Decision No. 33/2009/QD-TTg dated March 2, 2009 of the Prime Minister promulgating financial mechanisms and policies applicable to border-gate economic zones

DECISION

PROMULGATING FINANCIAL MECHANISMS AND POLICIES APPLICABLE TO BORDER-GATE ECONOMIC ZONES

THE PRIME MINISTER

Pursuant to the December 25, 2001 Law on Organization of the Government;

Pursuant to the Government’s Decree No. 10S/2006/ND-CP of September 22, 2006, detailing and guiding a number of articles of the Investment Law;

Pursuant to the Government’s Decree No. 29/2008/ND-CP of March 14, 2008. on industrial parks, export-processing zones and economic zones;

At the proposal of the Minister of Finance.

DECIDES:

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

This Decision prescribes financial mechanisms and policies applicable to border-gate economic zones and non-tariff sections of border-gate economic zones which arc established under the Prime Minister’s decisions.

Article 2. Subjects of application

1. Border-gate economic zone management boards under provincial-level People’s Committees, which are established under the Prime Minister’s decisions and have functions, tasks, powers and organizational structures and operate under the Government’s Decree No. 29/ 2008/ND-CP of March 14, 2008, on industrial parks, export-processing zones and economic zones (below referred to as Decree No. 29/2008/ ND-CP).

2. Enterprises of all economic sectors which invest in and operate technical and social infrastructure of border-gate economic zones.

Investors of projects under the Investment Law, enterprises established under the Enterprise Law and cooperatives established under the Law on Cooperatives in border-gate economic zones.

Article 3. Conditions for application

Financial mechanisms and policies under this Decision are applicable to border-gate economic zones and non-tariff sections of border-gate economic zones which fully meet the following conditions:

1. For border-gate economic zones:

a/ Being established under the Prime Minister’s decisions;

b/ Having a border-gate economic zone management board under Decree No. 29/2008/ ND-CP.

2. For non-tariff sections of border-gate economic zones:

a/ Having a customs office controlling and examining incoming and outgoing goods and vehicles in non-tariff sections.

b/ Being separated from the outside territory with fence systems, having entrance gates and doors to assure control by customs offices and concerned functional agencies.

Article 4. Interpretation of terms

Border-gate economic zone means an economic zone established under the conditions, order and procedures specified in Decree No. 29/2008/ND-CP in a mainland border area which has an international or major border gate.

Non-tariff sections of border-gate economic zones comprise export-processing zones, export -processing enterprises, tax suspension warehouses, tax suspension zones, bonded warehouses, special economic-trade zones, trade-industrial zones and other economic sectors which are established under the Prime Minister’s decisions, have goods export-import relations with the outside and meet the conditions specified in Clause 2, Article 3 of this Decision.

Chapter II

SPECIFIC PROVISIONS

Section 1. CREDIT AND INVESTMENT POLICIES

Article 5. State budget funds for infrastructure investment

1. Local budget funds for development investment shall be allocated to investment projects to build technical and social infrastructure of border-gale economic zones.

2. Central budget supports shall be given to important technical and social infrastructure investment projects. Conditions and principles for and types of works entitled to central budget supports comply with the Prime Minister’s decision.

3. Central budget funds for construction of border-gate economic zone infrastructure shall be managed, used and settled according to the law on capital construction investment management, the State Budget Law and other relevant laws.

Article 6. Raised funds

1. Large-scale and key investment projects on technical and social infrastructure construction may issue work bonds under the Government’s Decree No. 141/2003/ND-CP of November 20, 2003, on issuance of government bonds, government-guaranteed bonds and bonds of local governments.

2. All funds raised from bond issuance shall be invested in approved projects under law.

3. Foreign organizations and individuals and overseas Vietnamese may make direct investment in border-gate economic zones, even in the form of build-operate-transfer (BOT), build-transfer (BT) or build-transfer-operate (BOT).

4. Investment projects to build technical and social infrastructure or necessary public utility service works in border-gate economic zones may be included in the list of projects calling for official development assistance (ODA). ODA funds shall be managed and used according to current laws.

5. Investment projects in border-gate economic zones may borrow loans from credit institutions and raise funds from domestic and foreign organizations and individuals under law.

6. LaoCai international border-gate economic- zone (Lao Cai province), Cau Treo international border-gate economic zone (Ha Tinh province). Lao Bao special economic-trade zone (Quang Tri province), An Giang border-gate economic zone (An Giang province). Moc Bai border-gate economic zone (Tay Ninh province). Bo Y international border-gate economic zone (Kon Tum province). Dong Dang-Lang Son border-gate economic zone (Lang Son province). Mong Cai border-gate economic zone (Quang Ninh province) and Dong Thap border-gate economic zone (Dong Thap province) may raise, apart from the funds specified in Clauses 1, 2, 3, 4 and 5 of this Article, direct investment capital from domestic and overseas organizations and individuals, advanced capital of infrastructure users, and capital of enterprises permitted to build and operate technical infrastructure works in border-gate economic zones; borrow loans jointly provided by credit institutions and raise all investment capital sources in other forms under law.

Article 7. Capital from the land fund of border-gate economic zones

Provincial-level People’s Committees shall use land use levies and land rents collected from border-gate economic zones to build technical and social infrastructure and common necessary service and utility works of border-gate economic zones or create funds to clear ground for investment in border-gate economic zone development under law.

Article 8. State credit funds

Investment projects in border-gate economic zones are entitled to investment credit and export credit policies under the Government’s Decree No. 151/2006/ND-CP of December 20, 2006, on the States investment credit and export credit, and Decree No. 106/2008/ND-CP of September 19, 2008, amending and supplementing a number of articles of Decree No. 151/2006/ND-CP of December 20, 2006.

Section II. POLICIES ON TAXES, CHARGES, FEES AND LAND RENTS AND OTHER FINANCIAL POLICIES

Article 9. Enterprise income tax incentives

Enterprises established under investment projects in border-gate economic zones are entitled to enterprise income tax incentives under the Government’s Decree No. 124/2008/ND-CP of December 11, 2008, detailing and guiding a number of articles of the Law on Enterprise Income Tax, specifically as follows:

1. To enjoy the 10% preferential tax rate for 15 years. Those established under investment projects in the domains specified at Point b, Clause 1, Article 15 of the Government’s Decree No. 124/2008/ND-CP of December 11, 2008, may enjoy the 10% tax rate for an extended period not exceeding 30 years. The Prime Minister shall decide to extend the period of enjoying the 10% preferential tax rate under this Clause ai the proposal of the Minister of Finance.

2. To be exempt from enterprise income tax for 4 years and enjoy a 50% reduction of payable enterprise income tax amounts for 9 subsequent years. The tax exemption and reduction period is counted successively from the first year an enterprise has taxable income from the investment project: when an enterprise does not have taxable income for 3 (three) years counting from the first year it has turnover from the investment project, the tax exemption and reduction period is counted from the fourth year.

Article 10. Personal income tax incentives

Vietnamese and foreign personal income taxpayers under the Law on Personal Income Tax working in border-gate economic zones and earning income from their work are entitled to a 50% reduction of payable tax amounts.

Procedures for declaring, paying and settling persojial income tax comply with law.

Article 11. Value-added tax incentives

1. Goods and services produced and consumed in. goods and services imported from overseas to. and goods and services exported to overseas from, non-tariff sections of border gate economic zones are not subject to value-added tax.

2. Goods and services from other functional sections of border-gate economic zones and goods and services from inland Vietnam imported to non-tariff sections of border-gate economic zones are entitled to the 0% value-added tax rate. The Ministry of Finance shall promulgate a list of goods subject to examination prior to value-added tax refund applicable to goods and services specified in this Clause at the proposal of People’s Committees of provinces having border-gate economic zones.

3. Goods and services exported from non-tariff sections to other functional sections of border-gate economic zones or inland Vietnam arc subject to value-added lax under law.

Article 12. Excise lax incentives

Excise tax-liable goods produced and consumed in, or imported from overseas or inland Vietnam to. non-tariff sections of border-gate economic zones are not subject to excise tax except under-24-seat automobiles, which are subject to excise tax according to regulations.

2. Excise tax-liable goods exported overseas from non-tariff sections of border-gale economic zones are not subject to excise tax.

3. Excise tax-liable goods exported from non-tariff sections of border-gate economic zones to other functional sections of border-gale economic-zones or inland Vietnam are subject to excise tax according lo regulations.

Article 13. Export and import duty incentives

1. Goods exported overseas from or imported from overseas into non-tariff sections of border-gate economic zones for use only in these sections and goods circulated from one non-tariff section to another are not subject to export and import duties.

3. Goods which are produced, produced by subcontract mode, re-processed or assembled in non-tariff sections of border-gate economic zones are exempt from export duty when being exported overseas.

3. Imported materials to be used in production activities of investment projects in border-gate economic zones are exempt from import duty for 5 (five) years counting from the date of production. The detailed classification of materials for tax exemption is guided by the Ministry of Industry and Trade.

Imported semi-finished products, which are domestically unavailable, to be used in production activities of investment projects in border-gate economic zones are exempt from import duty for 5 (five) years counting from the date of production commencement. The determination of domestically unavailable semi-finished products for tax exemption is based on the list promulgated by the Ministry of Planning and Investment.

4. Goods which are produced, produced by subcontract mode, re-processed or assembled in non-tariff sections of border-gate economic zones without using imported materials, supplies, accessories or semi-finished products are exempt from import duty when being imported into inland Vietnam; when using imported materials, supplies, accessories or semi-finished products, such goods are subject to import duty on the proportions of those materials, supplies, accessories or semi-products in the goods’ structure. The payable import dirty on the proportions of imported materials, supplies, accessories or semi-finished products in goods imported into inland Vietnam shall be determined as follows:

a/ When importers have registered with customs offices prior to import into inland Vietnam the list and norms of imported materials, supplies, accessories and semi-finished products to be used in the production of goods for import into inland Vietnam, the payable import duty shall be determined based on the quantities, tax rates and taxed prices of those imported materials, supplies, accessories and semi-finished products.

b/ When it is impossible to determine the payable import duty under Point a of this Clause, the import duty shall be calculated according to the tax rate and taxed prices of goods produced, produced by subcontract mode, re-processed or assembled in border-gate economic zones for import into inland Vietnam at the time of customs declaration.

5. The unused quantities of goods imported into non-tariff sections of border-gate economic zones for production which have commercial value may be sold to inland Vietnam and are subject to import duty according to regulations.

6. Goods produced, produced by subcontract modes, re-processed and assembled in non-tariff sections of border-gate economic zones are entitled to import duty incentives or special import duty incentives under the law on import duty and export duly if they fully meet prescribed conditions.

Article 14. Land and water surface rent incentives

1. Investment projects in border-gate economic zones are exempt from land and water surface rents under the Government’s Decree No. 142/2005/ND-CP of November 14. 2005, on collection of land and water surface rents, specifically as follows:

a/ Investment projects in the domains particularly promoted for investment are exempt from land and surface water rents.

b/ Investment projects in the domains promoted for investment arc exempt from land rents for 15 years from the date of construction completion and operation.

c/ Projects other than those specified at Points a and b of this Clause are exempt from land rents for 11 years from the date of construction completion and operation.

d/ Lists of domains particularly promoted and promoted for investment comply with the investment law.

2. When renting land or water surface, domestic and foreign investors in Lao Cai international border-gate economic zone (Lao Cai province). CauTreo international border-gate economic zone (Ha Tinh province). Lao Bao special economic-trade zone (Quang Tri province). An Giang border-gate economic zone (An Giang province), Moc Bai border-gate economic zone (Tay Ninh province). Bo Y international border-gate economic zone (Kon Turn province), Dong Dang-Lang Son border-gate economic zone (Lang Son province). Mong Cai border-gate economic zone (Quang Ninh province) and Dong Thap border-gate economic zone (Dong Thap province) may enjoy, apart from the incentives specified in Clause 1 of this Article, a land or water surface rent equal to 30% of the land or water surface rents applied in the district having the lowest land and water surface rents under regulations of the provincial-level People’s Committee, counting from the year an investor ceases to enjoy the incentives specified in Clause 1 of this Article.

Article 15. Land use levy incentives

Investors that need to use land in border-gate economic zones for production and business may receive land and pay land use levy if they so wish; and are entitled to land use levy exemption and reduction under the Government’s Decrees No. 198/2004/ND-CP of December 3, 2004. and No. 44/2008/ND-CP of April 9, 2008, on land use levy collection.

Article 16. Policies on charges and fees

1. Border-gate economic zone management boards are authorized to collect a number of charges and fees related (o their state management activities according to regulations,including:

a/ Investment appraisal charges, business registration certificate fees and fees for supply of business registration information for investment projects under their competence.

b/ Charges and fees related to the grant, re-grant, modification, supplementation and extension of permits for representative offices in border-gate economic zones of foreign organizations and businessmen: and the grant of business permits for goods trading and goods trading-related activities to foreign-invested enterprises and foreign investors that make investment for the first time in border-gate economic zones after obtaining written approval of the Ministry of Industry and Trade.

c/ Charges and fees related to the grant, re-grant, extension and withdrawal of labor permits for foreigners and overseas Vietnamese working in border-gate economic zones: and the grant of labor books to Vietnamese working in border-gate economic zones.

d/ Charges and fees related to the grant of certificates of origin for goods produced in border-gate economic zones and other relevant permits and certificates in border-gale economic zones.

e/ Charges and fees related to the certification of contracts and documents on real estate in border-gate economic zones for concerned organizations.

f/ Charges and fees related to the evaluation and approval of environmental impact assessment reports of investment projects in border-gate economic zones to be decided by provincial-level People’s Commmittees.

2. Border-gate economic zone management boards shall set charge and fee levels applicable in their border-gate economic zones and submit them to competent agencies for promulgation under the law on charges and fees.

3. Part of charge and fee amounts directly collected by border-gate economic zone management boards shall be re-allocated from the state budget for covering charge and fee collection expenses and additionally paying operation expenses under law.

Article 17. Policies on operation and use of infrastructure works in border-gate economic zones

1. Investors of production and business projects in border-gate economic zones who use technical and social infrastructure works in border-gate economic zones shall pay infrastructure use charges.

2. Investors of socio-technical infrastructure in border-gate economic zones may manage and operate their invested works and collect infrastructure use charges from investors in border-gate economic zones: and collect charges on use of other infrastructure and public service and utility works in border-gate economic zones under law.

3. Border-gate economic zone management boards shall manage, operate, repair and maintain common socio-technical infrastructure works in border-gate economic zones other than those specified in Clause 2 of this Article and collect infrastructure use charges from investors in border-gate economic zones for management, repair and maintenance of these works under law.

Chapter III

ORGANIZATION OF IMPLEMENTATION

Article 18. Responsibilities of border-gate economic zone management boards

Border-gate economic zone management hoards have the competence and responsibility to perform the state management of border-gale economic zones under this Decision and Chapter V of Decree No. 29/2008/ND-CP.

Article 19. Responsibilities of People’s Committees of provinces having border-gate economic zones

1. To direct the elaboration of and approve detailed master plans to build border-gate economic zones and functional sections in border-gate economic zones; to direct the appraisal and approval of basic designs of investment projects to develop infrastructure of these functional sections.

2. To direct the recovery of land and water surface areas, compensation and ground clearance, resettled farming and resettlement and carry out procedures for land lease or assignment in border-gate economic zones under the land law and relevant laws.

3. To elaborate plans to use local budgets lor investment in socio-technical infrastructure of border-gate economic zones under the investment law, the state budget law and other relevant laws and submit them to People’s Councils of the same level for decision.

4. To discharge other state management tasks and powers towards border-gate economic zones under law.

Article 20. Responsibilities of ministries and branches

1. The Ministry of Planning and Investment, the Ministry of Finance and the Ministry of Industry and Trade shall manage and guide localities having border-gate economic zones in implementing the policies specified in this Decision.

2. Other ministries and branches shall, within the ambit of their functions, guide localities having border-gate economic zones in implementing this Decision.

Article 21. Implementation provisions

This Decision takes effect on May 1, 2009.

2. Licensed investment projects which are enjoying higher incentives under their investment licences or certificates than those under this Decision may enjoy such incentives for the remaining incentive period if they fully satisfy prescribed conditions. When such incentives are lower than those under this Decision, they may enjoy the incentives under this Decision for the remaining incentive period.

3. Trade-industrial parks in border-gate economic zones established by the Prime Minister prior to the effective date of this Decision may enjoy incentive mechanisms and policies applicable to non-tariff sections under this Decision if they fully meet the conditions on non-tariff sections.

4. Regulations on tax incentives for tourists in non-tariff sections of border-gate economic zones promulgated prior to the effective date of this Decision remain effective through June 30. 2009. From July 1, 2009. the Regulation on trading in duty-free goods promulgated together with the Prime Minister’s Decision No. 24/2009/QD-TTg of February 17, 2009, applies.

5. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, presidents of People’s Committees of provinces having border-gate economic zones and concerned organizations and individuals shall implement this Decision.