CIRCULAR

GUIDING THE FINANCIAL POLICIES SPECIFIED IN THE PRIME MINISTER'S DECISION NO. 12/2011/QD-TTG OF FEBRUARY 24, 2011, ON POLICIES ON DEVELOPMENT OF A NUMBER OF SUPPORTING INDUSTRIES

Pursuant to June 14, 2005 Law No. 45/ 2005/QH11 on Import Duty and Export Duty and the Government's Decree No. 87/2010/ND-CP of August 13, 2010, detailing the implementation of a number of articles of the Ease on Import Duty and Export Duly;

Pursuant to June 3, 2008 Law No. 13/2008/ QH12 on Value Added Lax and the Government's Decree No. I23/2008/NDCP of December 8, 2008, detailing and guiding a number of articles of the Law on Value Added Tax;

Pursuant to June 3, 2008 Law No. 14/2008/ QH12 on Enterprise Income Lax and the Government's Decree No. 124/2008/ND-CP of December 11, 2008, detailing and guiding a number of articles of the Law on Enterprise Income Tax;

Pursuant to June 17, 2010 Law No. 48/ 2010/QH12 on Non-Agricultural Land Use Tax-Pursuant to the Government's Decree No.198/2004/ND-CP of December 3, 2004, on collection of land use levy and Decree No. 44/ 2008/ND-CP of April 9, 2008, amending and supplementing a number of articles of Decree No. 198/2004/ND-CP;

Pursuant to the Government's Decree No. 120/2010/ND CP of December 30, 2010, amending and supplementing a number of articles of the Government's Decree No. 198/ 2004/ND-CP of December 3, 2004, on collection of land use levy;

Pursuant to the Government's Decree No. 142/20O5/ND-CP of November 14, 2005, on collection of land and water surface rents and Decree No. 121/2010/ND-CP of December 30, 2010, amending and supplementing a number of articles of Decree No. 142/2005/ND-CP:

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Article 1. Scope of regulation

This Circular guides financial policies to encourage the development of supporting industries of mechanical engineering, electronics-informatics, automobile manufacture and assembly, textile and garment, leather-footwear and hi-tech industry development as specified in Decision No. 12/2011/QD-TTg.

Article 2. Subjects of application

1. State management agencies, organizations and individuals related to supporting industries.

2. Projects to manufacture supporting industry products. Supporting industry products are those identified under Clause 2. Article 3 of Decision No. 12/2011/QD-TTg or named in the Prime Minister-promulgated list of priority supporting industry products referred to at Point a. Clause J, Article 5 of Decision No. 12/2011/QD-TTg.

Article 3. Import duty and export duty incentives

1. Projects on domains on the list of those eligible for import duty incentives provided in Appendix 1 to the Government's Decree No. 87/2010/ND-CP of August 13, 2010, detailing a number of articles of the Law on Import Duty and Export Duty (Decree No. 87/2010/ND-CP) or in geographical areas eligible for import duly incentives specified in Clause 18, Article 12 of Decree No. 87/2010/ND-CP. are entitled to import duty and export duty incentives under Article 12 of Decree No. 87/2010/ND-CP, specifically as follows:

1.1. Import duty exemption for:

a/ Equipment and machinery;

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c/ Parts, details, knocked-down parts, spare parts, fittings, molds, models and accessories for assembly with equipment, machinery and special-use means of transport specified at Points a and b of this Clause;

d/ Domestically unavailable materials and supplies which are used for manufacturing equipment and machinery in technological lines or manufacturing parts, details, knocked-down parts, spare parts, fittings, molds, models and accessories for assembly with equipment and machinery specified at Point a of this Clause;

e/ Domestically unavailable construction materials.

1.2. Import duty exemption for the imports specified in Clause 1.1 of this Article also applies to project expansion, technology replacement or renewal.

1.3. Import duly exemption for 5 (five) years after the date of production commencement for domestically unavailable raw materials, supplies and components which are imported to serve production activities under projects on domains eligible for import duty incentives specified in Appendix I to Decree No. 87/2010/ND-CP or in geographical areas facing extreme socio-economic difficulties (except projects to manufacture or assemble automobiles, motorcycles, air conditioners, electric heaters, refrigerators, washing machines, electric fans, dish washers. CD players, sound systems, electric irons, kettles, hair dryers, hand dryers and other items under the Prime Minister's decisions).

2. Import duty exemption for domestically unavailable raw materials and supplies which are imported for software production.

3. Import duty exemption for goods imported for scientific research and technological development, including domestically unavailable machinery, equipment, spare parts. supplies and means of transport and technologies: scientific documents, books, newspapers and journals and sources of electronic information on science and technology.

4. Goods manufactured, processed, reprocessed or assembled in non-tariff zones without the use of imported raw materials and parts, when being imported into the domestic market, are exempt from import duty: for those manufactured, processed, re-processed or assembled with the use of imported raw materials or parts, when imported into the domestic market, import duly shall be paid only for volumes of imported raw materials and parts constituting these goods.

5. For goods imported for export production or export into non-tariff zones, paid import duty amounts, if any. shall be refunded in proportion to the quantity of products actually exported. For exports which are certified to be wholly processed from imported raw materials, export duty is exempted.

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Article 4. Borrowing of state development investment credit

Projects to manufacture supporting industry products shall be considered for borrowing state development investment credit to meet part of their funding needs under the Government's regulations on state investment and export credit and guiding documents.

Article 5. Financial assistance policies according to regulations on development support for small- and medium-sized enterprises

Small- or medium-sized enterprises investing in projects to manufacture supporting industry products are entitled to financial assistance policies under the Government's Decree No. 56/2009/ND-CP of June 30, 2006, on development support for small- and medium-sized enterprises and the following guiding documents:

1. The Prime Minister's Decision No. 03/ 2011/QD-TTg of January 10, 2011, promulgating the Regulation on guarantee for small- and medium-sized enterprises to borrow loans from commercial banks.

2. Joint Circular No. 05/2011/TTLT-BKHDT-BTC of March 31, 2011, of the Ministry of Planning and Investment and the Ministry of Finance, guiding human resource training support for small- and medium-sized enterprises.

3. The Prime Minister's Decision No. 21/ 2011/QD-TTg of April 6, 2011, extending the deadline for payment of enterprise income tax for small- and medium-sized enterprises in order to remove difficulties and boost economic development in 2011; the Ministry of Finance's Circular No. 52/2011/TT-BTC of April 22, 2011, guiding the Prime Minister's Decision No. 21/2011/QD-TTg of April 6, 2011.

Article 6. Tax incentives for projects to manufacture supporting industry products for hi-tech industry development

Projects to manufacture supporting industry products for hi-tech industry development are entitled to lax policies under the law on high technologies, specifically as follows:

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a/ Projects to manufacture supporting industry products for hi-tech industry development on the list of domains eligible for import duty incentives provided in Appendix I to Decree No. 87/2010/ND-CP or in geographical areas eligible for import duty incentives provided in Clause 18. Article 12 of Decree No. 87/2010/ND-CP are eligible for import duly incentives under Clause 1, Article 3 of this Circular.

b/ Projects to manufacture supporting industry products for hi-tech industry development are eligible for import duty and export duty incentives under Clauses 2, 3,4 and 5. Article 3 of this Circular, provided that they satisfy relevant conditions.

c/ Procedures for provision of import duly and export duty incentives comply with Circular No. 194/2010/TT-BTC.

2. Regarding enterprise income tax:

a/ Projects to manufacture supporting industry products for hi-tech industry development belonging to enterprises newly formed under investment projects in hi-tech sectors, scientific research and technological development or software production or enterprises newly formed under investment projects in geographical areas facing socio-economic difficulties or extreme socio-economic difficulties are eligible for enterprise income tax rates and tax exemption or reduction under Chapter III of the Law on Enterprise Income Tax.

b/ Bases for application of preferential enterprise income tax rates and tax exemption or reduction comply with the Government's Decree No. 124/2008/ND-CP of December 11, 2008, detailing and guiding a number of articles of the Law on Enterprise Income Tax, the Ministry of Finance's Circular No. 130/2008/TT-BTC of December 26, 2008, guiding a number of articles of Law No. 14/2008/QH12 on Enterprise Income Tax. and the Government's Decree No. 124/2008/ND-CP of December 11, 2008, and the Ministry of Finance's Circular No. 18/2011/TT-BTC of February 10, 2011, amending and supplementing Circular No. 130/2008/TT-BTC.

Article 7. Guidance on other tax and payment incentives

1. Regarding value-added tax:

a/ Enterprises having projects to manufacture supporting industry products shall perform their value-added tax obligations under the Law on Value-Added Tax and the Government's Decree No. 123/2008/ND-CP of December 8, 2008, detailing and guiding a number of articles of the Law on Value-Added Tax.

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2. Regarding land use levy, land and water surface runt and non-agricultural land use tax:

Projects to manufacture supporting industry products on domains eligible for investment incentives or special investment incentives or in geographical areas facing socio-economic difficulties or extreme socio-economic difficulties are eligible for:

a/ Land use levy exemption or reduction under the Government's Decree No. 198/2004/ND-CP of December 3. 2004. on collection of land use levy: Decree No. 44/2008/ND-CP of April 9, 2008, and Decree No. 120/2010/ND-CP of December 30, 2010, amending and supplementing a number of articles of Decree No. 198/2004/ND-CP, and guiding documents.

b/ Land and water surface rent exemption or reduction under the Government's Decree No. 142/2005/ND-CP of November 14, 2005, on collection of land and water surface rents and Decree No. 121/2010/ND-CP of December 30, 2010, amending and supplementing a number of articles of Decree No. 142/2005/ND-CP. and guiding documents.

c/ Non agricultural land use tax exemption or reduction under the Law on Non-Agricultural Land Use Tax and its guiding documents.

Article 8. Effect

1. This Circular takes effect on August 18, 2011.

2. In the course of implementation of this Circular, if relevant documents mentioned in this Circular are amended, supplemented or replaced with new ones, new documents apply.-

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FOR THE MINISTER OF FINANCE
DEPUTY MINISTER




Do Hoang Anh Tuan