Decree 11/2024/ND-CP loan interests of BT projects; exemption from enterprise income tax and personal income tax in Ho Chi Minh City

DECREE

Specifying loan interests, reasonable profits, and modes of payment and account-finalization of investment projects under build-transfer (BT) contracts, and enterprise income tax and personal income tax exemption in Ho Chi Minh City^[1]

Pursuant to the June 19, 2015 Law on Organization of the Government; and the November 22, 2019 Law Amending and Supplementing a Number of Articles of the Law on Organization of the Government and the Law on Organization of Local Administration;

Pursuant to the June 25, 2015 Law on the State Budget;

Pursuant to the June 3, 2008 Law on Enterprise Income Tax; and the June 19, 2013 Law Amending and Supplementing a Number of Articles of the Law on Enterprise Income Tax;

Pursuant to the November 21, 2007 Law on Personal Income Tax; and the November 22, 2012 Law Amending and Supplementing a Number of Articles of the Law on Personal Income Tax;

Pursuant to the November 26, 2014 Law Amending and Supplementing a Number of Articles of the Laws on Taxes;

Pursuant to the June 18, 2014 Construction Law; and the June 17, 2020 Law Amending and Supplementing a Number of Articles of the Construction Law;

Pursuant to the June 13, 2019 Law on Public Investment;

Pursuant to the June 13, 2019 Law on Tax Administration;

Pursuant to the June 18, 2020 Law on Investment in the Form of Public-Private Partnership;

Pursuant to the National Assembly’s Resolution No. 98/2023/QH15 of June 24, 2023, on pilot implementation of a number of special mechanisms and policies for development of Ho Chi Minh City;

At the request of the Minister of Finance;

The Government promulgates the Decree specifying loan interests, reasonable profits, and modes of payment and account-finalization of investment projects under BT contracts, and enterprise income tax and personal income tax exemption in Ho Chi Minh City.

Chapter I

GENERAL PROVISIONS

Article 1. Scope of regulation

1. This Decree details a number of articles of the National Assembly’s Resolution No. 98/2023/QH15 of June 24, 2023, on pilot implementation of a number of special mechanisms and policies for development of Ho Chi Minh City (below referred to as Resolution No. 98/2023/QH15), including:

a/ Post-construction loan interests, reasonable profits, modes of payment and account-finalization of investment projects under BT contracts (below referred to as BT projects) in Ho Chi Minh City under Point d, Clause 5, Article 4 of Resolution No. 98/2023/QH15;

b/ Enterprise income tax and personal income tax exemption under Points a and b, Clause 1, Article 8 of Resolution No. 98/2023/QH15.

2. This Decree does not regulate:

a/ Loan interests in the course of construction of BT projects under the construction law;

b/ The ratio of equity mobilized by investors for implementing BT projects under Article 77 of Law on Investment in the Form of Public-Private Partnership.

Article 2. Subjects of application

This Decree applies to:

1. Parties to BT contracts, and agencies, organizations and individuals concerning BT project investment in Ho Chi Minh City.

2. Enterprises, agencies, organizations and individuals related to startup innovation activities in Ho Chi Minh City.

Chapter II

POST-CONSTRUCTION LOAN INTERESTS, REASONABLE PROFITS, Modes of payment AND Account-finalization OF INVESTMENT FUNDS IN COMPLETED BT PROJECTS

Section 1

POST-CONSTRUCTION LOAN INTERESTS, REASONABLE PROFITS

Article 3. Grounds for determining post-construction loan interest rate ceiling and maximum after-tax return-on-equity ratios

1. Reference interest rates for proposing post-construction loan interest rate ceiling include:

a/ The average medium-term and long-term loan interest rates of 4 commercial banks in Ho Chi Minh City - the Joint Stock Commercial Bank for Foreign Trade of Vietnam, the Joint Stock Commercial Bank for Investment and Development of Vietnam, the Vietnam Joint Stock Commercial Bank for Industry and Trade, and the Vietnam Bank for Agriculture and Rural Development - provided by the State Bank of Vietnam’s Ho Chi Minh City branch;

b/ Loan interest rates applicable to similar BT projects (if any).

2. The average after-tax return-on-equity ratio applicable to enterprises operating in sectors and fields of BT projects in Ho Chi Minh City shall be summed up and proposed by the assigned departments and specialized sectors of the Ho Chi Minh City People’s Committee to the Ho Chi Minh City People’s Committee.

Article 4. Competence, order and procedures for approval of post-construction loan interest rate ceiling and return-on-equity ratio of investors

1. Based on the list of BT projects, capacity to balance funding sources in medium-term and annual public investment plans and ability for issuing municipal bonds, and loan interest rates and return-on-equity ratios of investors specified in Article 3 of this Decree, the Ho Chi Minh City People’s Committee shall propose to the Ho Chi Minh City People’s Council for promulgation a resolution specifying post-construction loan interest rate ceiling and maximum return-on-equity ratio of investors at the year-end meeting of the Ho Chi Minh City People’s Council. 

2. Post-construction loan interest rate ceiling and maximum return-on-equity ratios proposed by the Ho Chi Minh City People’s Committee to the Ho Chi Minh City People’s Council as specified in Clause 1 of this Article must not be higher than reference loan interest rates and return-on-equity ratios specified in Article 3 of this Decree.

3. Based on the resolution of the Ho Chi Minh City People’s Council specified in Clause 1 of this Article, the Ho Chi Minh City People’s Committee shall issue a decision on post-construction loan interest rates based on terms of corresponding BT contracts and principles of application of post-construction loan interest rate ceiling and return-on-equity ratios of investors based on sectors and fields before December 31 every year for implementation of BT projects in Ho Chi Minh City in the subsequent year.

4. Clause 3 of this Article serves as a ground for determining post-construction loan interest costs and reasonable profits of investors in total investment of BT projects upon:

a/ Formulation and appraisal of prefeasibility study reports and investment policy proposal reports of BT projects; approval of BT project investment policy;

b/ Formulation and appraisal of feasibility study reports; approval of BT projects;

c/ Selection of investors, negotiation and conclusion of BT contracts;

d/ Payment and account-finalization of investment capital amounts of completed BT projects.

5. In case the fluctuation of average medium-term and long-term loan interest rates in the credit market results in the adjustment of post-construction interest rate ceiling of BT projects, the Ho Chi Minh City People’s Committee shall report thereon to the Ho Chi Minh City People’s Council for consideration and decision.

6. Issuance of post-construction loan interest rates and return-on-equity ratios  for 2024

a/ The Ho Chi Minh City People’s Committee shall propose to the Ho Chi Minh City People’s Council for promulgation a resolution specifying post-construction loan interest rate ceiling and maximum return-on-equity ratios of investors under Clause 1 of this Article at the upcoming meeting of the Ho Chi Minh City People’s Council from the effective date of this Decree;

b/ Based on the resolution of the Ho Chi Minh City People’s Council promulgated under Point a of this Article, the Ho Chi Minh City People’s Committee shall issue a decision on post-construction loan interest rates based on terms of corresponding BT contracts and principles of application of post-construction loan interest rate ceiling and return-on-equity ratios of investors applicable to different sectors and fields.

Article 5. Grounds for determination of post-construction loan interest costs covered by the State

1. Periods for calculation of post-construction loan interests

a/ The period for calculation of post-construction loan interests shall be counted from the date BT projects are completed, handed over and put into use to the date the payment to investors is completed;

b/ Post-construction loan interests for loan amounts already paid by the State are no longer valid from the time of payment;

c/ The delayed period of submission of dossiers for account-finalization of investment capital amounts of completed BT projects after the deadline specified in this Decree shall not be included in the period for calculation of post-construction loan interests covered by the State.

2. Post-construction loan interest rates

a/ Post-construction loan interest rates shall be calculated on the basis of actual interest rates of loans mobilized by investors to implement BT projects;

b/ In case actual post-construction loan interest rates are higher than those stated in BT contracts and their annexes (if any), the loan interest rate covered by the State must not exceed loan interest rate stated in BT contracts and their annexes (if any).

3. The actual loan amounts mobilized by investors to implement BT projects must not exceed loan amounts specified in BT contracts and their annexes (if any).

4. The timing of loan disbursement, disbursement rates between equity and loan sources are stated in signed BT contracts and their annexes (if any).

5. The timing of allocation of public investment funds by the State to investors is stated in signed BT contracts and their annexes (if any).

Article 6. Grounds for determination of investors’ profits paid by the State

1. Period for calculation of investors’ reasonable profits

a/ Investors’ profits shall be calculated from the time BT projects are completed, handed over and put into use to the time the payment to investors is completed;

b/ For BT projects’ work items and construction works that operate independently and are paid under BT contracts: Investors’ profits shall be calculated from the time such work items and construction works are completed, tested for acceptance and put into use to the time the investors are paid by the State;

c/ Investors’ return-on-equity amounts already paid by the State are no longer valid from the time of payment;

d/ The delayed period of submission of dossiers for account-finalization of investment capital amounts of completed BT projects after the deadline specified in this Decree shall not be included in the period for calculation of investors’ return-on-equity amounts paid by the State.

2. The actual equity contributed by investors in BT projects must not exceed the equity specified in BT contracts and their annexes (if any).

3. Return-on-equity ratios are stated in BT contracts and their annexes (if any).

4. The time when the State allocates public investment funds to investors is stated in BT contracts and their annexes (if any).

Section 2

PAYMENTS FOR BT PROJECTS

Article 7. Principles of control and payment of public investment capital amounts

1. The State Treasury shall control the payment of public investment capital amounts from the state budget in accordance with this Decree.

2. BT project contract-signing agencies shall open accounts at the State Treasury offices in localities convenient for transaction. The opening of accounts for control and payment must comply with the Government’s regulations on administrative procedures in the field of State Treasury and the Ministry of Finance’s regulations on guidance on registration and use of accounts at the State Treasury.

3. After receiving documents on detailed allocation of planned public investment capital amounts (including adjusted or added capital amounts, if any) of all-level People’s Committees in Ho Chi Minh City, if the tasks and projects for which investment procedures have been completed under Resolution No. 98/2023/QH15 and planned capital amounts have been allocated or allocated with adjusments, the State Treasury shall base itself on payment request dossiers of BT contract-signing agencies and terms of payment stated in BT contracts and their annexes (if any), number of payments, payment periods, time of payment, payment conditions and value of each payment to allocate capital amounts to projects.

In case a payment request dossier of a BT contract-signing agency is not conformable with regulations or lacks documents required in this Decree, the State Treasury shall refuse to make payment and, within 3 working days after receiving such dossier, issue a notice, clearly stating its payment refusal to be sent only once to the BT contract-signing agency for the latter’s dossier finalization or supplementation in accordance with this Decree.

4. The time limit for capital control and payment by the State Treasury is 3 working days from the date of receipt of a complete payment dossier of a BT contract-signing agency under this Decree.

5. A total capital amount to be paid for a BT project must not exceed the total investment approved by the competent authority. Such a project’s public investment capital amount disbursed in the year must not exceed the planned capital amount allocated for the project in the year.

6. The State Treasury shall control and make prompt and complete payment of capital amounts in accordance with regulations to projects that fully satisfy the specified payment conditions and make valid payment dossiers.

7. BT contract-signing agencies shall manage and use capital amounts for proper purposes and for eligible subjects and in an economic and effective manner; comply with current laws and take responsibility for accuracy of the implementation volume, unit price, requested payment value, dossiers and documents provided to the State Treasury.

Article 8. Payment conditions for BT projects

1. The time limit for allocation of public investment capital for a BT project after the project is completed and handed over to the State is 6 years for group-A projects, 4 years for group-B projects, or 3 years for group-C projects.

2. A BT contract and its annexes must clearly state equity ratios and loans, conditions and time limit for and number of payments by the State to the BT project enterprise or investor (in case no BT project enterprise is established).

3. The State shall make payment to a BT project enterprise or investor (in case no BT project enterprise is established) after the BT project or its work items or construction works that operate independently is/are certified as completely constructed by the BT contract-signing agency in accordance with the construction law and has/have its/their value audited.

4. The final payment shall only be made after the public investment capital value of the completed BT project is approved by the competent authority for account-finalization of investment capital amounts of completed BT projects.

Article 9. Methods of carrying out procedures for payment of state capital amounts via the State Treasury

1. Sending dossiers and receiving dossier processing results directly at the State Treasury’s head office.

2. Sending dossiers and receiving dossier processing results via the Public Service Portal of the State Treasury in case procedure-performing units conduct e-transactions with the State Treasury (these units shall access and follow instructions provided on the Public Service Portal of the State Treasury).

3. Sending dossiers and receiving dossier processing results via the National Public Service Portal. 

Article 10. Control and payment dossiers

1. A legal dossier of a BT project

A BT contract-signing agency shall send to the State Treasury a legal dossier of the BT project (for the first time upon the performance of transactions with the State Treasury or when there are dossier changes, modifications or supplementations), which must comprise:

a/ A competent authority’s decision on approval of the BT project and decision(s) on adjustment of the BT project (if any) (the original or true copy made by the BT contract-signing agency);

b/ The concluded BT contract and its annexes (if any) (the original or true copy made by the BT contract-signing agency);

c/ Annual public investment plan assigned by a competent authority (the original or true copy made by the BT contract-signing agency);

d/ A written certification of completed work items and construction works of the BT project that operate independently in accordance with the construction law (the original or true copy made by the BT contract-signing agency), for payment for completed work items and construction works of the BT project that operate independently.

2. Payment dossier

a/ An audit report on value of completed work items and construction works of the BT project that operate independently (the original or true copy made by the BT contract-signing agency), for payment for completed work items and construction works of the BT project that operate independently.

b/ A decision on approval of account-finalization of investment capital amount in the completed BT project as approved by the competent authority (the original or true copy made by the BT contract-signing agency), for payment made after the BT project is completed;

c/ A document issued by a person competent to approve BT projects, on determination of loan interest costs for a post-audit loan interest (the original or true copy made by the BT contract-signing agency), for payment of post-construction loan interests arising after the audit institution carries out the audit;

d/ A written payment request of the BT contract-signing agency (made according to Form No. 01 provided in the Appendix to this Decree);

dd/ Capital withdrawal paper (made according to Form No. 02 provided in the Appendix to this Decree).

Section 3

Account-finalization OF INVESTMENT CAPITAL AMOUNTS OF COMPLETED BT PROJECTS

Article 11. Account-finalization of investment capital amounts of completed BT projects

1. The account-finalization of investment capital amounts of completed BT projects must comply with the public investment law and this Decree.

2. Principles of account-finalization of investment capital amounts of completed BT projects

a/ Completed BT projects shall have their account-finalization reports audited;

b/ The account-finalization of investment capital amounts of completed BT projects shall be based on project approval decisions, BT project contracts, reports on account-finalization of investment capital amounts of completed BT projects and document issued by persons competent to approve BT projects, on determination of loan interest costs for investors’ loan interests arising after audit institutions carry out the audit.

Article 12. Agencies making reports on account-finalization of investment capital amounts of completed BT projects, dossiers of request for verification and approval of account-finalization of investment capital amounts of completed BT projects

1. BT project enterprises or investors (in case no BT project enterprise is established) shall make reports on account-finalization of investment capital amounts of completed BT projects and send dossiers to persons competent to approve account-finalization and agencies in charge of verification of account-finalization of investment capital amounts of completed BT projects.

2. Dossiers of request for verification and approval of account-finalization of investment capital amounts of completed BT projects shall be prepared under the provisions on dossiers of request for verification and approval of account-finalization of public investment capital amounts of completed projects. Such a dossier must comprise a BT project contract and its annexes (if any).

Chapter III

ENTERPRISE INCOME TAX AND PERSONAL INCOME TAX EXEMPTION

Article 13. Enterprise income tax exemption

1. Business startup enterprises, science and technology organizations, innovation centers, and intermediary organizations assisting business startup and innovation (below collectively referred to as enterprises) that generate income amounts from business startup and innovation activities in Ho Chi Minh City are entitled to enterprise income tax exemption for such income amounts.

Enterprises that generate income amounts eligible for enterprise income tax exemption under this Clause shall comply with the regulations of the Ho Chi Minh City People’s Council on priority sectors; and satisfy criteria and conditions for business startup and innovation activities.

The enterprise income tax exemption period is 5 years from the date the eligible enterprises generate income amounts liable to enterprise income tax from startup and innovation activities in Ho Chi Minh City during the effective period of Resolution No. 98/2023/QH15. When Resolution No. 98/2023/QH15 ceases to be effective while the enterprise income tax exemption period has not yet expired under this Clause, enterprises may continue to enjoy enterprise income tax exemption until the expiration of the tax exemption period.

Enterprises that are currently enjoying or entitled to enterprise income tax exemption under the conditions other than those specified in this Decree may choose to either enjoy the enterprise income tax exemption under such conditions or enjoy the tax exemption under this Decree for the remainding period.

2. During the effective period of Resolution No. 98/2023/QH15, organizations that generate income amounts from transfer of capital contributions or the right to capital contribution to business innovation and startup enterprises in Ho Chi Minh City are entitled to enterprise income tax exemption for these income amounts.

Business innovation and startup enterprises in Ho Chi Minh City mentioned in this Clause shall comply with regulations of the Ho Chi Minh City People’s Council on priority sectors; and criteria and conditions for business startup and innovation activities.

Income amounts generated from the transfer of capital or capital contribution right mentioned in this Clause mean those generated through partial or whole transfer of capital amounts or the right to capital contribution to business innovation and startup enterprises in Ho Chi Minh City (including also case of enterprise sale), excluding income amounts generated from the transfer of stocks, bonds, fund certificates, and other types of securities under regulations.

In case of sale of the whole of a single-member limited liability company owned by an institution in the form of capital transfer associated with real estate, enterprise income tax shall be declared and paid for real estate transfer activities.

3. An enterprise that carries out multiple production and business activities shall determine and account income amounts generated from activities eligible for enterprise income tax exemption specified in this Article in accordance with the law on enterprise income tax.

4. Enterprises shall declare and pay enterprise income tax in accordance with the law on tax administration.

Article 14. Personal income tax exemption

1. During the effective period of Resolution No. 98/2023/QH15, individuals who generate income amounts from transfer of capital contributions or the right to capital contribution to business innovation and startup enterprises in Ho Chi Minh City are entitled to personal income tax exemption for such income amounts.

Business innovation and startup enterprises in Ho Chi Minh City mentioned in this Clause shall comply with the regulations of the Ho Chi Minh City People’s Council on priority sectors; and criteria and conditions for business startup and renovation activities.

Income amounts generated from transfer of capital or capital contribution right under this Clause mean those generated through partial or whole transfer of capital or the right to capital contribution to business innovation and startup enterprises in Ho Chi Minh City (including also case of enterprise sale), excluding income amounts generated from the transfer of stocks, bonds, fund certificates, and other types of securities under regulations.

In case of sale of the whole of a single-member limited liability company owned by an individual in the form of capital transfer associated with real estate, personal income tax shall be declared and paid for real estate transfer activities.

2. The determination of income amounts generated from transfer of capital or capital contribution right and declaration with tax agencies must comply with the laws on personal income tax and tax administration.

Chapter IV

RESPONSIBILITIES OF AGENCIES, ORGANIZATIONS, AND INDIVIDUALS

Article 15. Responsibility of the Ministry of Finance

To coordinate with the Ho Chi Minh City People’s Committee in summing up and reporting on difficulties in the implementation of BT projects to the Prime Minister under this Decree.

Article 16. Responsibility of the Ministry of Planning and Investment

To coordinate with the Ho Chi Minh City People’s Committee in organizing according to their functions and assigned tasks the implementation of BT projects under Resolution No. 98/2023/QH15 and this Decree.

Article 17. Responsibility of the Ministry of Construction

To guide the resolution of problems related to construction investment costs of BT projects in accordance with construction investment regulations.

Article 18. Responsibility of the State Bank of Vietnam

To guide the State Bank of Vietnam’s Ho Chi Minh City branch in providing average medium-term and long-term loan interest rates of the 4 commercial banks specified at Point c, Clause 1, Article 3 of this Decree at the proposal of the Ho Chi Minh City People’s Committee.

Article 19. Responsibility of the Ho Chi Minh City People’s Council

To promulgate a resolution on the post-construction loan interest rate ceiling and maximum return-on-equity ratio of investors at a meeting of the Ho Chi Minh City People’s Council under Clauses 1 and 6, Article 4 of this Decree.

Article 20. Responsibilities of the Ho Chi Minh City People’s Committee

1. To organize the implementation of this Decree, ensuring compliance with this Decree, Resolution No. 98/2023/QH15 and the laws on construction, public investment and state budget.

2. To promulgate a decision on post-construction loan interest rate based on corresponding BT contract term and the principle of application of the post-construction loan interest rate ceiling specified in Clauses 3 and 6, Article 4 of this Decree.

3. To report to the Ho Chi Minh City People’s Council for allocation of public investment capital under medium-term and annual public investment plans of Ho Chi Minh City to make payment to BT investors under signed BT contracts and their annexes (if any).

4. To coordinate with the State Bank of Vietnam in guiding the State Bank of Vietnam’s Ho Chi Minh City branch in providing average medium-term and long-term interest loans rates of the 4 commercial banks specified at Point c, Clause 1, Article 3 of this Decree.

5. To coordinate with ministries and sectors in solving problems (if any) related to order and procedures for formulation, appraisal, approval and management of BT projects, construction investment costs, construction quality, conclusion and management of BT contracts.

Article 21. Responsibilities of authorities competent to approve investment policy and BT projects

1. To select investment methods of projects under BT contracts; to ensure investment efficiency and efficiency of the use of public investment capital sources.

2. To monitor and evaluate the implementation of BT projects, and use of public investment capital amounts to pay for BT projects, and investment efficiency of BT projects.

Article 22. Responsibilities of BT project enterprises and investors

1. BT project enterprises or investors (in case no BT project enterprises are established) shall exercise the rights and perform the obligations provided in BT contracts and their annexes (if any), this Decree, Resolution No. 98/2023/QH15 and relevant laws.

2. To coordinate with BT contract-signing agencies in finalizing payment dossiers and account-finalization dossiers of completed BT projects’ investment capital amounts.

Chapter IV

IMPLEMENTATION PROVISIONS

Article 23. Effect

1. This Decree takes effect on the date of its signing.

2. The provisions on enterprise income tax and personal income tax exemption of Articles 13 and 14 of this Decree shall apply from the effective date of Resolution No. 98/2023/QH15.

3. Once Resolution No. 98/2023/QH15 ceases to be effective, this Decree shall apply to BT contracts that are concluded during the effective period of Resolution No. 98/2023/QH15 and in the course of performance.

4. Ministers, heads of ministerial-level agencies, heads of government-attached agencies, the Ho Chi Minh City People’s Committee, and related agencies, organizations and individuals shall implement this Decree.-

On behalf of the Government
For the Prime Minister
Deputy Prime Minister
LE MINH KHAI

* The Appendix to this Decree is not translated.