CIRCULAR No.18/2000/TT-BTC OF MARCH 1, 2000 GUIDING A NUMBER OF ARTICLES OF THE GOVERNMENT�S DECREE No.73/1999/ND-CP OF AUGUST 19, 1999 ON THE INCENTIVE FINANCIAL REGIME FOR NON-PUBLIC ESTABLISHMENTS IN THE FIELD OF EDUCATION, HEALTHCARE, CULTURE AND SPORTS

Pursuant to the Government�s Decree No.73/1999/ND-CP of August 19, 1999 on policies of encouraging the socialization of activities in the field of education, healthcare, culture and sports;

To encourage organizations and individuals to mobilize their resources for the socialization of educational, medical, cultural and sport services; the Ministry of Finance guides a number of matters regarding the incentive financial regime for non-public establishments operating in the field of education, healthcare, culture and sport, as follows:

I. SUBJECTS ELIGIBLE FOR INCENTIVE FINANCIAL REGIME

1. Non-public establishments operating in the field of education, healthcare, culture and sport (hereinafter referred to as non-public establishments), including semi-public establishments, people-founded establishments and private establishments which have been set up and operating lawfully under the Government�s Decree No.73/1999/ND-CP of August 19, 1999.

2. Non-public establishments which have been set up and operating lawfully before Decree No.73/1999/ND-CP takes effect and which are still enjoying preferences under this Decree.

II. INCENTIVE FINANCIAL REGIME FOR NON-PUBLIC UNITS

1. On material bases and land:

1.1. Non-public establishments shall be given priority in renting houses and infrastructure under the State ownership; be allotted land by the State without the collection of land use levy to build schools, hospitals, medical establishments, vocational training establishments, school dormitories, stadiums, indoor gyms, swimming pools, sport training centers, cultural houses, theatres, libraries and exhibition houses. Cases where land rents are being paid to the State shall be exempt therefrom as from January 1st, 2000.

1.2. For public establishments transformed into semi-public establishments (wholly or partially) under decision of the competent authorities, the semi-public establishments shall continue to manage and use the State-invested properties (including land and assets thereon) on the basis of inventory and re-evaluation according to the market prices and determination that such properties are the capital contributions of the State. The reception and hand-over of properties between the public establishments and semi-public establishments shall comply with the provisions of Circular No.43/TC-QLCS of July 31, 1996 of the Finance Ministry.

1.3. Procedures for consideration of entitlement to preferences on renting State-owned houses and infrastructure or allocation of land without collection of land use levy:

+ The establishment decision and business registration certificate (the copies signed and stamped by the concerned establishment or the notarized copies).

+ The written proposal for renting State-owned houses and infrastructure (where houses and infrastructure exist) or for being allotted land without the collection of land use levy (where the land fund is available), clearly stating the establishment�s name; address; projected place and time for land renting or allotment according to the provisions of Point 1.1 above, and commitment on the use of houses, land and/or infrastructure for the right purposes.

The People�s Committees of the provinces and centrally-run cities shall have to prioritize the consideration and settlement so that non-public establishments may rent or be allotted land without collection of land use levy.

2. On taxes, charges and fees:

- The exemption and reduction of taxes, charges and fees shall comply with Articles 9, 10, 11, 12, 13, 14 and 15 of the Government�s Decree No.73/1999/ND-CP of August 19, 1999 and the current tax legislation.

- The determination of the areas meeting with difficult and exceptionally difficult socio-economic conditions for entitlement to the tax exemption and reduction preferences shall comply with Lists B and C issued together with the Government�s Decree No.51/1999/ND-CP of July 8, 1999 detailing the implementation of the Law on Domestic Investment Promotion (amended).

- Procedures to apply for enterprise income tax exemption and reduction:

To enjoy enterprise income tax exemption and/or reduction, non-public units shall have to send dossiers of application for tax preferences to the tax agencies directly managing them. Such a dossier includes:

+ The written proposal for enjoying enterprise income tax preferences.

+ The establishment decision and business registration certificate (the copies signed and stamped by the concerned establishment or the notarized copies).

+ The tax registration declaration.

Within 30 days after receiving a full and valid dossier, the tax agency directly managing the establishment shall have to issue a decision on tax exemption and/or reduction as well as the exemption and/or reduction duration.

Annually, when settling enterprise income tax, the tax agencies shall have to officially notify the establishments of the latter�s payable enterprise income tax amounts as well as the tax exemption and/or reduction amounts. If the tax amount paid by a non-public establishment for a year is smaller than the payable amount inscribed in the tax notice, the establishment shall have to fully pay the deficit within the time-limit stated in the tax notice. Where the tax amount paid in the year is larger than the payable amount inscribed in the notice, the excess shall be deducted from the tax amount payable in the subsequent period.

3. The State�s financial support with reallocation of enterprise income tax

The State�s financial support with the enterprise income tax reallocation shall comply with the following principle:

The tax amount reallocated as financial support by the State shall be at most equal to the tax amount already remitted by the non-public establishment into the State budget. Annually, on the basis of the establishment�s tax settlement in the previous year, the provincial/municipal Finance-Pricing Service shall consider the reallocation directly to the establishment.

3.1. For non-public establishments:

3.1.1. Conditions for being considered for enterprise income tax reallocation:

- Non-public establishments that have the demand to expand and raise the quality of, their service activities shall have to elaborate projects and get approval from the competent authorities for being entitled to the State�s reallocation, as its financial support, of the enterprise income tax amounts they have paid for incomes from teaching, vocational training, medical examination and treatment; performance of folk songs, dances, music and art, film projection; collection, conservation, development and popularization of the folk culture; exhibitions, physical training and sport activities for non-business purposes.

- Non-public establishments may only use the reallocated tax amounts for developing material bases, enhancing, expanding and raising the quality of their activities under the projects ratified by the competent authorities.

3.1.2. The order and procedures for consideration of reallocation of enterprise income tax amounts already paid by non-public establishments are stipulated as follows:

Annually, non-public establishments shall have to send to the Finance-Pricing Services of the provinces and centrally-run cities dossiers proposing the State to reallocate, as its financial support, the enterprise income tax amounts they have paid for the activities mentioned at Point 3.1.1 above. Such a dossier includes:

-The written proposal for being supported with the reallocation of the enterprise income tax amount to invest in developing material bases, expanding and raising the quality of the establishment�s service activities, clearly stating: the name, address and account number of the non-public establishment; the investment necessity and projected investment contents; the non-public establishment�s commitment on the use of the entire sum of money reallocated by the State as its financial support for investment in developing material bases, expanding and raising the quality of its service activities.

-The written permission of implementation of the investment project on construction and repair, issued by the competent agency (the original or notarized copy) under the Government�s Decree No.52/1999/ND-CP of July 8, 1999 promulgating the Regulation on Investment and Construction Management.

-The direct managing tax agency�s written certification of the latter�s budget remittances in the year for its incomes from activities mentioned at Point 3.1.1 above.

-The report on the use of the enterprise income tax amount already reallocated as financial support in the previous year (if any). As for non-public establishments set up and managed by the district-level People�s Committees, the report on the use of the above-mentioned reallocated tax amount must be certified by the district Finance Section.

After receiving full dossiers, the provincial/municipal Finance-Pricing Service shall consider the concrete levels of reallocation as financial support for all non-public establishments in the locality (irrespective of levels to decide their establishment) and submit such to the president of the People�s Committee of the province or centrally-run city for decision. After the financial support decision is issued, the provincial/municipal Finance-Pricing Service shall have to send notices and provide the financial support amounts for the non-public establishments. The time for fulfilling the above-mentioned work must not exceed 30 days.

3.2. For organizations and individuals leasing houses and land to non-public establishments:

Organizations and individuals leasing houses and land to non-public establishments (called organizations and individuals for short) for use as bases for operations for the purposes stipulated at Point 1.1 above shall not only be exempt from value added tax (VAT) on the incomes from house and land lease but also be provided with the financial support by the State through reallocation of the enterprise income tax amounts they have paid for the incomes from the lease for the above-mentioned purposes.

3.2.1. Conditions for being reallocated, as financial support, the already paid enterprise income tax amount:

- Having the stable house-and land-leasing term.

- Reducing the minimum lease rate by 10% as compared to the average rate on the local market set by the People�s Committee of the province or centrally-run city, or by the provincial/municipal Finance-Pricing Service under the People�s Committee�s authorization.

- Using the entire sum of money reallocated by the State as its support for investment in the leased infrastructure.

3.2.2. The order and procedures for consideration of the tax money reallocation shall be effected as follows:

- Annually, organizations and individuals having houses and land for lease shall have to send to the Finance-Pricing Service of the province or centrally-run city dossiers proposing the State to provide financial support by reallocating the enterprise income tax money already paid for the house and land lease. Such a dossier includes:

+ The written proposal for financial support through reallocation of the already paid enterprise income tax amount for investment in the leased infrastructure, clearly stating: the name, address and account number (if any); the plan on investment in the leased infrastructure; the commitment on the stable leasing term, the commitment on reduction of the lease rate and the use of the entire reallocated tax money for investment in the leased infrastructure.

- The house and land lease contract between the organization or individual and the non-public establishment (the original or notarized copy).

- The vouchers on enterprise income tax payment by the house- and land- leasing organization or individual for its/his/her incomes from house- and land-leasing activities with certification by its/his/her direct managing tax agency.

- The report on the use of the tax amount already reallocated in the previous year (if any).

The procedures for dossier reception and the time for notifying the financial support levels shall comply with the provisions of Point 3.1.2 above.

4. Where non-public establishments, organizations or individuals leasing houses and land to non-public establishments use the financial support for the wrong purposes and breach the above-mentioned commitments, they shall not only have to repay the tax amounts reallocated as financial support to the State budget but also pay interests thereon calculated at the bank�s deposit interest rate, and be handled according to the current law provisions.

5. Annually, the provincial/municipal Finance-Pricing Services shall have to sum up and report the situation of reallocating the enterprise income tax money as financial support to organizations, individuals and non-public establishments to the People�s Committees of the provinces and centrally-run cities and the Finance Ministry.

6. The income tax exemption and reduction for high-income earners as well as the import and export taxes shall comply with the provisions of Articles 14 and 15 of the Government�s Decree No.73/1999/ND-CP of August 19, 1999 and the current tax legislation.

III. IMPLEMENTATION PROVISIONS

- This Circular takes effect as from January 1st, 2000.

- In the course of implementation, if any problems arise, they should be reported to the Finance Ministry for study and settlement.

For the Finance Minister
Vice Minister
NGUYEN THI KIM NGAN