Recommendations on application of the Decree No. 135/2016 / NĐ-CP dated September 9, 2016 of the Government

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Name of recommendations: Recommendations on application of the Decree No. 135/2016 / NĐ-CP dated September 9, 2016 of the Government

Status: Has not been responded

Recommended by units: The Amata Bien Hoa Urban Joint Stock Company (Amata Industrial Zone, Long Binh District, Bien Hoa City, Dong Nai Province)

Official letter: 1602/ PTM - VP, dated: 2018-07-25

Recommended contents:

The Amata Bien Hoa Urban Joint Stock Company (Amata Bien Hoa) is an infrastructure construction business enterprise at Amata Industrial Park in Bien Hoa City, Dong Nai Province, with 90% investment capital from AMATA VN PCL. (The company is listed on the SET and the New York Stock Exchange NYSE).

The Amata Bien Hoa pays comments on the application of the Government's Decree No. 135/2016 / ND-CP dated September 9, 2016 amending and supplementing a number of articles of the decrees regulating the collection of land fees, land rental, water surface rental as follows:

The Decree No. 135/2016 / ND-CP has stipulated that the Amata Bien Hoa and industrial park infrastructure companies pay a lump-sum payment in addition to the land rent. In the case of Amata Bien Hoa, according to the Notices in June and August 2018 of the Tax Department of Dong Nai Province on  applying the Decree No. 135/2016 / ND-CP, the Amata Bien Hoa must pay additional " a lump sum payment of the State land rental by the industrial park infrastructure business which has allowed sub-prime investors to rent the land for the lump sum payment" with the amount of VND 349,416,966,269, including 02 items: (1). The amount of the  lump sum land rental is VND 122,724,544,277 and (2) the equivalent amount of the late payment from the date of subleasing the land subleasing is VND 226,692,415,992 until May 31, 2017.

The Amata Bien Hoa has completed the payment of item (1) and VND 69,160,148,934 of item (2). However, in the Amata Bien Hoa's view, the amount of (2) is called as " equivalent amount to late payment amount" that should be considered satisfactorily.

The provisions of the Decree 135/2016 / ND-CP requiring companies operating infrastructure in addition to land rent to pay a lump sum, but also pay an equivalent amount to late payment is not appropriate with the investment protection policy in principle of non-retroactivity (in accordance with Article 152 of the Law on the Promulgation of Legal Documents, 2015), and the Government's commitment to ensure the interests of investors due to major changes of policies, laws adversely that affect investors.

The equivalent amount to the late payment is the expense arising outside the budget of the company. The change of land policies under the Decree No. 135/2016 / ND-CP caused damage to Amata Bien Hoa and other industrial park infrastructure development companies. Especially Amata Bien Hoa does not violate the law on land management and use, has fulfilled its financial obligations to the State, but it still has to pay a deposit called "late payment".

AMATA VN PCL (the company contributing capital to Amata Bien Hoa) in accordance with the provisions of the claim losses from the "delayed payment" "to shareholders and securities investors. It will be difficult to explain to AMATA VN PCL's Board of Management the reasons for the loss, and this will be a negative business information for the company and the loss of market value of AMATA VN PCL’s shares is unable to count.

Therefore, The Amata Bien Hoa would like to recommend the Government to apply investment protection measures and the principle of non-retroactivity when implementing the Decree No. 135/2016 / ND-CP. Details are as follows:

1. Time of application: The equivalent amount to the late payment shall be applied from the effective date of the Land Law (July 1, 2014), which means that the application of the time for calculating the amount will be calculated from July 1, 2014 instead of January 1, 2016; or Amata Bien Hoa signed a land lease contract with a secondary investor until May 31, 2017 (according to the notice of Dong Nai Tax Department).

2. Pending the official state agency's response, the late payment shall not be made on the equivalent amount to the late payment that theAmata Bien Hoa has not yet carried out.

3. Allocation of equivalent money to the amount of late payment according to the Vietnamese accounting system At the time when the land is subleased to the customer (before the Land Law of 2013 takes effect), the Amata Bien Hoa has accounted for the entire amount alump sum payment from customers into revenue and an estimate of expenses to be paid to the State according to the provisions of law at that time on the accounting and tax regime, has already paid corporate income tax to the State budget. At present, if the company continuesto pay the amount equivalent to the late payment and recognize this expense in fiscal year 2017 will cause a huge loss. Therefore, if required to comply with the requirements of Decree 135/2016 / ND-CP,the Amata Bien Hoa would like to request the State to consider allowing annual allocation (for both accounting and tax) for the equivalent amount to the late payment until the end of the land use term 2044".

Responded by units: The Ministry of Finance

Official letter: , dated:

Responded contents:


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