Circular No. 22/2001/TT-BTC dated April 3, 2001 amending the Finance Ministry’s Circular No. 146/1999/TT-BTC dated December 17, 1999, which guides the tax exemption and reduction for subjects entitled to investment preferences under the Government’s Decree No. 51/1999/ND-CP dated July 8, 1999 detailing the implementation of domestic investment promotion Law No. 03/1998/QH10 (amended)

CIRCULAR

AMENDING THE FINANCE MINISTRY’S CIRCULAR No. 146/1999/TT-BTC OF DECEMBER 17, 1999, WHICH GUIDES THE TAX EXEMPTION AND REDUCTION FOR SUBJECTS ENTITLED TO INVESTMENT PREFERENCES UNDER THE GOVERNMENT’S DECREE No. 51/1999/ND-CP OF JULY 8, 1999 DETAILING THE IMPLEMENTATION OF DOMESTIC INVESTMENT PROMOTION LAW No. 03/1998/QH10 (AMENDED)

Pursuant to the current tax laws and tax ordinances;

Pursuant to the Governments Decree No.44/1998/ND-CP of June 29, 1998 on the transformation of State enterprises into joint-stock companies;

Pursuant to the Governments Decree No.51/1999/ND-CP of July 8, 1999 detailing the implementation of Domestic Investment Promotion Law No.03/1998/QH10 (amended);

Pursuant to the Governments Decree No.103/1999/ND-CP of September 10, 1999 on the assignment, sale, business contracting and lease of State enterprises;

The Ministry of Finance hereby guides the application of tax preferences to subjects entitled to investment preferences under the Domestic Investment Promotion Law as follows:

A. GENERAL PROVISIONS

I. This Circular shall apply to subjects entitled to tax preferences under the Domestic Investment Promotion Law, including:

1. State enterprises;

2. State enterprises transformed into joint-stock companies under the Governments Decree No.44/1998/ND-CP of June 29, 1998 on the transformation of State enterprises into joint-stock companies;

3. State enterprises assigned to collectives of laborers, sold to collectives, individuals or legal persons according to the provisions of the Governments Decree No.103/1999/ND-CP of September 10, 1999;

4. Joint-stock companies, limited liability companies, partnerships;

5. Private enterprises;

6. Cooperatives, unions of cooperatives;

7. Private, people-founded and semi-public educational and training establishments; private and people-founded medical establishments; and national culture establishments set up and operating according to the provisions of law;

8. Enterprises of political organizations, socio-political organizations and professional societies with business registration made according to law provisions.

9. Business individuals and groups operating under Decree No.66-HDBT of March 2, 1992 of the Council of Ministers and individual business households with business registration made according to the provisions of the Governments Decree No.02/2000/ND-CP of February 3, 2000 on business registration;

10. Vietnamese citizens, overseas Vietnamese and foreigners residing in Vietnam, who purchase stocks of and/or contribute capital to, Vietnamese enterprises.

II. Subjects mentioned at Points 1, 2, 3, 4, 5, 6, 7, 8 and 9 of Section I above (referred collectively to as production and/or business establishments), whose investment projects meet the conditions on labor, business lines and trades, business domains and locations for investment preferences and which have been granted investment preference certificates shall be entitled to tax, land-use levy and land-rental preferences (referred collectively to as tax preferences) under the guidance in Part B of this Circular when:

- Their operations are in line with their registered business lines and trades.

- They have already registered tax payment with the tax authorities.

- They fully comply with the provisions of the legislation on accountancy and statistics.

B. TAX PREFERENCES

I. REGARDING ENTERPRISE INCOME TAX RATES

1. Subjects of application:

Subjects mentioned at Points 1, 2, 3, 4, 5, 6, 7, 8 and 9, Section I, Part A of this Circular shall enjoy enterprise income tax rate preferences prescribed in Article 20 of Decree No.51/1999/ND-CP according to the following preferential tax rates:

2. Preferential enterprise income tax rates:

2.1. The tax rate of 25% for projects of investment in the branches or trades prescribed on List A issued together with Decree No.51/1999/ND-CP;

2.2. The tax rate of 25% for investment projects, which are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP;

2.3. The tax rate of 20% for projects of investment in the branches or trades prescribed on List A, which are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP;

2.4. The tax rate of 20% for investment projects, which are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP;

2.5. The tax rate of 15% for projects of investment in the branches or trades prescribed on List A, which are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP;

If a production and/or business establishment mentioned at Point 1, Section I, Part B of this Circular is, apart from the business lines and trades entitled to enterprise income tax rate preference, engaged in other business lines and trades, it shall have to monitor and account the taxable incomes of business lines and trades entitled to preferential tax rates separately from the taxable incomes of other business lines and trades, and make separate declaration of enterprise income tax payment strictly according to the tax rate set for each of the business lines and trades, which it is engaged in. In cases where the said establishment fails to monitor and separately account the taxable incomes of business lines and trades, which are subject to different enterprise income tax rates, its total income must be declared according to the highest enterprise income tax rate being applied by such establishment under the provisions of the Law on Enterprise Income Tax.

For production and/or business establishments, which implement investment projects on production and/or business expansion or intensive investment, the preferential enterprise income tax rates mentioned at Point 2, Section I, Part B of this Circular shall apply throughout the period during which the investment projects are entitled to enterprise income tax exemption or reduction and only to the increased income amount brought about by such investment. After this period, the total income amount from the implementation of investment projects on production and/or business expansion or intensive investment must be declared according to the tax rates specified in the Law on Enterprise Income Tax.

II. EXEMPTION OR REDUCTION DURATION AND LEVELS FOR VARIOUS KINDS OF TAX

1. Regarding enterprise income tax

1.1. For investment projects on setting up new production and/or business establishments:

a/ Subjects of application:

Production and/or business establishments newly set up under investment projects, State enterprises transformed into joint-stock companies under the Government’s Decree No.44/1998/ND-CP of June 29, 1998, State enterprises assigned to collectives of laborers and State enterprises sold to collectives, individuals or legal persons under the Government’s Decree No.103/1999/ND-CP of September 10, 1999 shall enjoy enterprise income tax exemption or reduction as prescribed in Article 21 of Decree No.51/1999/ND-CP for the durations and at the levels below:

b/ Tax exemption and reduction durations and levels:

- 2-year exemption, after taxable income is generated, and 50% reduction of the payable tax amount for two subsequent years, for projects that meet one of the conditions prescribed in Article 15 of Decree No.51/1999/ND-CP.

- 2-year exemption, after taxable income is generated, and 50% reduction of the payable tax amount for four subsequent years, for projects that meet both conditions prescribed in Article 15 of Decree No.51/1999/ND-CP.

- 3-year exemption, after taxable income is generated, and 50% reduction of the payable tax amount for five subsequent years, for projects of investment in the branches or trades defined on List A, which are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP.

- 3-year exemption, after taxable income is generated, and 50% reduction of the payable tax amount for seven subsequent years, for projects that meet both conditions prescribed in Article 15, which are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP.

- 4-year exemption, after taxable income is generated, and 50% reduction of the payable tax amount for seven subsequent years, for projects of investment in the branches or trades defined on List A, which are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP.

- 4-year exemption, after taxable income is generated, and 50% reduction of the payable tax amount for nine subsequent years, for projects that meet both conditions prescribed in Article 15, which are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP.

The above-mentioned preferential tax exemption or reduction levels shall apply only to the taxable income amount of the business lines and trades entitled to investment preferences. In cases where production and/or business establishments fail to separately account the taxable income amounts of the business lines and trades entitled to investment preferences, the taxable income amount entitled to tax exemption or reduction shall be determined as a percentage of the turnover of the business lines and trades eligible for investment preferences over the total turnover of the concerned production and/or business establishments.

For production and/or business establishments newly set up under investment projects, which have the taxable incomes right from the year of completion of investment and commencement of production and business, but the time for their production and/or business activities in the first year is less than 6 months, such enterprises may register the enterprise income tax exemption or reduction durations with the local tax authorities starting from the following year.

For production and/or business establishments, which are operating and implementing investment projects on setting up new production and/or business establishments eligible for investment preferences, the enterprise income tax preferences shall be effected as follows:

- If the newly-set up production and/or business establishments are the units that have been granted business registration certificates, conduct cost-accounting of their business results and make enterprise income tax registration, declaration and payment with the local tax authorities, such units may enjoy the enterprise income tax exemption and reduction durations and levels as guided at Point 1.1.b, Section II, Part B of this Circular;

- If the newly-set up production and/or business establishments are dependent cost-accounting units, which register, declare and pay enterprise income tax at the principal production and/or business establishments, the enterprise income tax exemption or reduction durations and levels shall apply to the principal production and/or business establishments under the guidance at Point 1.2, Section II, Part B of this Circular.

Production and/or business establishments set up from the division, separation, merger, consolidation, ownership transformation or renaming of the previous operating production and/or business establishments (including cases of dissolution of private enterprises to set up the new ones or participation in setting up limited liability companies in the capacity of the chairmen of Management Boards or directors of the companies in the same provinces or centrally-run cities) shall not be entitled to the enterprise income tax preferences under the guidance in Section I and Point 1.1, Section II, Part B of this Circular;

1.2. For investment projects on production and/or business expansion or intensive investment:

a/ Subjects of application:

Production and/or business establishments, which implement investment projects on production and/or business expansion or intensive investment in the branches or trades defined on List A of Decree No.51/1999/ND-CP shall enjoy enterprise income tax exemption or reduction for the increased income amount brought about by such investment under the provisions of Article 23 of Decree No.51/1999/ND-CP according to the following preferential durations and levels:

b/ Preferential durations and levels:

- 1-year exemption and 50% reduction of the payable tax amount for four subsequent years;

- 3-year exemption and 50% reduction of the payable tax amount for five subsequent years, for investment projects, which are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP.

- 4-year exemption and 50% reduction of the payable tax amount for seven subsequent years, for investment projects, which are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP.

The tax exemption or reduction durations for investment projects on production and/or business expansion or intensive investment shall be determined by either of the following two methods:

- Calculating from the year when the investment project is completed and put into production and/or business;

- Calculating from the year following the year when the investment project is completed and put into production and/or business.

For investment projects implemented for over 1 year and divided into different investment items, the concerned production and/or business establishments may calculate the enterprise income tax exemption and reduction duration for each investment item that has already been completed and put into production and/or business or for the whole investment projects that have been completed and put into production and/or business.

Basing themselves on the situation on implementation of investment projects and the tax exemption or reduction durations mentioned above, the production and/or business establishments shall register with the tax authorities the specific tax exemption or reduction durations for their own units. The written registrations of tax exemption or reduction durations shall be made and sent to the tax authorities together with the copies of investment preference certificates.

Production and/or business establishments shall have to separately account the increased income amount brought about by their investment in order to determine the to be-exempted or -reduced enterprise income tax amount. Where they fail to separately account the increased income amount brought about by their investment in the production and/or business expansion or intensive investment, the increased taxable income amount shall be determined as a percentage of the value of the newly invested fixed assets put into use over the total remaining value of the fixed assets (including the value of the newly invested assets put into use) at the time of considering tax exemption or reduction.

1.3. Regarding BOT and BTO projects:

a/ Subjects of application:

Production and/or business establishments, which have been newly set up from investment projects implemented in the form of Build-Operate-Transfer (BOT) or Build-Transfer-Operate (BTO) contracts, shall enjoy enterprise income tax preferences under the provisions of Article 22 of Decree No.51/1999/ND-CP with the following preferential duration and level:

b/ Preferential duration and level:

4-year exemption, after taxable income is generated, and 50% reduction, of the payable tax amount for nine subsequent years, for the income amount arising from the implementation of investment projects in forms of BOT and BTO, for production and/or business establishments mentioned at Point 1.3.a, Section II, Part B of this Circular.

If, in addition to the income from BTO or BOT projects, production and/or business establishments earn incomes from other production and/or business activities, they shall have to account separately the business results of each activity in order to implement the preferential tax regime and declare tax payment as prescribed specifically for each of their business activities.

1.4. Additional enterprise income tax preferences:

Production and/or business establishments, which have been newly set up from investment projects or which implement investment projects on production and/or business expansion or intensive investment in the branches or trades defined on List A or in the regions defined on List B or C issued together with Decree No.51/1999/ND-CP shall enjoy additional enterprise income tax exemption according to the provisions of Article 24 of Decree No.51/1999/ND-CP.

1.5. Additional enterprise income tax preferences for export goods-manufacturing and/or trading establishments:

a/ Subjects of application:

The export goods-manufacturing and/or -trading establishments entitled to investment preferences shall, in addition to the enterprise income tax preferences provided for in Articles 20, 21, 22, 23 and 24 of Decree No.51/1999/ND-CP, enjoy additional enterprise income tax preferences prescribed in Article 27 of Decree No.51/1999/ND-CP for the durations and at the levels below:

b/ Preferential durations and levels:

b.1. 50% reduction of the payable tax amount on the income generated in the following cases:

+ First-year export by the mode of direct export;

+ First-year export of new commodities with economic, technical and utility properties different from those of the commodities already exported by the enterprises;

+ First-year export to a new market of a foreign country or a territory other than the old market.

b.2. 50% reduction of the tax amount to be paid for the income arising from export in the fiscal year, for establishments with export turnover of the current year higher than that of the previous year;

b.3. 20% reduction of the tax amount to be paid for the income generated from export in the fiscal year in the following cases:

+ The export turnover represents over 50% of the total turnover;

+ The export market is maintained stably in terms of the quantity or value of export goods for 3 previous years in a row.

b.4. Another 25% reduction of the tax amount to be paid for the income generated from export in the fiscal year, for production and/or business establishments which enjoy tax preferences under the guidance at Items b.1, b.2 and b.3 of this Point, provided that the investment projects are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP.

b.5. Exemption of the whole enterprise income tax amount to be paid for the income generated from export in the fiscal year, for production and/or business establishments which enjoy tax preferences under the guidance at Items b.1, b.2 and b.3 of this Point, provided that the investment projects are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP.

In order to have basis for the application of additional enterprise income tax preference levels as guided at Point 1.5, Section II, Part B of this Circular, the export goods-manufacturing and/or -trading establishments shall have to separately account the income amount eligible for preferences for each of the above-mentioned cases. Where such income amount cannot be accounted separately, it shall be determined as a percentage of the export turnover over the total turnover of the concerned production and/or business establishment.

2. Regarding land-use tax:

2.1. Subjects of application:

Production and/or business establishments assigned land by the State for implementation of investment projects entitled to investment preferences shall enjoy exemption or reduction of land-use tax (including agricultural land-use tax and housing and land tax) prescribed in Article 19 of Decree No.51/1999/ND-CP for the durations and at the levels below:

2.2. Preferential durations and levels:

a/ Production and/or business establishments assigned land by the State for implementation of investment projects in the branches or trades defined on List A issued together with Decree No.51/1999/ND-CP shall enjoy land-use tax exemption or reduction as from the time they are assigned land as follows:

- 50% reduction of land-use tax for seven years, for projects of investment in the branches or trades defined in Section II of List A issued together with Decree No.51/1999/ND-CP;

- Exemption of land-use tax throughout the project implementation duration, for projects of investment in the branches or trades defined in Section I of List A issued together with Decree No.51/1999/ND-CP.

b/ Production and/or business establishments assigned land by the State for implementation of investment projects in the regions defined on List B issued together with Decree No.51/1999/ND-CP shall enjoy land-use tax exemption as from the time they are assigned land as follows:

- 7-year exemption, for projects in the regions defined in Section II of List B issued together with Decree No.51/1999/ND-CP.

- 10-year exemption, for projects in the regions defined in Section I of List B issued together with Decree No.51/1999/ND-CP.

c/ Production and/or business establishments which are assigned land by the State for implementation of investment projects in the regions defined on List B issued together with Decree No.51/1999/ND-CP and, at the same time, meet the conditions prescribed in Article 15 of Decree No.51/1999/ND-CP shall enjoy land-use tax exemption as from the time they are assigned land as follows:

- 11-year exemption, for investment projects in the branches or trades defined on List A issued together with Decree No. 51/ 1999/ND-CP;

- 15-year exemption, for projects that fully meet two conditions prescribed in Clauses 1 and 2, Article 15 of Decree No. 51/1999/ND-CP.

d/ Production and/or business establishments assigned land by the State for implementation of investment projects in the regions defined on List C issued together with Decree No.51/1999/ND-CP shall enjoy land-use tax exemption as from the time they are assigned land as follows:

- 11-year exemption, for projects in the regions defined in Section II of List C issued together with Decree No.51/1999/ND-CP.

- 15-year exemption, for projects in the regions defined in Section I of List C issued together with Decree No.51/1999/ND-CP.

- Exemption of land-use tax throughout the project implementation duration, for investment projects in the branches or trades defined on List A, which are implemented in the regions defined on List C, issued together with Decree No.51/1999/ND-CP.

Annually, within the land-use tax preferential duration, the concerned production and/or business establishments must determine by themselves and account into their production and/or business costs the payable land-use tax amounts after subtracting the exempted or reduced land-use tax amounts at the levels guided at Point 2.2, Section II, Part B of this Circular.

3. Regarding import tax

3.1. Subjects of application:

Production and/or business establishments which implement projects of investment in the branches or trades defined on List A or in the regions defined on List B and List C, issued together with Decree No.51/1999/ND-CP, shall be exempt from import tax on equipment and machinery imported for the creation of fixed assets as prescribed in Article 26 of Decree No.51/1999/ND-CP at the following preferential levels.

3.2. Preferential levels:

Equipment and machinery imported to create fixed assets, which cannot be produced in the country or may be produced in the country but fail to meet the quality requirements shall be exempt from import tax, including:

- The special-use equipment, machinery and transport means (included in the technological lines) which are imported to create fixed assets of enterprises or to expand their investment or renew technologies.

- The special-use transport means for carrying workers.

To be exempt from import tax, the above-mentioned special-use equipment, machinery and transport means must be accepted by the agencies competent to decide investment preferences, and be registered with the border-gate customs offices for implementation.

4. Regarding tax on the transfer of profit (income) abroad:

4.1. Subjects of application:

Overseas Vietnamese, foreigners residing in Vietnam and other foreigners who make capital contribution or purchase stocks in Vietnam, when transferring their lawful incomes abroad shall enjoy preferences regarding tax on the transfer of profit (income) abroad, as provided for in Clause 4, Article 1 of Decree No.51/1999/ND-CP at the following preferential levels:

4.2. Preferential levels:

To pay a tax amount representing 5% of the lawful income amount transferred abroad.

The method of determining the payable tax amount and the tax payment procedures shall comply with Section V, Part C of Circular No.99/1998/TT-BTC of July 14, 1998 of the Finance Ministry.

5. Regarding income tax for high-income earners

Investors being individuals shall be exempt from income tax for high-income earners according to the provisions in Article 25 of Decree No.51/1999/ND-CP.

III. EXEMPTION AND REDUCTION OF LAND-USE LEVY

1. Subjects of application:

Production and/or business establishments assigned land by the State to conduct production and/or business activities shall enjoy land-use levy exemption or reduction prescribed in Article 17 of Decree No.51/1999/ND-CP at the following preferential levels.

2. Preferential levels:

a/ 50% reduction of land-use levy, for investment projects in the branches, trades or domains defined on List A of the Appendix to Decree No.51/1999/ND-CP;

b/ 75% reduction of land-use levy, for investment projects implemented in the regions defined on List B of the Appendix to Decree No.51/1999/ND-CP;

c/ Exemption of land-use levy in the following cases:

- The investment projects fall into the branches, trades or domains defined on List A and are implemented in the regions defined on List B of the Appendix to Decree No.51/1999/ND-CP;

- The investment projects are implemented in the regions defined on List C of the Appendix to Decree No.51/1999/ND-CP;

The above-mentioned levels of land-use levy preferences shall be determined once at the time the concerned production and/or business establishments are assigned land and the land-use levy amounts payable to the State budget must be calculated as prescribed.

IV. LAND-RENTAL EXEMPTION AND REDUCTION

1. Subjects of application:

Production and/or business establishments leased land by the State to conduct production and/or business activities shall enjoy land-rental preferences prescribed in Article 18 of Decree No.51/1999/ND-CP with the following preferential durations and levels.

2. Preferential durations and levels:

a/ Production and/or business establishments leased land by the State for implementation of investment projects on production and/or business activities, if the investment projects meet the conditions prescribed in Article 15 of Decree No.51/1999/ND-CP, shall enjoy land-rental exemption after the signing of the land-rent contracts as follows:

- 3-year exemption, for investment projects which meet one of the conditions prescribed in Article 15 of Decree No.51/1999/ND-CP;

- 6-year exemption, for investment projects which meet both conditions prescribed in Article 15 of Decree No.51/1999/ND-CP;

b/ Production and/or business establishments leased land by the State for implementation of investment projects on production and/or business activities in the regions defined on List B issued together with Decree No.51/1999/ND-CP shall enjoy land-rental exemption after signing the land-rent contracts as follows:

- 7-year exemption, for projects in the regions defined in Section II of List B issued together with Decree No.51/1999/ND-CP;

- 10-year exemption, for projects in the regions defined in Section I of List B issued together with Decree No.51/1999/ND-CP;

c/ Production and/or business establishments leased land by the State for implementation of investment projects on production and/or business activities, if the investment projects are implemented in the regions defined on List B issued together with Decree No.51/1999/ND-CP, and concurrently meet the conditions prescribed in Article 15 of the said Decree, shall enjoy land-rental exemption after the signing of the land-rent contracts as follows:

- 11-year exemption, for projects of investment in the branches or trades defined on List A issued together with Decree No.51/1999/ND-CP;

- 13-year exemption, for investment projects which concurrently meet 2 conditions prescribed in Clauses 1 and 2, Article 15 of Decree No.51/1999/ND-CP;

d/ Production and/or business establishments leased land by the State for implementation of investment projects on production and/or business activities, if the investment projects are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP shall enjoy land-rental exemption after the signing of the land-rent contracts as follows:

- 11-year exemption, for projects in the regions defined in Section II of List C issued together with Decree No.51/1999/ND-CP;

- 15-year exemption, for projects in the regions defined in Section I of List C issued together with Decree No.51/1999/ND-CP;

- Exemption of land rentals throughout the implementation duration, for projects of investment in the branches or trades defined on List A, which are implemented in the regions defined on List C issued together with Decree No.51/1999/ND-CP;

Annually, during the land-rental preferential time-limit, the production and/or business establishments shall have to determine by themselves and account into their production and/or business costs the land rental amounts payable to the State budget, after deducting the preferential amounts at the levels prescribed at Point 2, Section IV, Part B of this Circular.

C. ORGANIZATION OF IMPLEMENTATION

I.FOR PRODUCTION AND/OR BUSINESS ESTABLISHMENTS

1. After being granted investment preference certificates, production and/or business establishments that implement investment projects eligible for tax preferences under this Circulars guidance shall have to send valid copies of their investment preference certificates to the tax authorities directly managing tax collection within 10 working days after the issuance of the investment preference certificates, which shall serve as basis for the application of tax preferences to the establishments in strict compliance with the provisions in Article 37 of Decree No.51/1999/ND-CP;

Annually, basing themselves on the granted investment preference certificates, production and/or business establishments shall determine by themselves the preferential tax amounts as well as the amounts payable to the State budget, make periodical declaration and remittance thereof to the State budget and conduct the final account settlement with the tax authorities according to current regulations.

2. Particularly for production and/or business establishments, which are entitled to tax preferences under the guidance at Point 3, Section II and Section III, Part B of this Circular, the order and procedures for tax preferences shall be effected as follows:

- For production and/or business establishments entitled to tax preferences under the guidance at Point 3, Section II, they shall have to send applications and copies of their investment preference certificates together with the economic-technical expositions on the list of special-use machinery, equipment and transport means (included in the technological lines) as well as transport means used specifically for carrying workers to the customs offices at the border gates where the establishments actually import goods. The customs offices at the border gates through which the establishments import machinery, equipment and transport means shall effect the import tax exemption for each actual importation by such establishments (in case of entrusted import, the entrusted importing establishments shall submit the above-said dossiers together with the import entrustment contracts to the customs offices).

- For production and/or business establishments entitled to tax preferences under the guidance in Section III, the dossier and competence for consideration of land-use levy exemption or reduction shall comply with the guidance in the Finance Ministrys Circular No.115/2000/TT-BTC of December 11, 2000, which guides the implementation of the Governments Decree No.38/2000/ND-CP of August 23, 2000 on the collection of land-use levy.

3. In the course of project implementation, if production and/or business establishments fail to fully meet the conditions for tax preferences at the already registered levels due to objective or subjective causes, they shall have to notify such in writing to the agencies which have granted them investment preferences within 30 days after the projects are no longer eligible for such investment preferences as prescribed so that the latter may adjust the investment preference certificates to suit the practical conditions therefor.

4.Production and/or business establishments that commit acts of fraudulence to enjoy tax preferences under the Domestic Investment Promotion Law or that fail to report changes in their investment conditions shall have to pay compensation for any arising loss and refund the tax preferences which they have enjoyed. Besides, depending on the seriousness of their violations, such production and/or business establishments shall also be administratively sanctioned or examined for penal liability according to law provisions.

II. REGARDING TAX-COLLECTING BODIES

1. Tax-collecting bodies (including tax authorities and customs offices, which, hereinafter, are referred to as tax authorities) shall base themselves on the tax preferences clearly stated in the investment preference certificates to determine the exempted or reduced tax amounts for production and/or business establishments that have fulfilled the obligations guided in Part A of this Circular and sent to the tax authorities valid copies of their investment preference certificates together with other necessary papers as guided in Part B of this Circular.

2. If detecting that the investment preference levels inscribed in the investment preference certificates granted to the production and/or business establishments are incompatible with the practical conditions for investment preferences, the tax authorities shall temporarily apply preferential tax levels strictly according to the practical conditions, at the same time notify such to the concerned establishments and request the investment preference certificate-granting agencies to adjust part or cancel all of the investment preferences according to the provisions in Article 34 of Decree No.51/1999/ND-CP.

Annually, when making final tax settlement, the tax authorities shall have to officially determine the tax preferences which the production and/or business establishments enjoy investment preferences; as well as the amounts they still have to pay to the State budget, and notify them thereof so that they fully pay the outstanding amounts within the prescribed time-limits; or any amounts paid in excess of the amounts inscribed in the tax authorities notices for deduction from the amounts payable in the subsequent period.

3. In the course of inspecting the tax settlement, if detecting that production and/or business establishments have committed acts of falsely declaring or evading tax, the tax authorities must not settle the tax preferences for such production and/or business establishments. The tax authorities shall have to fully collect tax arrears from the production and/or business establishments and apply sanctioning measures as prescribed by law.

4.Tax authorities of different levels shall have to open dossiers and books to monitor and archive all documents related to tax preferences under the guidance in this Circular. Annually, the tax authorities shall have to report to the Finance Ministry (the General Department of Tax) on the subjects eligible for investment preferences under the Domestic Investment Promotion Law, the tax amounts and State budget revenues which have actually been exempted or reduced, together with the reports on the State budget revenues in the year in the localities.

5. Tax and customs officials or other individuals who abuse their positions and powers to deliberately act in contravention of the provisions of Decree No.51/1999/ND-CP and guidance in this Circular, thus causing loss to the State budget shall, depending on the seriousness of their violations, be disciplined, administratively sanctioned or examined for penal liability according to the provisions of law.

III. IMPLEMENTATION EFFECT

1. Production and/or business establishments which have been enjoying preferences under the Domestic Investment Promotion Law before June 22, 1994 or under the Governments Decree No.07/1998/ND-CP of January 15, 1998 detailing the implementation of the Domestic Investment Promotion Law shall continue enjoying investment preferences till the end of the remaining period according to their investment preference certificates. The profit tax preferences inscribed in the investment preference certificates shall be converted into the enterprise income tax preferences as from January 1, 1999. The turnover tax preferences inscribed in the investment preference certificates shall be effected till the end of December 31, 1998.

2. For projects with investment preference certificates granted under the Domestic Investment Promotion Law before June 22, 1994 or under the Governments Decree No.07/1998/ND-CP of January 15, 1998 detailing the implementation of the Domestic Investment Promotion Law, which are entitled to the additional preferences on land-use tax, land-use levy, land rentals, enterprise income tax or import tax prescribed in Decree No.51/1999/ND-CP, if they are granted certificates of additional investment preferences by the competent agencies, they shall enjoy such preferences only for the remaining preferential period after Decree No. 51/1999/ND-CP takes effect.

3. Production and/or business establishments, which enjoy tax preferences according to the provisions in Decree No.51/1999/ND-CP, if having any changes in their conditions for preferences, shall have to notify such to the competent agencies for consideration, adjustment, supplement or termination of preferences before schedule in strict compliance with the provisions in Article 34 of Decree No.51/1999/ND-CP.

4.In case of the change of owners (or managers) of the projects which are entitled to tax preferences under the guidance in this Circular, the new owners (or managers) shall continue enjoying the preferential tax levels already inscribed in the tax preference certificates for the remaining duration of the projects and have to fulfill the obligations of the former owners (or managers).

5. This Circular takes effect after its signing and replaces the Finance Ministrys Circular No. 146/1999/TT-BTC of December 17, 1999 which guides the implementation of the Governments Decree No. 51/1999/ND-CP of July 8, 1999 detailing the implementation of the Domestic Investment Promotion Law (amended).

For investment projects which have been granted investment preference certificates and given the preferential tax levels under the guidance in Circular No. 146/1999/TT-BTC, if such preferential levels fail to comply with the guidance in this Circular, thereby affecting the investors interests, the tax authorities shall consider to permit these investment projects to enjoy the preferential tax levels provided for in this Circular for the remaining preferential period after this Circular takes effect.

Regarding tax preferences already applied to investment projects before the effective date of this Circular, if the preferential levels fail to conform with the ones provided for in this Circular, the retrospective tax collection or reimbursement shall not be effected.