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THE
MINISTRY OF FINANCE
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SOCIALIST
REPUBLIC OF VIET NAM
Independence - Freedom - Happiness
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No:
20/2002/TT-BTC
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Hanoi,
February 28, 2002
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CIRCULAR
GUIDING THE IMPLEMENTATION OF THE GOVERNMENT�S DECREE
No. 71/2001/ND-CP OF OCTOBER 5, 2001 ON PREFERENCES FOR INVESTMENT IN THE
CONSTRUCTION OF DWELLING HOUSES FOR SALE OR LEASE
A. SUBJECTS OF APPLICATION
I. Enterprises of all economic sectors, which
are investors of investment projects on construction of dwelling houses for
sale or lease as prescribed in Article 2 of the Government’s Decree No.
71/2001/ND-CP, and entitled to the preferences, include:
1. Domestic enterprises:
- State enterprises founded and operating under
the State Enterprises Law;
- Enterprises founded and operating under the
Enterprise Law;
- Enterprises of political organizations,
socio-political organizations and professional associations; security and
defense enterprises founded and operating according to law provisions;
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- Enterprises directly invested by overseas
Vietnamese; enterprises directly invested by foreigners permanently residing in
Vietnam; enterprises jointly founded by Vietnamese citizens and overseas
Vietnamese and/or foreigners permanently residing in Vietnam.
2. Foreign-invested enterprises founded and
opera-ting under the Law on Foreign Investment in Vietnam.
II. In order to enjoy the preferences
regarding taxes and other remittances prescribed in the Government’s Decree No.
71/2001/ND-CP, the preference-eligible subjects mentioned at Point I, Part A of
this Circular must meet the following conditions:
- Having made housing business registration
according to law provisions;
- Investing in projects on multi-storied
dwelling houses (with five stories or more for Hanoi and Ho Chi Minh cities,
three stories or more for other provinces and cities); with self-contained
apartments, common stairs and passages; housing projects with at least 60% of
their total land acreage being used for the construction of multi-storied
condominiums for priority sale or lease to subjects specified in Article 5 of
the Government’s Decree No. 71/2001/ND-CP. The house sale prices or rents have
been determined on the principle of capital preservation and benefit assurance
for the concerned business establishments. For sale prices or rents of
condominium apartments, the land use levy, land tax and land rent preferences
must not be calculated into the prices or rents (as prescribed in Clause 1,
Article 6 of Decree No. 71/2001/ND-CP).
- Fully and strictly complying with the law
provisions on accounting, invoices and vouchers; being capable of accounting
separately the business results of projects enjoying preferences regarding
land-related tax and remittances.
B. LEVELS OF PREFERENCES
REGARDING LAND-RELATED TAX AND REMITTANCES
I. For domestic enterprises: Domestic
enterprises mentioned at Point I.1, Part A of this Circular, which execute
housing projects prescribed in Article 2 of the Government’s Decree No.
71/2001/ND-CP, called project investors for short, shall enjoy the following
tax preferences:
1. Land use levy preferences:
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b/ 50% reduction of the land use levy for the
land acreage used for the construction of dwelling houses other than
condominiums within the project area (if any);
c/ Exemption from the land use levy for projects
on construction of dwelling houses of different types in geographical areas
with difficult or extremely difficult socio-economic conditions (on list B or C
in the appendices attached to the Government’s Decree No. 51/1999/ND-CP of July
8, 1999);
d/ Entitlement to deferred payment of the land
use levy for the land acreage subject to land use levy payment, corresponding
to the construction tempo of each project as decided by the
provincial/municipal People’s Committees, but the duration for deferred payment
of land use levy must not exceed five years, counted from the time of land
assignment.
e/ For project investors that are assigned land
and must pay land use levy as well as land-loss compensation as prescribed in
Clause 2, Article 8 of the Government’s Decree No. 71/2001/ND-CP of October 5,
2001, the paid land-loss compensation amount shall be subtracted from the
payable land use levy but must not exceed the total land use levy payable by
the investors.
The investors shall not be allowed to calculate
the relocation support expenses prescribed in Clause 1, Article 8 of the
Government’s Decree No. 71/2001/ND-CP of October 5, 2001 into the land-loss
compensation amount for deduction from payable land use levy or other State
budget remittances (if any).
2. Preferences regarding residential land or
project construction land use tax: The project investors shall be exempt from
residential land or project construction land use tax for three years as from
the time they are assigned land, for the land acreage used for the construction
of condominiums. Where the condominiums are completely constructed then sold or
handed over to users within less than three years, the time for land use tax
exemption shall end upon the handing over of the condominiums.
3. Enterprise income tax rate preferences:
a/ The tax rate of 15% for investment in the
construction of condominiums and dwelling houses of other types in geographical
areas with extremely difficult socio-economic conditions (on list C of the
appendix attached to the Government’s Decree No. 51/1999/ND-CP of July 8,
1999).
b/ The tax rate of 20% for investment in the
construction of condominiums and dwelling houses of other types in geographical
areas with difficult socio-economic conditions (on list B of the appendix
attached to the Government’s Decree No. 51/1999/ND-CP of July 8, 1999).
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The investors must organize the separate
accounting of the business results of each project enjoying the preferential
enterprise income tax rates; if they fail to do so, the highest enterprise
income tax rate applicable to the investors production and business activities
shall apply.
II. For foreign-invested enterprises:
Foreign-invested enterprises founded and
operating under the Law on Foreign Investment in Vietnam (hereinafter
collectively called investors), which join in constructing housing projects
prescribed in Article 2 of the Government’s Decree No. 71/2001/ND-CP in urban
areas, shall enjoy the following preferences regarding land-related tax and
remittances according to Decree No. 71/2001/ND-CP:
1. Land rent preferences:
a/ Exemption from land rent for the land acreage
used for the construction of condominiums throughout the land-leasing duration.
Where condominiums are built for sale, the land
rent exemption duration shall be counted from the date the land-lease contract
is signed till the date all condominium apartments are sold.
b/ Exemption from land rent for the first three
years, counted from the time the land-lease contract is signed, for the land
acreage for which the investors must pay land rent for the construction of
dwelling houses (excluding the land acreage used for the construction of
condominiums); past the land rent exemption duration, the investors must
declare and pay land rent according to regulations.
Where the dwelling houses are completely built
then sold or handed over to users within less than three years, the land rent
exemption duration shall end on the date of handing over of such houses and
land.
c/ Where a project must temporarily cease its
construction or operation, with the approval of a State body competent to lease
land, the land rent for the temporary construction cessation duration shall be
reduced by 50%.
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d/ Where the investors sell dwelling houses
other than condominiums, which are built within the land area assigned for the
project on construction of condominiums, they must pay the use levy for the
land (associated with the sold dwelling houses), but shall be allowed to deduct
therefrom the land rent actually paid into the State budget for this land area,
which, however, must not exceed the payable land use levy. The land-loss
compensation amount shall not be allowed to be deducted from the payable land
use levy.
- The land acreage for which the land use levy
must be paid and the land rent is deducted is the acreage of land associated
with the sold dwelling houses.
- The prices for calculation of the payable land
use levy are the land prices set by the People’s Committees of the provinces or
centrally-run cities on the basis of the land price bracket stipulated by the
Government and computed according to the land prices at the time of transfer of
dwelling houses.
2. Enterprise income tax preferences: The
investors that execute projects on construction of dwelling houses prescribed
in Article 2 of the Government’s Decree No. 71/2001/ND-CP of October 5, 2001 in
urban areas shall enjoy the following preferential enterprise income tax rates:
a/ The tax rate of 10% for investment in the
construction of condominiums and dwelling houses of other types in geographical
areas with extremely difficult socio-economic conditions (prescribed in Section
A of the list of geographical areas where investment is encouraged, in appendix
I attached to the Government’s Decree No. 24/2000/ND-CP of July 31, 2000).
b/ The tax rate of 15% for investment in the
construction of condominiums and dwelling houses of other types in geographical
areas with difficult socio-economic conditions (prescribed in Section B of the
list of geographical areas where investment is encouraged in appendix I
attached to the Government’s Decree No. 24/2000/ND-CP of July 31, 2000).
c/ The tax rate of 20% for investment in the
construction of condominiums and dwelling houses of other types in other
geographical areas.
The investors must organize the separate
accounting of the business results of projects enjoying different preferential
enterprise income tax rates; if they fail to do so, the highest enterprise
income tax rate applicable to the investors production and business activities
shall apply.
C. ORGANIZATION OF
IMPLEMENTATION
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Each investor must send one copy of the decision
permitting it to act as investor, or the project investment license, the
land-assignment decision, land-lease contract (affixed with the unit’s seal) to
the Tax Department of the province or centrally-run city where the unit’s head
office is based, and another copy to the Tax Department in charge of land and
housing tax collection in the locality where the project is to be executed
within 10 days after receiving such decision so as to make registration for
enjoying tax preferences.
1. On the land use levy declaration and payment,
exemption and reduction, and deferred payment
- Within 15 days after being assigned the land,
the investors must declare and pay the land use levy, compile land use levy
exemption or reduction dossiers and send them to the direct tax management
agencies under the guidance in Circular No. 115/2000/TT-BTC of December 11,
2000 of the Ministry of Finance, requesting land use levy exemption or
reduction.
- Within 10 days after the provincial/municipal
People�s Committees
issue the decisions permitting them to defer land use levy payment, the
investors eligible for deferred land use levy payment must send to the tax
offices which directly manage the land use levy collection the copies of such
decisions (affixed with the unit�s
seal) for registration of the land use levy payment plan. The duration for
deferred land use levy payment must not exceed five years as from the time of
land assignment.
2. The land tax and land rent declaration,
payment and exemption shall comply with current regulations.
3. On the application of enterprise income tax
rates: Annually, the investors shall calculate, declare and pay enterprise
income tax at the preferential tax rates.
4. For investors that are executing projects
already approved by competent bodies before the effective date of the
Government’s Decree No. 71/2001/ND-CP and meet all the conditions prescribed in
Article 2 of Decree No. 71/2001/ND-CP and Section II, Part A of this Circular,
they shall directly work with the local Tax Departments so as to determine the
ongoing constructions and construction items, which are entitled to investment
preferences under Decree No. 71/2001/ND-CP and the guidance in this Circular as
from the effective date of Decree No. 71/2001/ND-CP.
5. Upon the expiry of the investment duration
prescribed in their investment licenses, if the foreign investors are not
allowed to extend their investment licenses as prescribed, they shall have to
transfer without indemnification the entire infrastructures belonging to their
projects to the competent Vietnamese State bodies according to law provisions
and settle the existing matters according to Vietnamese law provisions. The
succeeding investors shall enjoy investment preferences for the remaining
project components, which have not been yet granted investment preferences, in
the remaining preferential duration.
6. For the projects eligible for housing investment
preferences as prescribed in the Government’s Decree No. 71/2001/ND-CP, if
during the time of construction investment the competent bodies permit the
change of their investors, the new investors shall continue to enjoy the
investment preferences for the remaining project components, which have not yet
been granted investment preferences, in the remaining preferential duration.
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The tax offices directly managing the tax
collection must make the lists of investors that have registered for executing
investment projects on construction of dwelling houses, compile dossiers for
monitoring each investor, grasp the situation of the project implementation;
organize the tax collection and the implementation of tax preferences.
1. Land use levy collection, exemption and
reduction:
- The collection of land use levy from the
project investors shall be the same as that of land use levy from those
subjects that are assigned land by the State under the guidance of Circular No.
115/2000/TT-BTC of the Ministry of Finance. The land use levy exemption and
reduction shall comply with current regulations.
The land use levy exemption and reduction, the
calculation of payable land use levies, and the determination of the duration
of deferred payment shall be effected at the time of handing over the land for
project execution or at the time of house sale, for foreign investors.
- Those investors who commit administrative
violations of the regulations on the declaration and payment of land-related
tax and remittances shall be sanctioned according to regulations.
2. The land tax exemption for investors of
projects on construction of dwelling houses shall comply with the provisions at
Point 3.a, Section IV of Circular No. 83-TC/TCT of October 7, 1994 of the
Ministry of Finance, which guides the implementation of the Government�s Decree No. 94/CP of August
25, 1994 detailing the implementation of the Ordinance on Housing and Land Tax.
3. Land rent collection, exemption and
reduction: The land use levy collection and payment and the land rent exemption
and reduction shall comply with Decision No. 189/2000/QD-BTC of November 24,
2000 of the Minister of Finance, issuing the Regulation on land, water surface
and sea surface rents applicable to various forms of foreign investment in
Vietnam.
4. Application of enterprise income tax rates:
The tax offices shall base themselves on the approved projects dossiers of
registration for investment preferences to determine the temporarily-paid tax
amounts in each year. At the year-end, after receiving the tax settlement
reports from the investors, they shall inspect the implementation of the
housing investment projects so as to apply the preferential enterprise income
tax rates, calculate the payable enterprise income tax amounts and make the tax
final settlement according to regulations.
D. IMPLEMENTATION EFFECT
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The People’s Committees of the provinces and
centrally-run cities shall have to direct the provincial/municipal Planning and
Investment Services, Tax Departments, Finance and Pricing Services and Land
Administration Services, the People’s Committees at various levels as well as
the investors, within the scope of their respective functions and powers, to
manage and execute investment projects and effect tax-related investment
preferences under the guidance of this Circular.
If any problems arise in the course of implementation,
the units are requested to promptly report them to the Ministry of Finance for
timely implementation guidance.
FOR THE MINISTER OF FINANCE
VICE MINISTER
Vu Van Ninh