Decision No. 130/2007/QD-TTg dated August 02, 2007 of the Prime Minister on several financial mechanizm and policies applied to investment projects on clean development mechanism

DECISION

ON SEVERAL FINANCIAL MECHANIZM AND POLICIES APPLIED TO INVESTMENT PROJECTS ON CLEAN DEVELOPMENT MECHANIZM

THE PRIME MINISTER

Pursuant to Gorvernment Organization Law issued on 25th December 2001; Pursuant to Investment Law No. 59/2005/QH11 dated 29th November 2005;

Pursuant to Environmental Protection Law No. 52/2005/QH11 dated 29th November 2005;

Pursuant to Ordinance on fees and charges No. 38/2001/PL-UBTVQH10 dated 28th August 2001; At the proposal of Minister of Ministry of Finance,

DECIDES:

Article1.Targetandscopeofapplication

This Decision provides for the investment project according to Clean Development Mechanizm and several financial mechanizms, policies applied to investment project accordingtoCleanDevelopmentMechanism(hereinaferreferredtoCDMproject).

Article2.Terminterpretation

InthisDecision,thefollowingtermsareconstruedasfollows:

1. A CDM project is a production investment project applying advanced and environment-friendly technology with result in greenhouse gas emission reduction approvedforregisterandissuanceofgreenhousegasemissionreductioncertificateby theInternationalExecutiveBoardonCDM(anentitysetupbycountriesparticipating the Climate Convention and assigned taskofmonitoringCDMprojects)

2.Greenhousegasemissionisthereleaseofanygascausingclimatechangethatis undercontroloftheKyotoProtocol,consistingofCO₂,CH₄,N₂0,HFCs,PFCs,SF₆and othergasesstipulated intheKyotoProtocol.

3. Certified Emission Reductions(CERs) are credits issued to a CDM project by International Executive Board. One CERisequivalenttoonetonofCO₂.

4.ValidtimeofCERsisthetimestipulatedbyInternationalExecutiveBoardonCDM whileissuingCERs.

5.FinishedtransferencetimeofCERsisthetimewhenCERspurchaseisfinished,the sellerhavefullyreceivedmoneyfrompurchaser.

6.NationalDesignatedAuthorityinCDMisMONRE.

Article 3.Potential fields to beinvestedandcarriedoutCDMproject

1.CDMprojectisabletobecarriedoutinanyeconomicfieldwithresultingreenhouse gasemissionreduction,consisting of the following fields:

a)Enhancementofenergyefficiency,conservationandsaving;

b) Harvest and applyrenewable energy sources;

c)Fuelswitchingwiththeaimat reducing greenhouse emission reduction;

d)Gasesrecoveryandutilizationfromoildrilling;

đ) Methane (CH₄) recovery from wastedisposal sites and coal mining for electricity generation,living;

e)Afforestationorreforestationtoincreasecapacityofgreenhousegasabsorptionand emissionreduction;

f)CH₄emissionreductionfromhusbandryandcultivationactivities;

g)Otherfieldsresultingingreenhousegasemissionreduction.

2.MONREprovidesdetailedguidanceonpotentialfieldstodevelopandcarryoutCDM project defined in Item 1 of this Article.

Article4.Formtodevelopandinvestin implementation of a CDM project

CDM project is a new investment project, or a deep investment project, or an open investment project resulting in greenhouse gas emission reduction in the following forms:

1.National/DomesticinvestordevelopsCDMproject;providedfundincashandother eligibleassets/propertiestocarryoutCDMprojectinVietnam.

2. Foreign/ international investor develop CDM project; provide/ apply capital or technologytoVietnamtocarryoutCDMproject.

3.National/Domesticinvestor,foreign/internationalinvestoruseconsultants/advisors to develop CDM project, and carry out or jointlycarryoutCDMprojectinVietnam.

Article 5.ConditionstoaCDMproject

1. A CDM project shall have tomeet the following conditions:

a)Itmustbeaprojectdevelopedinlinewithcurrentlawoninvestment,consistentwith strategies and development plans of Ministries, sectors, localities; and contributes to ensuresustainabledevelopmentofVietnam;

b)InvestorsdevelopandcarryoutprojectvoluntarilyandstrictlyinlinewithVietnamese lawsandinternationalconventions thatVietnamcountryhassigned;

c)Ensurefeasibilitywithadvancedtechnologyandsuitablesourceoffunding;donot usetheOfficialDevelopmentAssistance(ODA)orStatebudgettocollectCERsthat aretobetransferredtoforeigninvestors;

d) Greenhouse gas emission reduction is recognized with an actual amount of reduction, with additionality available; calculated, monitored and checked in line with specificdefinedplan;

đ)Environmentimpactstatement must be available;

e)RegisteredandapprovedbyInternationalExecutiveBoardonCDM;

f) The implementation of a CDM project shall not result in any further unexpected responsibilitytotheVietnameseGovernmentincomparisonwithcontentsstipulatedin the Kyoto Protocol;

g) A CDM project must be developed in line with procedures stipulated for a CDM project with a Confirmation Letter or ApprovalLetterissuedbyMONREavailable.

2.MONREisresponsibleforprovidingguidancetoimplementthePartg,Item1ofthis Article.

Article 6. Rights and dutiesofCDMdevelopmentandimplementationinvestor

1.CDMprojectdevelopmentandimplementationinvestorshavethefollowingrights:

a) To enjoy preferential treatment: regarding tax, land use fee, land lease fee, deprecationoffixassets;investmentcreditof State stipulated in this Decision.

b)EntitledtobeunderconsiderationofenjoyingsubsidypolicytoproductsoftheCDM project that in prioritized fields.

c)Entitledtobeunderconsiderationofgettingfinancialsupportinprojectdevelopment inlinewithcurrentlawsandregulations.

d)EntitledtosellCERsundertheirownership in line with current laws and regulations.

đ) To access and to be provided with information relating to identification of CERs selling price.

e) To be prioritized in consuming products of a CDM project in comparison with the same products not from a CDM project.

2.InvestorsinCDMdevelopmentandimplementationinVietnamshallhavetocarry outthefollowingduties:

a) To register with the tax management agency when the project begins its implementation to enjoy tax incentives(preferentialtreatmentontax).

b)ToregisterCERsissuedtoaCDMprojectbytheInternationalExecutiveBoardon CDMwithVietnamEnvironmentProtectionFund.

c) To carry out financial obligations stipulated to a CDM project, pay relevant fees stipulated in Article 9 of this Decision and inlawsandregulationson feesandcharges.

d) To be under monitoring of authorized agencies in line with regulations to a CDM project.

đ)ToreporttoDNAinCDMonprojectimplementationandFocalpointreceivingCERs issued to a CDM project by the International Executive Board on CDM in line with regulations.

Article 7. Management and utilization of CERs

1.CERsisunderownershipofCDMprojectdevelopmentandimplementationinvestor, is monitored and managed through VietnamEnvironmentProtectionFund.

VietnamEnvironmentProtectionFund(VEPF)isresponsibleforarrangingmonitoring andmanagementofCERsissuedbytheInternationalExecutiveBoardofCDMtoCDM projects carried out in Vietnam.

2. When receiving, dividing and selling CERs, CERs owner and focal point receiving CERsshallhavetoregisterwithVEPFandreporttoDNAonCDM.

Article8.TimetosellCERsandCERssellingprice

1.AfterreceivingCERs,CDMprojectdevelopmentandimplementationinvestorisable

toofferforsellingimmediatelytopartnerwhodesirestopurchase,ortoselectsuitable timewithinthevalidtimeofCERs.

2.SellingpriceofCERsisdefinedbasedonnegotiationaccordingtomarketpriceat the selling time.

3. MONRE is responsible for providing consultancy, support, and monitoring CERs selling.

Article 9.CERs selling fees

1. CDM project development and implementation investor shall have to pay CERs selling feeswhen selling CERs.

2.CERssellingfeesiscalculatedbypercentage(%)oftotalamountofmoney(income) thatCDMprojectdevelopmentandimplementation investor get fromCERsselling.

IncasethatCERsowners,whoareforeigninvestors,donotsellCERstogetmoney buttransferCERstotheirowncountriestofulfiltheircommitmentofgreenhousegas emissionreduction,theyshallhavetopayfeesthatiscalculatedbypercentageoftotal amountofmoneyequivalenttoamountofCERstheyownbasedonmarketpriceatthe timetheytransfersuchCERstotheircountries.

3. VEPF is responsible for arrangement of collecting CERsselling fees. Collected CERsselling feesshall be used to cover expenses for fee collection; to support propagation and awareness raising activities on CDM; to support approval of CDM project documents, to support management and monitoring of CDM project implementation;andotherpurposesrelevanttoCDMinlinewithlawandregulations;to supportsubsidypracticetoproductsofCDM project in the prioritized fields.

4.MinistryofFinancestipulatespecificallylevelofCERssellingfees;provideguidance on management and utilization of CERs selling fees stipulated in Item 3 of this Article.

Article 10.Accounting for expensesand income of a CDM project

1.Accountingforinvestmentexpenses,operationexpenses,andincomefrombusiness productionactivitiesofaCDMprojectshallbecarriedoutinlinewithcurrentregulation oflaw.

2.IncomefromsellingCERsisaccountedforinotherincomeline.Investorsareableto eitheraccountforthatincomeinthetotalincomelineoftheyearthatCERsaresoldor allocateitinincomeofseveralyears stipulated in Item 3 of this Article.

3.Allocationofincomefromsellingiscarriedoutasfollows:

a)IncaseCERsissoldrightintheyearCERsbecomevalid,incomefromsellingCERs shall be allocated to the time durationthatisthevalidtimeofCERs.

b)IncaseCERsissoldatanytimewithinvalidtimedurationofCERs,incomefrom sellingCERsshallbeallocatedtotherespectiveyearswithinremainingvalidtimeof CERs.

Article 11.Wear and tear (depreciation) of fixed assets

Fixed assets formed from a CDM project is applied rapid depreciation method stipulatedinregulationof depreciationoffixedassets

Article 12.Business incometaxforCDMproject

1.Businessincometax,taxexemption,businessincometaxreductionappliedtoCDM projectiscarriedoutsimilartootherprojectsinthefieldsunderspeciallypreferential treatmentforinvestmentasstipulatedinItemIII,PartA,Annex1Listoffieldsunder preferentialtreatmentforinvestmentenclosedwithDecree108/2006/NĐ-CPdated22 Sep.2006stipulatingandguidingimplementationofseveralArticlesofInvestmentLaw; Business income tax law and official documents guiding implementation of Business IncomeTax Law.

2.IncaseaCDMprojectisanopeninvestmentproject,adeepinvestmentprojectora projectthatitsadditionalinvestmentiscarriedouttosupplementmoreequipmentsof anon-goingbusinessentities;additionalincomegainedfromsuchnewinvestmentis underpreferentialtreatmentofbusinessincometaxapplicationasstipulatedinItem1 ofthisArticle.Inthiscase,businessenterprisesshallhavetocalculateseparatelythe additional income from new investment to identify amount of preferential business income tax,tax exemption or tax reduction.

3.IncaseCDMprojectselecttheoptionthattotalincomefromsellingCERsshallbe accountedforinotherincomelineoftheyearthatsellingcarriedoutasstipulatedin Item 2, Article 10 of this Dicision, CDM project development and implementation investorisallowedtoeitherpaybusinessincometaxonetimeorpaybusinessincome tax for several times in line with regulationsandlawonbusinessincometax.

Article 13.Import duties

CDMprojectshallbeexemptedfromimportdutiesifgoodsisimportedtocreatefixed assets of the project; if goods is in form of raw materials, materials, semi-finished productsthathavenotbeenabletobeproducedyetbythenation,importedtoserve project production activity as stipulated in Item 6 and Item 16, Article 16, Decree 149/2005/NĐ-CP dated 8 Dec. 2005 of the Government stipulating in details performanceofImportdutieslaw,ExportdutieslawandcurrentreguationsonExport and Import duties.

Article 14.Land usefee,landleasefee

CDM project is exempted from land use fee, land lease fee in line with current regulations and law applied to projects in the fields that under specially preferential treatmentforinvestment.

Article 15. Mobilization of capital fund

1. Investors are allowed to mobilize capital fund in form of cooperation, linkage with othernationalandinternationalenterprises,economicentities, financialorganizationsto developandimplementCDMprojects.

2. CDM project qualified according to Decree 151/2006/NĐ-CP dated 20 December 2006oftheGovernmentininvestmentcreditandexportcreditofStateshallbeableto enjoyinvestmentcredit policies of the State.

3.IncaseCDMprojectregisteredwithInternationalExecutiveBoardandcontractto sell CERs signed amongst partners, it shall be under prioritized consideration of borrowingmoney.

Article16.Subsidypolicytoproducts of CDM projects

1.ProductsofCDMprojectshallenjoysubsidy policy of the VEPF if they meet the followingrequirements:

a) They are in the list of products of CDMprojectinprioritizedfields.

b)Actualcoststoproducesuchproductsare higher than actual sellingpriceinthe signedcontract.

2.DurationtoenjoysubsidypolicyappliedtoproductsofCDMprojectisdefinedbased

on the time the project have products and capacitytomakeupproductioncostofthe productsthatundersubsidypolicy.

3.VEPFapplysubsidypolicytoproductsofCDM project in line withthisDecision and guidanceofMoF.

4.MoF,incooperationwithMONRE,providedetailedguidanceonconditionstoenjoy subsidypolicy,levelofsubsidyandtimeto enjoysubsidypolicyappliedtoproductsof CDMprojectandinthelistofeligible and qualified products.

Article 17.Implementationarrangements

1.ThisDecisionshallcomeintoeffectafter 15 days of its publication on Official Gazette.

2.CDMprojectsdevelopedandcarriedoutbeforethisDecisionissuanceshallhaveto registerCERsissuedwith VEPF and report DNA on CDM within 90 days for monitoring, management,enjoyingofrightsandcarryingoutduties stipulated in this Decision.

3.MinistersofMoF,MONREareresponsibleforprovidingdetailedguidanceon implementationofthisDecision

4.Ministers,Leadersofministerial agencies,Headsofgovernmentalbodies, Chairpersons of PPCs shall be responsibleforimplementingthisDecision./.