Ministry of Planning and Investment, relevant ministries and sectors, and the Vietnam Union of Cooperatives to draft a proposal for establishing the Cooperative Development Support Fund and submit it to the Prime Minister for decision.

Article 8. Credit

1. Cooperatives with new investment projects, expanded production and business capacity shall be eligible to borrow development credit funds from the State Development Fund in accordance with Decree No. 106/2004/ND-CP dated April 1, 2004, of the Government on State Development Credit and Decree No. 20/2005/ND-CP dated February 28, 2005, of the Government supplementing the list of projects eligible for State Development Credit under Decree No. 106/2004/ND-CP.

2. Cooperatives with investment projects in production, business, and export activities eligible for investment incentives shall enjoy investment incentives in accordance with Decree No. 51/1999/ND-CP dated July 8, 1999, of the Government detailing the implementation of the Law on Domestic Investment (amended) No. 03/1998/QH10.

3. Cooperatives with a need to borrow capital from credit institutions for new investments, upgraded investments, expanded production and business capacity, and activities providing services for economic development and member livelihoods shall be provided with favorable conditions for borrowing and appropriate guarantee forms for loans suitable to the type of cooperative economy. Lending shall be carried out in accordance with current regulations. Cooperatives operating in agriculture and rural areas shall borrow from credit institutions in accordance with current regulations on agricultural and rural credit policies.

Article 9. Support for Trade Promotion Activities

Cooperative enterprises producing goods for export that do not fall within the scope of support from the national key trade promotion program shall be supported with 50% of the costs according to the national key trade promotion program if they have a trade promotion project approved by the competent authority for the following activities:

1. Commercial information and export publicity.

2. Export advisory services.

3. Training to enhance business skills and capabilities for export.

4. Participation in export product fairs and exhibitions.

5. Brand promotion of products.

Article 10. Support for Innovation Application, Technological Improvement, Agricultural Extension, Fishery Extension, and Industrial Extension

1. Cooperative enterprises with projects applying innovation and improving technological levels may borrow medium and long-term loans from the National Science and Technology Development Fund, the Science and Technology Development Funds of Ministries, sectors, and localities.

2. Cooperative enterprises organizing training sessions for members to adopt new technologies under the Program on Building Models for Applying and Transferring Science and Technology to Serve Rural and Mountainous Economic and Social Development shall be supported with 100% of the costs.

3. Cooperative enterprises shall enjoy policies on agricultural extension, fishery extension, and industrial extension as stipulated in Decree No. 56/2005/NĐ-CP dated April 26, 2005 of the Government on agricultural extension and fishery extension, and Decree No. 134/2004/NĐ-CP dated June 9, 2004 of the Government on Encouraging the Development of Rural Industry.

Article 11. Support for Cooperatives' Investment in Infrastructure Serving Production and Community Life and Participation in Programs for Economic and Social Development

1. Cooperatives shall be supported:

a) In building infrastructure serving production and business operations of cooperatives and the daily life of members;

b) In establishing rural industrial clusters and village craft clusters to promote production and business activities.

2. Cooperatives shall be prioritized to participate in the following economic and social development programs:

a) Construction projects for infrastructure in their areas and management of such projects after completion, including infrastructure projects serving the development of industrial clusters and village craft clusters in rural areas;

b) Other economic and social development projects in their areas that are suitable to the capacity of cooperatives.

3. Procedures and formalities for implementation of support and priority:

a) Each year, cooperatives must proactively register with the agency managing the economic and social development program at the local level regarding their needs and capacity to implement projects under the target economic and social development program, poverty reduction, and hunger eradication programs to receive support and priority participation;

b) The agency managing the target program has the responsibility to publicly announce the scope, target groups, and conditions of each program; to accept, review, and approve cooperative registration forms for program participation; to assist cooperatives in completing necessary procedures to join the program; to monitor, inspect, and resolve issues arising during the implementation of assigned projects.

Chapter III

IMPLEMENTING PROVISIONS

Article 12. Effective Date

This Decree takes effect fifteen days after its publication in the Official Gazette and replaces Decree No. 15/CP dated February 21, 1997 of the Government on Policies to Encourage the Development of Cooperatives.

Article 13. Responsibility for Implementation

1. The Ministries of Finance, Planning and Investment, Trade, Science and Technology, Natural Resources and Environment, Education and Training, and the State Bank of Vietnam shall, based on their assigned functions, tasks, and authorities, be responsible for guiding the implementation of this Decree.

2. The Ministry of Planning and Investment shall be responsible for monitoring and urging the organization of the implementation of this Decree.

3. Ministers, Heads of ministerial-level agencies, Heads of agencies under the Government, Chairpersons of provincial people's committees directly under the central government shall be responsible for implementing this Decree./.