Decree No. 59/2014/ND-CP dated June 16, 2014 of the Government amending and supplementing a number articles of the Government’s Decree No. 69/2008/ND-CP of May 30, 2008, on policies to encourage socialization in the fields of education, vocational training, healthcare, culture, sports and environment

DECREE

Amending and supplementing a number articles of the Government’s Decree No. 69/2008/ND-CP of May 30, 2008, on policies to encourage socialization in the fields of education, vocational training, healthcare, culture, sports and environment[1]

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

Pursuant to the November 29, 2005 Investment Law;

Pursuant to the November 29, 2006 Law on Tax Administration; and the November 20, 2012 Law Amending and Supplementing a Number of Articles of the Law on Tax Administration;

Pursuant to the November 29, 2013 Land Law;

At the proposal of the Minister of Finance,

The Government promulgates the Decree amending and supplementing a number articles of the Government’s Decree No. 69/2008/ND-CP of May 30, 2008, on policies to encourage socialization in the fields of education, vocational training, healthcare, culture, sports and environment.

Article 1.To amend and supplement a number of articles of the Government’s Decree No. 69/2008/ND-CP of May 30, 2008

1. To amend Clause 1 of Article 1 as follows:

“1. Scope of regulation of the Decree

Fields in which socialization is encouraged include education-training, vocational training, healthcare, culture, physical training and sports, environment, and judicial expertise.”

2. To amend and supplement Article 5 as follows:

“Article 5. Lease and construction of material foundations

1. Ministries and sectors in charge of the fields in which socialization is encouraged and People’s Committees of provinces and centrally run cities (below referred to as provincial-level People’s Committees) shall, based on budget capacity and the need to encourage socialization, invest in infrastructure facilities and partially or completely build new works, or use existing construction works and infrastructure facilities for lease for a definite term to socialization establishments.

2. In case the state budget cannot arrange or insufficiently arranges funds for investment in infrastructure facilities and construction of works for lease, ministries and sectors in charge of the fields in which socialization is encouraged and provincial-level People’s Committees shall reach agreement with socialization establishments so that the latter will pay rentals in advance so as to create funds for investment and construction activities.

The advanced rental amount shall be converted into the number of years or months for which rentals for infrastructure facilities or works used for socialization activities have been paid.

3. Rental rates for infrastructure facilities and part or the whole of works for use for socialization activities shall be decided by ministries or sectors in charge of the fields in which socialization is encouraged and provincial-level People’s Committees after reaching agreement with socialization establishments in the principle that rental rates shall be determined in line with common rates in the market, with incentives offered by localities at the time of signing lease contracts taken into consideration, but must fully cover expenses for forming leased assets.

4. Socialization establishments that have paid or advanced rentals for infrastructure facilities and works used for socialization activities may:

a/Make further investments so as to complete socialization projects to conduct production and business activities in accordance with law, in case they rent infrastructure facilities and part of works for use for socialization activities;

b/ Account the amount of rentals for infrastructure facilities and works used for socialization activities (already paid or advanced) as project costs according to regulations;

c/ Calculate the value of their additional investments (if any) into projects’ investment capital and use these additionally invested assets as loan collaterals.

5. In case investors wish to contribute capital to, or set up joint ventures or partnerships with socialization establishments, ministries and sectors in charge of the fields in which socialization is encouraged and provincial-level People’s Committees shall agree with such investors on the use of the amount of rentals for infrastructure facilities and works used for socialization activities or the value of land-attached assets already invested to contribute capital to, or set up joint ventures or partnerships with, socialization establishments in accordance with law.

6. When the lease term or the capital contribution duration prescribed in Clause 1 or 4 of this Article expires or prematurely terminates in accordance with law, socialization establishments shall transfer to the State all infrastructure facilities and architectural works built on land.

7. The order and procedures for lease of infrastructure facilities and works for use for socialization activities and contribution of capital with rentals for implementation of socialization projects shall comply with this Decree and the law on state asset management and use.

8. Provincial-level People’s Committees shall create favorable conditions for socialization establishments to build schools, hospitals, recreational centers, sports centers, museums, libraries, cultural houses, theaters, cinemas and other works for use for socialization activities in conformity with approved master plans.

9. The Ministry of Finance shall guide the implementation of this Article.”

3. To amend and supplement Article 6 as follows:

“Article 6. Land lease

1. The State shall lease cleared land to socialization establishments for construction of works for use for socialization activities in the form of land lease with land rental exemption for the whole lease term, except the cases prescribed in Clause 2 of this Article.

Expenses for compensation and ground clearance work serving the construction of works for use for socialization activities shall be handled under Clause 5 of this Article.

2. For socialization establishments that use urban land, provincial-level People’s Committees shall, based on practical conditions of their localities, prescribe the regime of land rental exemption and reduction applicable to each geographical area or field. The highest incentive level is land rental exemption for the whole project duration; the lowest incentive level equals that prescribed by the land and investment laws.

At least six (6) months after the effective date of this Decree, based on the fields and geographical areas in which socialization is encouraged, provincial-level People’s Committees shall promulgate and publicize the above-mentioned land rental exemption or reduction regime after reaching agreement with standing bodies of provincial-level People’s Councils.

Once every three (3) years, provincial-level People’s Committees shall review lists of fields and geographical areas in which socialization is encouraged for amendment or supplementation as appropriate.

3. In case an investor lawfully acquires by itself the right to use a land lot to implement a project to build works for use for socialization activities but the use purpose of such land lot must be changed according to land use master plans or plans, the investor may be leased land by the State in accordance with the land law and eligible for land rental exemption or reduction according to Clauses 1 and 2 of this Article, specifically:

a/ If the investor is eligible for land rental exemption for the whole project duration, the money amount paid by the investor for the land use rights may be included in the project’s investment cost;

b/ If the investor is eligible for land rental exemption for a certain number of years, the money amount paid by the investor for the land use rights shall be regarded as the land rental amount paid in advance to the State for land lease in accordance with the land law. This amount shall be determined based on the price of the transferred land lot calculated according to its use purpose at the time a competent state agency issues a decision permitting the change of the land use purpose, which, however, must not exceed the compensation or support expenses in case of land recovery by the State in accordance with the land law.

c/ The amount paid by the investor for the land use rights prescribed at Point b of this Clause shall be determined based on the following principles:

- In case the land price used for calculation of land rentals is determined by the land price adjustment coefficient method, the price of the transferred land lot at the time of issuance of the decision on change of the land use purpose shall also be determined by the land price adjustment coefficient method.

- In case the land price used for calculation of land rentals is determined by the direct comparison, subtraction, income-based and surplus-based methods, the price of the transferred land lot at the time of issuance of the decision on change of the land use purpose shall also be determined by these methods;

The determination of the land price for calculation of land rentals by the land price adjustment coefficient method or direct comparison, subtraction, income-based and surplus-based methods shall comply with the Government’s decree on collection of land rental and water surface rental.

4. Land rental exemption or reduction prescribed in Clauses 1 and 2 of this Article is implemented as follows:

a/ Socialization establishments that have socialization projects approved by competent agencies in accordance with law and are leased land by the State to implement such projects will be eligible for land-related incentive policies under this Decree from the time the land lease decision or the decision permitting the change of land use purposes is issued, provided that their projects satisfy the requirements prescribed in the Prime Minister-promulgated decision on types, size and criteria of socialization projects;

b/ After projects are completed and put into operation, if competent state agencies, through inspection, detect that socialization establishments fail to satisfy the requirements prescribed in the Prime Minister-promulgated decision on types, size and criteria of socialization projects as having committed, socialization establishments shall be required to refund the exempted or reduced land rental amount, calculated according to the policies and land prices effective at the time of enjoying land incentives as prescribed at Point a of this Clause, and pay late-payment interests, calculated based on the exempted or reduced land rental amount in accordance with the law on tax administration;

c/ Depending on local realities and type of socialization projects, provincial-level People’s Committees shall assign tax offices to assume the prime responsibility for, and coordinate with agencies in charge of the fields in which socialization is encouraged and other related agencies in, inspecting the satisfaction of the Prime Minister-prescribed requirements on types, size and criteria by socialization establishments at the time their projects are commissioned and put into operation;

d/ The inspection prescribed at Points b and c of this Clause shall be conducted as follows:

- After its project is completed and put into operation, within the time limit prescribed in the Prime Minister-promulgated decision on types, criteria, size and standards of socialization projects in each field, the socialization establishment shall notify in writing tax offices that its project has been competed and put into operation, enclosed with relevant dossiers and documents so that tax offices shall consider and issue an official land rental exemption or reduction decision;

- Within 30 days after receiving the socialization establishment’s notice, tax offices shall coordinate with related agencies in implementing the tasks prescribed at Point c of this Clause. In case the socialization establishment fails to satisfy the requirements prescribed in the Prime Minister-promulgated decision on criteria, size and criteria of socialization projects, tax offices shall report such to the provincial-level People’s Committee for handling according to Point b of this Clause.

5. Handling of compensation and ground clearance expenses

a/ Provincial-level People’s Committees shall, based on their local budget capacity, implement compensation and ground clearance work and lease cleared land to investors to implement socialization projects.

b/ In case a provincial-level People’s Committee cannot allocate funds from the local budget to implement compensation and ground clearance work and lease cleared land to an investor to implement a socialization project, compensation and ground clearance expenses shall be handled as follows:

- If the socialization establishment is eligible for land rental exemption for the whole project duration, it shall refund compensation and ground clearance expenses paid under the approved plan to the state budget and may account such expenses as the project’s investment capital;

- If the socialization establishment is eligible for land rental exemption or reduction for a certain period or ineligible for land rental exemption or reduction, it shall refund compensation and ground clearance expenses paid under the approved plan to the state budget and may clear such expense against the payable land rental amount (in case of land lease with one-off rental payment for the whole lease term) or convert such amount into a number of years or months for which land rentals have been paid (in case of land lease with annual rental payment) in accordance with the law on collection of land rental and water surface rental, which, however, must not exceed the project’s payable land rental amount or land rental payment duration. The remainder (if any) may be accounted as the project’s investment capital.

c/ In case a socialization establishment that is leased land by the State voluntarily advances compensation and ground clearance expenses to the State with a view to speed up the ground clearance progress, compensation and ground clearance expenses shall be handled as follows:

- If the socialization establishment is eligible for land rental exemption for the whole project duration, it may account compensation and ground clearance expenses paid under the approved plan as the project’s investment capital;

- If the socialization establishment is eligible for land rental exemption or reduction for a certain period or ineligible for land rental exemption or reduction, it shall clear compensation and ground clearance expenses paid under the approved plan against the payable land rental amount (in case of land lease with one-off rental payment for the whole lease term) or convert such amount into a number of years or months for which land rental have been paid (in case of land lease with annual rental payment) in accordance with the law on collection of land rental and water surface rental, which, however, must not exceed the project’s payable land rental amount or land rental payment duration. The remainder (if any) shall be accounted as the project’s investment capital.

d/ Compensation and ground clearance expenses specified at Points b and c of this Clause include expenses for compensation, support and resettlement and funds for organization of compensation and ground clearance work.

6. In case a socialization establishment that is leased land by the State with  one-off rental payment for the whole lease term and eligible for land rental exemption for the whole project duration or for a certain number of years under Clauses 1 and 2 of this Article wishes to pay land rental (not to apply incentive policies), the payable land rental amount shall be determined according to the land policies and land prices effective at the time a competent authority allows it to pay land rental. The payable land rental amount shall be determined for the remaining land use period which is the remaining duration of the investment project. The establishment has the rights over the value of the right to lease land for the remaining land use period in accordance with relevant provisions of the land law corresponding to the form of land use.

In this case, the socialization establishment may clear the remainder (if any) of compensation and ground clearance expenses paid under the approved plan (not yet included in the project’s cost) against the payable land rental amount, which, however, must not exceed the payable land rental amount. The establishment may account the value of the right to use leased land as the project’s asset value and shall have rights and obligations like economic organizations allocated land by the State with collection of land use levy for the remaining land use period in accordance with the land law.

7. In case 2 or more investors register to implement investment projects in the field in which socialization is encouraged in the same location, the investor that best satisfies criteria of size, quality and efficiency prescribed by the bidding and land laws shall be selected.

8. Socialization establishments using land lawfully shall be granted certificates of land use rights and house and other land-attached asset ownership and have their lawful land use rights and house and asset ownership protected by the State in accordance with law. The order and procedures for land lease and grant of certificates must comply with the land law.

9. Socialization establishments shall use land for proper purposes as planned in accordance with the land law. Upon the expiration of lease terms, if socialization establishments no longer need land or are dissolved or relocated, they shall return the allocated land to the State. Those using land for improper purposes shall be subject to land recovery by the State.

10. Accounting of the value of the right to use leased land as the project’s asset value and land-related rights of a socialization establishment:

a/ In case the socialization establishment is leased land by the State with one-off rental payment for the whole lease term and eligible for land rental exemption for the whole project duration, or with annual rental payment, it may neither account the value of land use rights as its investment project’s asset value nor convert, transfer, donate or sub-lease the right to use leased land, or take out mortgage, provide guarantee or contribute capital with the right to use leased land.

b/ In case the socialization establishments is leased land by the State with one-off rental payment for the whole lease term and is eligible for land rental exemption for a number of years, it may account the value of the right to use leased land, calculated according to the paid land rental amount, as its investment project’s asset value. The establishment may only convert, transfer, donate or sub-lease the land use rights; or take out mortgage, provide guarantee or contribute capital with the right to use leased land in correspondence to the paid land rental amount.

11. Transfer of socialization projects

a/ In the course of implementation of a socialization project, if the socialization establishment, for objective reasons, cannot further implement such project on the land leased by the State, it may transfer the project in accordance with the law on real estate business, provided that it obtains a written in-principle approval from the provincial-level People’s Committee. The project transferee must commit to further implement the socialization project in accordance with its objectives and land use purpose;

b/ The value of the transferred project shall be agreed upon by the two parties, covering:

- Land-attached assets, in case the project is eligible for exemption from land rental or subject to annual rental payment;

- Land-attached assets and the whole of land use right value, in case the project is leased land with one-off rental payment for the whole lease term and has fully pay the payable land rental amount (ineligible for land rental exemption or reduction);

- Land-attached assets and part of the land use right value in correspondence to the land rental amount already paid to the state budget, in case the project is eligible for land rental reduction.

c/ The procedures for land lease between the old investor and new investor upon transfer of socialization projects must comply with the land law.

12. For land lawfully transferred from organizations, households and individuals without change of use purposes under Clause 2 of this Article, socialization establishments may account the land use right value as investment projects’ asset value and include it as costs for investment capital recovery in accordance with law.

13. The Ministry of Finance shall guide the implementation of this Article.”

4. To amend and supplement Clause 9 of Article 18 as follows:

“Article 18.Tasks of provincial-level People’s Committees

9. Inspection and supervision tasks

To direct provincial-level  Tax Departments to assume prime responsibility for, and coordinate with provincial-level Planning and Investment Departments, Finance Departments and Natural Resources and Environment Departments and related departments in, supervising the implementation of socialization projects under conditions and criteria approved by competent authorities. If detecting socialization establishments that fail to satisfy the conditions and criteria, to report such to provincial-level People’s Committees for the latter to consider abolishing incentives in accordance with law.”

Article 2.Transitional provisions

1. In case socialization establishments that are using residential or urban land satisfy requirements prescribed in the Prime Minister-promulgated decision on the type, criteria, size and standards of socialization projects but provincial People’s Committees have not yet promulgated regulations on land use levy or land rental exemption and reduction as prescribed in Clause 1, Article 6 of the Government’s Decree No. 69/2008/ND-CP, these establishments will be eligible for land rental exemption or reduction under this Decree from the effective date of Decree No. 69/2008/ND-CP.

2. In case socialization establishments that have been allocated land by the State and are eligible for land use levy exemption or reduction have paid the irreducible land use levy amount as prescribed by the law on incentives for socialization activities before the effective date of this Decree, they may continue to use land for the remaining land use term without having to switch to land lease form. If switching to the land lease, they shall not be required to pay land rental for the land allocation period.

3. Socialization establishments that have been allocated or leased cleared land by the State, permitted by competent state agencies to enjoy incentives policies prescribed in Decree No. 69/2008/ND-CP for a period between the effective date of Decree No. 69/2008/ND-CP and before August 1, 2014, shall not refund compensation and ground clearance expenses to the State, if the State does not require.

4. The Ministry of Finance shall guide the implementation of this Article.

Article 3.Effect

1. This Decree takes effect on August 1, 2014.

2. To annul Clause 3, Article 4 and Clause 3, Article 18 of the Government’s Decree No. 69/2008/ND-CP of May 30, 2008.

3. Ministers, heads of ministerial-level agencies, heads of government-attached agencies and chairpersons of provincial-level People’s Committees shall implement this Decree.-

On behalf of the Government
Prime Minister
NGUYEN TAN DUNG