JOINT CIRCULAR No. 21/2003/TTLT-BVHTT-BTC OF JULY 1, 2003 GUIDING THE PAYMENT OF ROYALTIES AND THE DEDUCTION FOR, SETTING UP AND USE OF, ROYALTY FUNDS FOR A NUMBER OF TYPES OF WORKS PRESCRIBED IN THE GOVERNMENT’S DECREE No. 61/2002/ND-CP OF JUNE 11, 2002

Pursuant to the Government’s Decree No. 61/2002/ND-CP of June 11, 2002 on the royalty regime (hereinafter referred to as Decree No. 61/2002/ND-CP);

The Ministry of Culture and Information and the Ministry of Finance hereby jointly guide the payment of royalties and the deduction for, setting up and use  of, royalty funds for a number of types of works prescribed in the Government’s Decree No. 61/2002/ND-CP of June 11, 2002 as follows:

A. GENERAL PROVISIONS

1. When using works in the forms of publications; audio tapes or discs, video tapes or discs, films, and radio or television programs; performing arts, press works, and plastic art and applied fine art works; or photographic works, organizations and individuals must sign contracts for use of works with the works’ authors or owners, or through the lawful representative organizations authorized by the works’ authors or owners (hereinafter referred to as representatives) according to the contract form enclosed with this Circular (not printed herein).

2. If their works, the production of which is ordered or financed by the State or financed in whatever form, are used, the authors or owners shall be also entitled to enjoy royalties, remuneration and other material benefits suitable to the forms in which their works are used.

3. Depending on the practical conditions and characteristics of each type of works, the works’ users and authors or owners shall reach agreement on specific royalties in the contracts for the use of works according to law provisions.

4. The guidance on, examination and settlement of disputes, complaints and denunciations related to, the royalty regime shall comply with the State’s current regulations.

B. SPECIFIC PROVISIONS

I. ROYALTIES FOR THEATRICAL WORKS AND WORKS OF OTHER TYPES OF PERFORMING ARTS

1. Royalties for theatrical works and works of other types of performing arts shall comply with the provisions in Articles 15 and 16 of Decree No. 61/2002/ND-CP.

When pieces of music or songs which have been publicized are used, their composers or owners shall be paid royalties as prescribed in Article 16 of Decree No. 61/2002/ND-CP or Item 3, Section A of this Circular.

2. Grading of works:

Basing themselves on the contents and quality of works, the art councils belonging to the works’ users shall evaluate and grade the works in writing, serving as a basis for the payment of royalties to their authors or owners according to the following grades:

Grade I: Works of average quality;

Grade II: Works of above-average quality;

Grade III: Works of good quality;

Grade IV: Works of excellent quality.

3. The subjects specified in Clause 4, Article 13 of Decree No. 61/2002/ND-CP shall enjoy remuneration under the contracts as agreed by the works’ users. Remuneration monies shall be included in the total expenses for the program production.

4. The use of works which have been publicized for performances in service of political tasks, people in deep-lying, remote areas or areas meeting with exceptional difficulties, in service of army units and people in border regions or islands, for international exchange performances for non-commercial purposes, free of charge, or without performance contracts or financial support in whatever form, shall not be subject to payment of royalties. Decisions of the Ministry of Culture and Information shall be required if the above-said activities are carried out by central art units and decisions of the provincial/municipal People’s Committees shall be required if they are carried out by local art units.

II. ROYALTIES FOR CINEMATOGRAPHIC AND VIDEO WORKS

1. Royalties for cinematographic and video works shall comply with the royalty bracket prescribed in Articles 20 and 21 of Decree No. 61/2002/ND-CP.

Remuneration monies paid to the subjects specified in Clause 4, Article 19 of Decree No. 61/2002/ND-CP shall be included in the total film production costs.

2. Grading of scripts:

2.1. Basing themselves on the contents and quality of scripts, the script-approving councils authorized by the Ministry of Culture and Information shall evaluate and grade them qualitatively in writing, serving as a basis for the payment of royalties to their authors as follows:

Grade I: Scripts of average quality;

Grade II: Scripts of good quality;

Grade III: Scripts of excellent quality.

The grading of scripts shall comply with the regulations of the Ministry of Culture and Information.

2.2. For scripts written with the funding from the State budget or other financial sources: On the basis of the written evaluations of the script-approving councils, the works’ users shall decide on the payable royalty levels but the royalty portions from the State budget must not exceed the permitted royalty funds while the royalty portions from other financial sources shall be agreed upon by the involved parties.

2.3. For scripts written without the State budget funding, the payable royalty levels shall be decided by the art councils of the works’ users.

3. Grading of cinematographic works:

3.1. Basing themselves on the contents and artistic and technical quality of cinematographic works, the film-approving councils authorized by the Ministry of Culture and Information, after approving and permitting the publicization thereof, shall evaluate and grade such works qualitatively in writing , serving  as a basis for the payment of royalties to the remaining titles specified in Clauses 1, 2, 3 and 4, Article 20 of Decree No. 61/2002/ND-CP.

Grade I: Works of average quality;

Grade II: Works of good quality;

Grade III: Works of excellent quality.

The qualitative grading of cinematographic works shall comply with the regulations of the Ministry of Culture and Information.

3.2. For cinematographic works funded with the State budget and other financial sources: On the basis of the written evaluations of the film-approving councils, the works’ users shall decide on the payable royalty levels but the royalty portions from the State budget must not exceed the permitted royalty funds while the royalty portions from other financial sources shall be agreed upon by the involved parties.

3.3. For cinematographic works not funded with the State budget: the works’ users shall apply the royalty levels according to the current regulations or agreed contracts.

4. When works are transformed from literary works, theatrical scripts or from other types of performing arts into cinematographic scripts, the authors of the transformed works and of the original works must reach written agreement on royalties. The authors of original works shall enjoy royalties equal to 30-40% of the royalties for writing scripts of the works of the same genre and grade; the authors of transformed works shall enjoy the rest of the script royalties under the provisions in Clause 1, Article 21 of Decree No. 61/2002/ND-CP.   

5. For cinematographic works serving children or ethnic minority people: The councils shall have to evaluate them in writing, serving as a basis for the payment of additional incentive royalties to their authors.

The incentive royalties for works serving children or ethnic minority people shall be equal to 5% of the royalties payable for such cinematographic works.

Works with contents related to both children and ethnic minority people shall also enjoy the maximum incentive percentage of 5% only.

6. From the 11^th duplicate of a motion picture on, the author shall enjoy an additional incentive royalty equal to 8% of the film’s total sale turnover. Such incentive royalty is calculated by either of the following methods:

Method 1: The incentive royalty (NB_KK) is calculated according to the following formula:

S NB_KK  = The average selling price of one duplicate of a motion picture x (n - 10) x 8%.

of which:

- S NB_KK is the total incentive royalty for the 11^th duplicate of the film on;

- n is the number of actually sold duplicates of the film (n ³ 11);

- The average selling price of a duplicate of the film is the selling price prescribed in the contract agreed upon by the work’s owner and the work’s user or the selling price approved by a competent State body for each genre of films.

Method 2: The incentive royalty (NB_KK) is calculated according to the following formula:

                  n

S NB_KK = S  DT_i   x  8%                 

                i = 11

of which:

- S NB_KK is the total incentive royalty for the 11^th duplicate of the film on;

- n is the number of actually sold duplicates of the film (n ³ 11);

- DT_i is turnover from the sale of the film’s duplicate No. i (i ³ 11);

7. For cinematographic works produced at high costs, as compared with the average production cost/year, which have been approved by competent bodies, due to special requirements on equipment and/or supplies but not artistic creation, the royalty levels shall be calculated according to the following formula (which, however, must not over-double the royalty for films of the same genre with the average total production cost/year).

The calculation formula is as follows:

                  n 

NB = T x ( S NB_i ) x (1 + h/10)

                 i - 1  

of which:

- NB is the royalty for the cinematographic work with a high production cost

- T is the average cinematographic work production cost/year approved by the competent body (exclusive of royalty) 

                Actual film production cost (high)
- h  =  —————————————————
                Average film production cost/year

- (1 + h/10): To enjoy value 2 when h is higher than 10

    n

- S NB_i        is the total royalty co-efficient (from 1 to n) for the authors as prescribed
  i = 1          in the royalty bracket.

III. ROYALTIES FOR PRESS WORKS (PRINTED AND ON-LINE)

1. Royalties for press works shall comply with the provisions in Article 24 of Decree No. 61/2002/ND-CP.

2. Other provisions:

2.1. For brief news reports or news reports already publicized by the press or news agencies, the editors-in-chief shall decide on the royalty levels payable to the writers of brief news reports or the suppliers or selectors of publicized news reports for re-printing.  

2.2. Excellent press works of high value or works created in such special circumstances as natural calamities, wars or created in deep-lying or remote areas, the editors-in-chief shall decide on the payable royalty levels as prescribed in the royalty bracket for each genre and on incentive royalties as prescribed in Clause 5, Article 25 of Decree No. 61/2002/ND-CP.

2.3. Press works reprinted from other press or already publicized at seminars or conferences shall be paid royalties lower than those for works used for the first time. The royalty levels therefor shall be decided by the editors-in-chief but must not be lower than 50% of the royalties for works of similar genres, which the press agencies are applying.

2.4. For interviews, if the interviewees do not ask for a certain percentage of the royalty to be enjoyed by the interviewers, the editors-in-chief shall decide on the percentage of such royalty to be paid to the interviewees.

IV. ROYALTIES FOR RADIO AND TELEVISION WORKS

1. Royalties payable to the works’ authors or owners shall comply with the provisions in Articles 28 and 29 of Decree No. 61/2002/ND-CP.

2. For units governed by the Government’s Decree No. 10/2002/ND-CP of January 16, 2002 on the financial regime applicable to non-business units with revenues, they shall pay royalties under the agreed contracts.

V. ROYALTIES FOR PLASTIC WORKS (FINE ART), APPLIED FINE ART AND PHOTOGRAPHIC WORKS

1. Royalties for plastic works (fine art), applied fine art and photographic works funded with the State budget shall be the expenses for the creation of models and paid to the works’ authors or owners. Depending on the artistic quality, value and use value of the works, the expenses for the creation of models shall be agreed upon by the works’ users and the works’ authors or owners through the contracts for the use of works, representing a percentage (%) of the value of works prescribed in the following table:

Table 1. Royalties for works valued at up to VND 10 million

Calculation unit: VND million

Table 2. Royalties for works valued at between over VND 10 million and VND 100 million

Calculation unit: VND million

Table 3. Royalties for works valued at between over VND 100 million and VND 1,000 million

Calculation unit: VND million

2. For monuments and grandiose paintings, royalties payable for the creation of models, sketches and works shall be calculated according to the percentages (%) prescribed in the following table:

Calculation unit: VND million

For works valued at over VND 10,000 million, royalties shall be equal to those for works valued at VND 10,000 million plus 1% per another VND 1,000 million, calculated according to the following formula:

NB  =  Nb + (n x 1%)   

of which:

- NB is the royalty for a work valued at over VND 10,000 million.

- Nb is the royalty for a work valued at VND 10,000 million (calculated according to column 10, Point 2, Section V).

- n is the additional amount of VND 1,000  million of the first VND 10,000 million.

3. For plastic works (fine art), monuments or grandiose paintings which are duplicates, copies or made of other materials, their authors or owners shall be paid royalties equal to 30% of the expenses for the creation of their models or sketches according to the value of the new duplicates of the works and such royalties shall be payable for up to the third duplicates only. For works being duplicates, copies or made of other materials, they must be numbered serially for payment of royalties.

VI. ROYALTIES FOR WORKS BELONGING TO THE STATE AND FOR WORKS FOR WHICH THE COPYRIGHT TIME LIMIT HAS EXPIRED

1. Works belonging to the State include:

- Works without heirs or with heirs who waive their inheritances or are not entitled to claim their inheritances as prescribed at Point b, Clause 1, Article 764, Article 765 of the Civil Code and Clause 2, Article 13 of the Government’s Decree No. 76/ND of November 29, 1996, guiding the implementation of  a number of copyright provisions in the Civil Code.

- Works with unidentified authors or anonymous works as prescribed in Clause 5, Article 766 of the Civil Code.

Organizations and individuals that use the above-said works must:

- Seek the permission from, and sign contracts with, the Copyright Department for the use of works;

- Inscribe the real names or pennames of the authors (if available) on the works, and the right names of the works, ensuring the integrity of the works’ contents.

- Pay royalties (or remuneration) to the Copyright Department according to the contracts for the use of works, which must not exceed the royalty bracket for each genre.

The Copyright Department shall be assigned to manage these royalties and use them according to the following percentages:

+ Deducting 20% of the collected royalty amount for supplementation to the annual budgets and spending on the Copyright Department’s collection of royalties and copyright legislation dissemination and education.

+ Remitting the remaining 80% into the State budget.

2. For works for which the copyright time limit has expired, organizations and individuals that use them shall not have to pay royalties.

VII. DEDUCTION FOR, SETTING UP, MANAGEMENT AND USE OF, ROYALTY FUNDS

1. Setting up of royalty funds:

1.1. For theatrical works and works of other types of performing arts; The users of theatrical works or works of other types of performing arts shall make deductions for setting up royalty funds by either of the following methods:

Method 1: Royalty funds shall be set up according to the royalty bracket prescribed in Article 15 of Decree No. 61/2002/ND-CP plus 10% of the relevant royalty percentage;

The users of works shall base themselves on the genres and sizes of theatrical works or works of other types of performing arts to set up royalty funds as appropriate according to the following formula:

              n                                        n   

Q_NB = ( S NB_i ) x TL_min + 10% ( S  NB_i ) x TL_min

            i = 1                                   i = 1

of which:

- Q_NB is the royalty fund.

- NB_i is the royalty for the highest grade of each genre (prescribed in Article 15 of Decree No. 61/2002/ND-CP).

    n 
- (S NB_i)      is the total of royalties for the highest grade payable to the titles (from 1 to n)
  i = 1                    according to the genres prescribed in the royalty bracket.

- TL_min is the minimum salary prescribed by the State for employees and servants working in the administrative and non-business sector.

n
- 10% (S  NB_i ) x TL_min    is the additional expenses for payment of royalties
          i = 1                      and other material benefits (if any).   
                  

Example:

The royalty fund for works prescribed in Clause 1, Article 15 of Decree No. 61/2002/ND-CP, for long plays of 105 minutes - 150 minutes, is calculated as follows:

Q_NB = (NB director max + NB playwright max  + NB choreographer + NB musician + NB painter) x TL min + 10% (NB director max + NB playwright max  + NB choreographer + NB musician + NB painter) x TL min
= [81 + 123.8 + (25% x 81) + (60% x 81) + (60% x 81)] x VND 290,000 + 10% [81 + 123.8 + (25% x 81) + (60% x 81) + (60% x 81)] x VND 290,000      
= (81 + 123.8 + 20.25 + 48.6 + 48.6) x VND 290,000 + 10% (81 + 123.8 + 20.25 + 48.6 + 48.6) x VND 290,000
= 322.25 x VND 290,000 + 10% (322.25 x VND 290,000) = VND 93,452,500 + 9,345,250 = VND 102,797,750

Method 2: The royalty fund is set up from total turnover of the show according to the percentages prescribed in Clauses 1, 2 and 3, Article 16, Decree No. 61/2002/ND-CP, and calculated according to the following formula:

                                          n
Q_NB = Percentage %  x  S DT_i
                                        i = 1

 of which:

- Q_NB is the royalty fund.

- DT_i is the turnover from the i^th performance show (from the sale of tickets or art performance service contracts).

- The percentage % is the percentage determined for each genre of art performance.

1.2. For cinematographic works: The agencies using cinematographic works shall make deductions for setting up royalty funds according to the percentage (%) of the highest grade of the royalty bracket prescribed in Article 20 of Decree No. 61/2002/ND-CP for each genre plus 30% of such percentage and multiplied by the selling price or average total cinematographic work production cost/year already approved by a competent body. The calculation formula is as follows:

              n                          n 

Q_NB = [(S NB_i ) + 30% (S NB_i )] x T

             i = 1                     i = 1

of which:

- Q_NB is the royalty fund.

- NB_i is the percentage (%) of the highest grade of the royalty bracket prescribed in Article 20 of Decree No. 61/2002/ND-CP.

          n
-        S NB_i                    is the total of the percentages (%) of the highest grades (from 1 to n) of
          i =1             the titles prescribed in the royalty bracket.

- T is the selling price or average total cinematographic work production cost /year already approved by a competent body (exclusive of royalty).

Example: The royalty fund for feature films (Point 1, Article 20 of Decree No. 61/2002/ND-CP) in a year is calculated according to the following elements:

+ The percentage (%) of the highest grade of the royalty bracket (NB_i) of: director 2.75%, playwright 2.75%, cameraman 1.50%, film producer 0.50%, musician 0.90%, and painter 1.00%.

+ The total of the percentages (%) of the highest grade (grade III) of the six titles prescribed in the royalty bracket, which is 9.4% (2.75% + 2.75% + 1.50% + 0.50% + 0.90% + 1.00%).

+ The average feature film production cost/year (T), already approved by a competent agency (exclusive of royalty), which is VND 250,000,000.

Accordingly, the royalty fund will be:

Q_NB = [9.4% + (30% x 9.4%)] x VND 250,000,000

= (9.4% + 2.82%)  x  VND 250,000,000

= 12.22% x VND 250,000,000

= VND 30,550,000

Where the film’s selling price is higher than the approved film production cost, the work’s user may make deductions for setting up a royalty fund to be paid to the authors on the basis of such selling price.

1.3. The royalty funds for the press (printed and on-line):

For the press agencies which can self-balance their funding and make profits from press activities, if they make deductions representing a percentage (%) of their turnover for their royalty funds as prescribed at Point b, Clause 1, Article 26 of Decree No. 61/2002/ND-CP, which, however, are insufficient for payment of royalties as prescribed, they may use their other revenue sources to make up for the deficit under decisions of their managing agencies.

1.4. The royalty funds for radio and television stations shall comply with Article 30 of Decree No. 61/2002/ND-CP.

2. Use and management of royalty funds:

2.1. Use of royalty funds:

The royalty funds may be set up on the basis of maximum deductions while the royalties actually payable to the authors or owners of works must be based on the evaluation and grading of works according to the prescribed criteria. The rest of the royalty funds shall be used for the payment of remuneration and material benefits and for the organization of creation-promoting activities such as investment in composition, rewards for works winning high prizes in competitions (domestic or international) but not for other purposes.

2.2. Management of royalty funds:

The estimation, management and settlement of royalty funds shall comply with the current regulations.

If not used up at the end of a year, the royalty funds shall be carried forward by the units to the subsequent year.

C. IMPLEMENTATION ORGANIZATION

The Joint Circular takes implementation effect 15 days after its publication in the Official Gazette.

For any amounts further arising in 2003 (if any), when applying the norms prescribed in this Circular, the agencies, units and organizations shall arrange them by themselves in the funding estimates allocated by competent agencies from the beginning of the year.

If facing any problems in the course of implementation, the branch- or domain-managing ministries and the provincial/municipal People’s Committees sould report them to the Ministry of Culture and Information and the Ministry of Finance for consideration and settlement.

For the Minister of Culture and Information
Vice Minister
TRAN CHIEN THANG

For the Ministry of Finance
Vice Minister
NGUYEN CONG NGHIEP