ON LOAN INTEREST, FAIR RETURN, PAYMENT METHODS, SETTLEMENT OF INVESTMENT PROJECTS UNDER BT CONTRACTS; EXEMPTION FROM CORPORATE INCOME TAX, PERSONAL INCOME TAX IN HO CHI MINH CITY

1. This Decree elaborates Resolution No. 98/2023/QH15 dated June 24, 2023 of the National Assembly on pilot implementation of specific regulations and policies on Ho Chi Minh City development (hereinafter referred to as “Resolution No. 98/2023/QH15”), including:

a) Post-construction interest, fair return, payment methods, settlement of investment projects in Build-and-Transfer contracts (hereinafter referred to as “BT projects”) in Ho Chi Minh City in accordance with Point d Clause 5 Article 4 of Resolution No. 98/2023/QH15;

b) Exemption from corporate income tax (CIT), personal income tax (PIT) in accordance with Point a and Point b Clause 1 Article 8 of Resolution No. 98/2023/QH15.

2. This Decree does not provide for:

a) Loan interest during construction phase of BT projects which conforms to construction laws;

b) Equity mobilized by investors for implementation of BT project which conforms to Article 77 of the Law on Investment in Public-Private Partnerships.

This Decree applies to:

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

2. Enterprises, agencies, organizations, and individuals relevant to renovation start-up and business start-up in Ho Chi Minh City.

1. Reference interest rate for the purpose of proposing post-construction interest rate

a) Average interest rates for medium-term and long-term loans of 4 commercial institutions in Ho Chi Minh City provided by State Bank of Vietnam branch in Ho Chi Minh City: Joint Stock Commercial Bank for Foreign Trade of Vietnam, Joint Stock Commercial Bank for Investment and Development of Vietnam, Vietnam Joint Stock Commercial Bank for Industry and Trade, Vietnam Bank for Agriculture and Rural Development or Agribank;

b) Loan interest rates of similar BT projects (if any).

2. Average after-tax return rate on equity of enterprises operating in respective sectors and fields of BT projects in Ho Chi Minh City consolidated and reported to People’s Committee of Ho Chi Minh City by professional departments and authorities affiliated to People’s Committee of Ho Chi Minh City.

1. Based on list of BT projects, capacity for balancing funding sources in medium-term and annual public investment plans, capacity for issuing bonds of local government, interest rates, and after-tax return rate on equity of investors under Article 3 hereof, the People’s Committee of Ho Chi Minh City shall request the People’s Council of Ho Chi Minh City to promulgate Resolution on top limit of post-construction interest rates and top limit of after-tax return rate on equity of investors in the year-end meeting of People's Council of Ho Chi Minh City.

2. Top limit of post-construction interest rates and top limit of after-tax return rate on equity proposed to the People’s Council of Ho Chi Minh City by the People’s Committee of Ho Chi Minh City under Clause 1 of this Article must not be higher than reference values under Article 3 hereof.

3. Based on Resolution of People’s Council of Ho Chi Minh City under Clause 1 of this Article, People’s Committee of Ho Chi Minh City shall promulgate Decision on post-construction interest rates depending on term of respective BT contracts and rules for applying top limit of post-construction interest rates; return rate on equity of investors by sectors and fields before December 31 each year in order to implement BT projects in Ho Chi Minh City in the next year.

4. Regulations under Clause 3 of this Article shall serve as the basis for determining post-construction interest rates and fair return of investors in total investment of BT projects for the purpose of:

a) producing and appraising pre-feasibility study report, reports proposing investment guidelines of BT projects; approving investment guidelines of BT projects;

b) producing and appraising feasibility study report; approving BT projects;

c) choosing investors, negotiating and signing BT contracts;

d) paying and settling investment of finished BT projects.

5. If average interests of medium-term and long-term loans in credit market fluctuate in a manner that leads to adjustment top limit of post-construction interest rates of BT projects, People’s Committee of Ho Chi Minh City is responsible for requesting People’s Council of Ho Chi Minh City to consider.

6. Regarding issuance of post-construction interest rates and return rate on equity of 2024

a) People’s Committee of Ho Chi Minh City shall request People's Council of Ho Chi Minh City to promulgate Resolution on top limit of post-construction interest rates and top limit of return rate on equity of investors in accordance with Clause 1 of this Article in the next meeting of People’s Council of Ho Chi Minh City from the date on which this Decree comes into force;

b) Based on Resolution promulgated by the People’s Council of Ho Chi Minh City under Point a of this Clause, People’s Committee of Ho Chi Minh City shall promulgate Decision on post-construction interest rates in accordance with term of respective BT contracts and rules for applying top limit of post-construction interest rates; return rate on equity of investors in respective sectors and fields.

1. Calculation of post-construction interests

a) Post-construction interests shall be calculated from the date on which BT projects are finished, transferred, and used to the date on which payment to investors is fully made;

b) Post-construction interests of loans incurred by the Government shall cease to be accumulated from the date on which the Government pays investors;

c) The period past the time limit prescribed under this Decree in which investors submit documents on settlement of investment of finished BT projects shall not be counted towards period in which post-construction interests are calculated to be paid by the Government.

2. Post-construction interest rates

a) Post-construction interest rates shall be calculated in accordance with actual interests of capital mobilized by investors for the purpose of executing BT projects;

b) If actual post-construction interest rates are higher than what is prescribed under BT contracts and appendices of BT contracts (if any), the Government shall only incur up to the post-construction interest rates specified under BT contracts and appendices of BT contracts (if any).

3. Loan capital mobilized by investors for the purpose of executing BT projects shall at most equal loan capital under BT contracts and appendices of BT contracts (if any).

4. The date on which loans are disbursed, disbursement percentage between equity and loan capital shall conform to signed BT contracts and appendices of BT contracts (if any).

5. The date on which the Government pays public investment for investors shall be specified under BT contracts and appendices of BT contracts (if any).

1. Calculation of fair return of investors

a) Return of investors is calculated from the date on which BT projects are finished, transferred, and used to the date on which payment to investors is made;

b) In respect of independently operated work items and constructions affiliated to BT projects paid in accordance with BT contracts: return of investors shall be calculated from the date on which the work items, constructions affiliated to BT projects are commissioned and used to the date on which the Government pays the investors;

c) Return of investors corresponding to equity paid for by the Government shall cease from the date on which the Government pays the investors;

d) The period past the time limit prescribed under this Decree in which investors submit documents on settlement of investment of finished BT projects shall not be counted towards period in which investor return is calculated to be paid by the Government.

2. Actual equity with which the investors participate in BT projects shall equal at most the equity specified under BT contracts and appendices of BT contracts (if any).

3. Return rate on equity shall be specified under BT contracts and appendices of BT contracts (if any).

4. The date on which the Government pays public investment for investors shall be specified under BT contracts and appendices of BT contracts (if any).

1. The State Treasury shall control and settle public investment from state budget sources in accordance with this Decree.

2. Agencies signing BT contracts shall open accounts at the State Treasury to facilitate transactions. The opening of accounts for control and payment shall conform to regulations of the Government on administrative procedures of the State Treasury and the Ministry of Finance regarding guidelines for registration and use of accounts at the State Treasury.

3. Upon receiving documents on detail allocation of public investment plan (including amendments, if any) of People’s Committees of Ho Chi Minh City, in respect of tasks and projects that have met all investment procedures according to Resolution No. 98/2023/QH15 and have had plan capital allocated and/or revised, the State Treasury shall rely on request for payment of agencies signing BT contracts, payment clauses under BT contracts and appendices of BT contracts (if any), installments, payment stages, payment date, payment conditions, and value of each installment to pay capital of projects.

If documents requesting payment of agencies signing BT contracts are inadequate in accordance with this Decree, the State Treasury shall reject payment and, within 3 working days from the date on which they receive payment request sent by agencies signing BT contracts, state reasons for rejection in writing and send to agencies signing BT contracts once for revision in accordance with this Decree.

4. The State Treasury shall perform capital control and payment within 3 working days from the date on which adequate documents requesting payment sent by agencies signing BT contracts are received in accordance with this Decree.

5. Total capital of BT projects that is paid must not exceed total investment approved by competent authority. Public investment of projects disbursed in a year must not exceed capital plan of the year.

6. The State Treasury is responsible for controlling and paying capital in a timely, adequate, and law-compliant manner when payment conditions are met and payment documents are adequate as per the law.

7. Agencies signing BT contracts are responsible for managing and using capital for the right purposes, beneficiaries, efficiently, effectively; complying with applicable regulations, accuracy of workload, unit price, amount requesting payment, and documents provided to State Treasury.

1. Allocation of public investment for payment of BT projects shall be implemented within 6 years in respect of group A projects, 4 years in respect of group B projects, 3 years in respect of group C projects from the date on which the projects are finished.

2. BT contracts and appendices of BT contracts must include specific regulations proportion of equity and loan, conditions, term, number of occasions where the Government pays BT project enterprises or investors (if BT project enterprises are not established).

3. The Government shall pay for BT project enterprises or investors (if BT project enterprises are not established) after BT projects or independently operating work items, constructions affiliated to BT projects are verified for completion by agencies signing BT contracts in accordance with construction laws and audited for value of finished BT projects, independently operating work items, constructions affiliated to BT projects.

4. Final installment shall only be made after public investment of finished BT projects are approved by competent authority for settlement of investment of finished BT projects.

1. Send documents and receive results directly at the State Treasury.

2. Send documents and receive results via Public Service Portal of the State Treasury if entities engage in electronic transactions with the State Treasury (entities shall access and comply with instructions on Public Service Portal of the State Treasury).

3. Send documents and receive results via National Public Service Portal.

1. Legal documents of BT projects

Agencies signing BT contracts shall send legal documents of BT projects to the State Treasury (upon initial transactions with the State Treasury or when necessary):

a) Decision approving BT projects of competent authority and decisions on amendment to BT projects (if any) (original copies or copies created by agencies signing BT contracts);

b) Signed BT contracts and appendices of BT contracts (if any) (original copies or copies created by agencies signing BT contracts);

c) Annual public investment plans assigned by competent authority (original copies or copies created by agencies signing BT contracts);

d) In respect of payment for independently operating work items and constructions affiliated to finished BT projects: written verification of independently operating work items and constructions affiliated to finished BT projects in accordance with construction laws (original copies or copies created by agencies signing BT contracts).

2. Payment documents

a) In respect of payment for independently operating work items and constructions affiliated to finished BT projects: audit reports of independently operating work items and constructions affiliated to finished BT projects (original copies or copies created by agencies signing BT contracts);

b) In respect of payment following completion of BT projects: decisions approving settlement of investment of finished BT projects approved by competent authority (original copies or copies created by agencies signing BT contracts);

c) Documents of competent individuals approving BT projects determining interests of loans that are taken after the date on which audit is performed (original copies or copies created by agencies signing BT contracts) in respect of payment for post-construction interests for loans taken after the date on which audit organizations perform audit;

d) Written payment request of agencies signing BT contracts (Form No. 1 under Appendix attached hereto);

dd) Notice on capital withdrawal (Form No. 2 under Appendix attached hereto).

1. Settlement of investment of finished BT projects shall conform to public investment laws and this Decree.

2. Rules for settling investment of finished BT projects

a) Settlement reports of finished BT projects must be audited;

b) Settlement of investment of finished BT projects relies on decisions approving projects, regulations under BT contracts, settlement reports of investment of finished BT projects, and documents of competent individuals approving BT projects on determining of interests of loans taken by investors after the date on which audit organizations perform audit.

1. BT project enterprises or investors (if BT project enterprises are not established) acting as agencies producing settlement reports of investment of finished BT projects shall send documents to competent individuals entitled to approve settlement and agencies presiding approval for settlement of investment of finished BT projects.

2. Documents submitted to request approval for settlement of investment of finished BT projects shall conform to regulations on documents submitted to request approval for settlement of public investment of finished projects; where contracts are BT project contracts and appendices of BT project contracts (if any).

1. Business start-up enterprises, science and technology organizations, renovation centers, and intermediate organizations assisting business start-up and renovation (hereinafter referred to as “enterprises”) generating revenues from business start-up and renovation in Ho Chi Minh City shall be eligible for exemption from CIT of these revenues.

Enterprises generating revenues eligible for CIT exemption under this Clause must satisfy regulations of People’s Council of Ho Chi Minh City on priority sectors; criteria, conditions, and details of business start-up and renovation operations.

CIT exemption shall last 5 years starting from the date on which eligible enterprises generate CIT payable from start-up and renovation operations in Ho Chi Minh City during the effective period of Resolution No. 98/2023/QH15. When Resolution No. 98/2023/QH15 expires before CIT exemption period under this Clause, enterprises shall continue to benefit from CIT exemption for the full duration of exemption.

If enterprises are benefiting from or eligible for CIT exemption under eligibility other than those specified under this Decree, they may choose to either benefit from CIT exemption under other eligibility or eligibility under this Decree for the remainder of the duration.

2. During the effective period of Resolution No. 98/2023/QH15, organizations generating revenues from transfer of capital, right to capital contribution to business start-up enterprises in Ho Chi Minh City shall be eligible for CIT exemption for these revenues.

Business start-up enterprises in Ho Chi Minh City under this Clause must meet regulations of People’s Council of Ho Chi Minh City on priority sectors; criteria, conditions, and details of business start-up and renovation operations.

Revenues generated from transfer of capital, right to capital contribution under this Clause mean revenues generated by partial or total transfer of capital, right to capital contribution to business start-up enterprises in Ho Chi Minh City (including merger and acquisition of enterprises), except for revenues generated from the transfer of shares, bonds, fund certificates, and other securities as per the law.

In case of total acquisition of single-member limited liability companies owned by organizations in form of transfer of capital attached to immovable property, CIT shall be declared and paid in accordance with immovable property transfer.

3. If enterprises engage in multiple production and business activities, the enterprises shall determine and record revenues generated from activities eligible for CIT exemption under this Article in accordance with corporate income tax laws.

4. Enterprises shall declare and pay tax in accordance with tax administration laws.

1. During the effective period of Resolution No. 98/2023/QH15, individuals generating revenues from transfer of capital, right to capital contribution to business start-up enterprises in Ho Chi Minh City shall be eligible for PIT exemption for these revenues.

Business start-up enterprises in Ho Chi Minh City under this Clause must meet regulations of People’s Council of Ho Chi Minh City on priority sectors; criteria, conditions, and details of business start-up and renovation operations.

Revenues generated from transfer of capital, right to capital contribution under this Clause mean revenues generated by partial or total transfer of capital, right to capital contribution to business start-up enterprises in Ho Chi Minh City (including merger and acquisition of enterprises), except for revenues generated from the transfer of shares, bonds, fund certificates, and other securities as per the law.

In case of total acquisition of single-member limited liability companies owned by individuals in form of transfer of capital attached to immovable property, PIT shall be declared and paid in accordance with immovable property transfer.

2. Determination of revenues generated by transfer of capital, right to capital contribution and declaration to tax authority shall conform to personal income tax and tax administration laws.

Cooperate with People’s Committee of Ho Chi Minh City in consolidating and reporting difficulties in implementation of BT projects to Prime Minister in accordance with this Decree.

Cooperate with People’s Committee of Ho Chi Minh City within their functions and tasks in implementing BT projects in accordance with Resolution No. 98/2023/QH15 and this Decree.

Provide guidelines in respect of difficulties relating to construction investment of BT projects in accordance with construction laws.

Instruct State Bank of Vietnam branch of Ho Chi Minh City to provide average interests of medium-term and long-term loans of 4 commercial institutions under Point c Clause 1 Article 3 hereof at request of People’s Committee of Ho Chi Minh City.

Promulgate Resolution on top limit of post-construction interests and top limit of return rate on equity of investors at meeting of People’s Council of Ho Chi Minh City in accordance with Clause 1 and Clause 6 Article 4 of this Decree.

1. Organize implementation of this Decree; ensure compliance with this Decree, Resolution No. 98/2023/QH15, construction laws, public investment laws, and state budget laws.

2. Promulgate Decision on post-construction interests depending on term of respective BT contracts and rules for applying top limit of post-construction interests in accordance with Clause 3 and Clause 6 Article 4 hereof.

3. Request People’s Council of Ho Chi Minh City to allocate public investment in medium-term and annual public investment plans of Ho Chi Minh City to pay BT investors in accordance with signed BT contracts and appendices of BT contracts (if any).

4. Cooperate with State Bank of Vietnam in guiding State Bank of Vietnam branch of Ho Chi Minh City to provide average interests of medium-term and long-term loans of 4 commercial institutions under Point c Clause 1 Article 3 hereof.

5. Cooperate with ministries and central departments in order to receive guidelines and handle difficulties (if any) relating to procedures for producing, appraising, approving, managing Bt projects, construction investment, construction quality, signing and managing BT contracts.

1. Assume responsibility in choosing investment format of projects according to BT contracts; ensuring investment effectiveness and public investment use effectiveness.

2. Monitor and evaluate implementation of BT projects, use of public investment to pay for BT projects, and investment effectiveness of BT projects.

1. BT project enterprises or investors (if BT project enterprises are not established) are responsible for exercising rights and obligations under BT contracts and appendices of BT contracts (if any), this Decree, Resolution No. 98/2023/QH15, and relevant law provisions.

2. Cooperate with agencies signing BT contracts to finalize documents on payment and settlement of finished BT projects.

1. This Decree comes into force from the date of signing.

2. Regulations on exemption from CIT and PIT under Article 13 and Article 14 hereof shall enter into force from the effective date hereof

3. If Resolution No. 98/2023/QH15 expires where BT contracts have been signed during effective period of Resolution No. 98/2023/QH15 and are being implemented, BT contracts shall conform to this Decree.

4. Ministers, heads of ministerial agencies, heads of Governmental agencies, People’s Committee of Ho Chi Minh City, relevant agencies, organizations, and individuals are responsible for the implementation of this Decree.