Circular 02/1999/TT-BTC

CIRCULAR No CIRCULAR No. 02/1999/TT-BTC OF JANUARY 5, 1999 GUIDING THE FINANCIAL REGIME EXPERIMENTALLY APPLIED AT MOC BAI BORDER-GATE ECONOMIC AREA, TAY NINH PROVINCE Pursuant to Decision No. 210/1998/QD-TTg of October 27, 1998 of the Prime Minister on the experimental application of a number of policies on development of Moc Bai border-gate economic area, Tay Ninh province, the Ministry of Finance hereby guides the experimental application of financial regime to Moc Bai border-gate economic area, Tay Ninh province, as follows: I. OBJECTS AND SCOPE OF REGULATION: 1. Scope of regulation: According to provisions of Article 1, Decision No. 210/1998/QD-TTg of October 27, 1998 of the Prime Minister, the scope of experimental application of a number of policies specified in this Circular embraces: Long Thuan, Tien Thuan, Loi Thuan and An Thanh communes of Ben Cau district, and Phuoc Luu, Binh Thanh and Phuoc Chi communes of Trang Bang district, Tay Ninh province. The above-said geographical areas shall be collectively referred to in this Circular as Moc Bai border-gate economic area. 2. Objects eligible for preferences: Eligible for financial preferences provided for in this Circular are domestic and foreign investors that invest in the production, business and infrastructure construction in Moc Bai border-gate economic area in compliance with the Law on Domestic Investment Promotion and the Law on Foreign Investment in Vietnam. More specifically: a) Domestic investors include enterprises of all economic sectors established under the provisions of the Law on State Enterprises, the Law on Private Enterprises, the Corporate Law, the Law on Cooperatives,� b) Foreign investors include foreign-invested enterprises, foreign investors-partners to business cooperation contracts, overseas Vietnamese investing in their native land in the forms specified in the Law on Foreign Investment in Vietnam, and foreign investors conducting business activities not under the Law on Foreign Investment in Vietnam. Domestic enterprises and foreign-invested enterprises investing in Moc Bai border-gate economic area, which do not set up economic legal entities, shall have to separately account their business activities in the area to serve as basis for the determination of the preferential regime. Only production and business activities conducted in Moc Bai border-gate economic area shall be eligible for the preferential regime. 3. The domestic and foreign investors that have invested in Moc Bai border-gate economic area before the effective date of Decision No.210/1998/QD-TTg of October 27, 1998 of the Prime Minister shall, as from the effective date of this Circular, be entitled to investment preferences provided for in this Circular. II. SPECIFIC GUIDANCE A. PROVISIONS ON MOBILIZATION OF CAPITAL FROM DOMESTIC AND FOREIGN SOURCES - The domestic enterprises and foreign-invested enterprises investing in production and business development as well as infrastructure construction in Moc Bai border-gate economic area shall be entitled to mobilize all capital sources in the country and abroad in appropriate forms such as bank loans, loans from organizations and individuals, issuance of enterprise bonds, etc., according to the provisions of current laws in order to create capital source for business development. - The People�s Committee of Tay Ninh province shall, within its function, tasks and powers, be entitled to apply the appropriate forms of capital mobilization for construction of infrastructure projects in Moc Bai border-gate economic area, such as issuance of lottery of special kind, report to the Government for permission to issue project bonds or mobilize public-utility labor of the people, etc., according to provisions of the current laws. B. PROVISIONS ON MANAGEMENT OF INVESTMENT CAPITAL FROM THE STATE BUDGET FOR INFRASTRUCTURE CONSTRUCTION AND DEVELOPMENT IN MOC BAI BORDER-GATE ECONOMIC AREA 1. Drafting of investment capital estimates for Moc Bai border-gate economic area: Annually (in the period from 1999 to 2002), basing itself on the estimates of collection of export t ax and import tax at Moc Bai border-gate economic area already approved by the People�s Council of Tay Ninh province and agreed to by the Ministry of Finance in annual budget estimates of Tay Ninh province, the People�s Committees of Tay Ninh province shall propose the level of annual State capital to be separately invested through the provincial budget to Moc Bai border-gate economic area (to be detailed for each investment project, classified into groups and put in priority order) to the Ministry of Planning and Investment and the Ministry of Finance for consideration. On the basis of estimates of the revenue from export tax and import tax in Moc Bai border-gate economic area and at the proposal of the People�s Committee of Tay Ninh province, the Ministry of Finance shall determine the total amount of State budget capital to be separately invested each year in Moc Bai border-gate economic area which shall not be lower than 50% of the total export tax and import tax amounts annually collected in Moc Bai border-gate economic area. Such investment capital shall be allocated by the Ministry of Finance through the Finance and Pricing Department of Tay Ninh province to be invested in Moc Bai border-gate economic area. The Ministry of Planning and Investment shall reach an agreement with the Ministry of Finance upon investment capital for each project, the total investment capital and related matters before issuing the decision ratifying the investment capital estimates for the whole period of 1999-2002 and the annual investment capital estimates with the capital amount allocated by the State budget to Tay Ninh province. Basing itself on the notice of the Ministry of Planning and Investment on the annual capital allocation from the central-level budget to Moc Bai border-gate economic area, the People�s Committee of Tay Ninh province shall draft the estimates for use of investment capital in each quarter, then send it to the Ministry of Finance (not later than the 20th day of the last month of the preceding quarter). On the basis of the investment capital estimates for the whole year and the estimates for capital use in each quarter drafted by the locality and the capability of the central-level budget at each point of time, the Ministry of Finance shall determine and announce the quarterly estimates of capital allocation to the Peoples� Committee of Tay Ninh province. The capital amount invested each year by the State in Moc Bai border-gate economic area through the provincial budget must be revised in the following year on the basis of the preceding year�s actually collected amount which shall be incorporated into the following year�s investment capital estimates, the difference between the actually collected amount and the estimated revenue at the beginning of the year shall be included in the following year�s investment capital estimates. Such investment capital shall be considered as target support from the central budget to the province and shall not be accounted in the spending tasks of the local budget. 2. Allocation mode, reporting regime, final settlement of accounts and management of investment capital for Moc Bai border-gate economic area: According to the investment capital use estimates for the whole year and each quarter already ratified the Ministry of Finance (the central budget) shall allocate capital to the approved investment projects through Tay Ninh province�s budget. All capital amounts allocated by the central budget to Moc Bai border gate economic area through the provincial budget shall be used only for purpose of constructing infrastructure projects according to the master plan of Moc Bai border-gate economic area already approved by the competent level and shall have to be managed strictly according to the current regulations on investment and construction management. In the course of organizing the implementation, the locality shall be entitled to take the initiative in regulation investment capital levels among the projects within the total capital level already approved, and report them to the Ministry of Planning and Investment and the Ministry of Finance. Any changes in the list of projects must obtain official written agreement from the Ministry of Planning and Investment. The investment capital for Moc Bai border-gate economic area allocated through the provincial budget shall be collectively reflected in the monthly budgetary reports and annual budgetary settlements of the locality with a part separately recorded for investment projects in Moc Bai border-gate economic area (including capital source specifically allocated by the budget and that mobilized by the province). Quarterly, the province shall report to the Ministry of Finance and the Ministry of Planning and Investment on the situation of carrying out investment and construction and allocating capital to each project, and at the year�s end, report to the Prime Minister (concurrently to the Ministry of Finance and the Ministry of Planning and Investment) on the performance results of the whole year. 3. The management, allocation and settlement of investment capital for each investment project in Moc Bai border-gate economic area shall strictly comply with the State�s current regulations on investment in capital construction. C. PROVISIONS ON PREFERENCES IN LAND AND WATER SURFACE RENTS; TAX PREFERENCES 1. Preferences in land and water surface rents: Foreign and domestic investors that invest in production, business and infrastructure construction in Moc Bai border-gate economic area, when renting land and/or water surface from the State shall, besides preferential exemptions or reductions are entitled to under the current regulations of the State, 50% land or water surface rent reduction as compared with the land or water surface rent rates currently applicable to Moc Bai border-gate economic area, in conformity with the current regulations on determination of land and water surface rent rates. 2. Preference in tax on transfer of income abroad and other taxes: a) Tax on transfer of income abroad: - Incomes earned by foreign investors from investment activities in Moc Bai border-gate economic area (including the reimbursed income tax amount and income earned from capital transfer), shall be subject to tax on transfer of incomes abroad at the lowest tax rate of 5% when transferred abroad or kept outside Vietnam. b) Other taxes: Other taxes, fees and charges shall comply with the current stipulations in the tax laws, the Law on Domestic Investment Promotion (amended), the Law on Foreign Investment in Vietnam and other legal documents. 3. Order and procedures for qualification to investment preferences: The order and procedures to apply for investment preferences as provided for by this Circular shall comply with the current regulations on the order and procedures of qualification to land rent preferences and tax preferences provided for in the current documents on land and water surface rent and the tax regime. V. IMPLEMENTATION ORGANIZATION This Circular takes effect from January 1st, 1999. All previous stipulations on the financial regime already applied to Moc Bai border-gate economic area which are contrary to this Circular are now annulled. Any problems arising in the course of implementation shall be reported to the Ministryy of Finance for study and settlement. For the Minister of Finance Vice Minister TRAN VAN TA