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

Status: 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: No 1602/ PTM - VP, dated: 2018-07-25

Recommended contents:

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

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

The Decree No. 135/2016 / ND-CP has stipulated that 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 applying the Decree No. 135/2016 / ND-CP, the Amata Bien Hoa must pay an additional lump sum"rent" of the State land of the industrial park infrastructure business that has leased land for one-time payment to the "" landlord with the amount of VND 349,416,966,269, including 02 items: (1). land rent amounts payable once was VND 122 724 544 277 and (2) . equivalent amount calculated from the date for the deferred payment for secondary investors subleasing land was  VND 226 692 415 992 until may 31, 2017.

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

Provisions of the Decree 135/2016 / ND-CP require operating infrastructure companies 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 policiess and laws adversely 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 the Amata Bien Hoa and other industrial park infrastructure development companies. Especially the Amata Bien Hoa does not violate the law on land management and use, has fulfilled its financial obligations to the State, but they still have to pay a deposit called "late payment".

AMATA VN PCL (the company contributing capital to the 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 losses, and this will be a negative business information for the company and the losses of market value of AMATA shares that VN PCL causes is not counted.

Therefore, the Amata Bien Hoa recommends the Government to apply investment protection measures and the principle of non-retroactivity when implementing the Decree No. 135/2016 / ND-CP. Particularly:

  1. Application Time: 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 time for calculating the amount will be calculated from July 1, 2014 instead of January 1, 2016; orthe Amata Bien Hoa signed a land lease contract with a secondary investor until May 31,2017 (according to the notice of the Dong Nai Tax Department).
  2.  Pending the official state agency's response, the late payment shall not be made on the amount equivalent to the late payment that the Amata Bien Hoa has not yet made.
  3. The equivalent Amount to the late payment amount according to the Vietnamese accounting system: At the time when the land is subleased to the customer (before the Land Law 2013has taken effect), Amata Bien Hoa has accounted for the entire amount a one-time 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 country. If you continue to 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 the Decree 135/2016 / ND-CP, the Amata Bien Hoa requested the State to consider allowing annual allocation (for both accounting and tax) with 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: 10868/BTC - QLCS, dated: 2018-09-07

Responded contents:

The Ministry of Finance received a recommendation from the AMATA Bien Hoa Urban Joint Stock Company for land tax collection policy as stipulated in the Decree No. 135/2016 / NĐ-CP dated 9 September, the Document No. 1602 / PTM-VP dated July 25, 2018 of the Vietnam Chamber of Commerce and Industry reporting to the Government on the implementation of the Resolution No. 35 / NQ-CP in Q1 /. In this regard, the Ministry of Finance has agreed as follows:

Concerning the proposal on the policy on land rent collection in accordance with the Decree No. 135/2016 / ND-CP of Amata Bien Hoa Urban Joint Stock Company (the Recommendation on March 31, No. 233AVB / 2017 dated September 2017), the Ministry of Finance issued an Official Letter No. 7251 / BTC-QLCS dated June 2, 2017, an Official Letter No. 15466 / BTC-QLCS dated November 15, 2017 to the Public (attached).


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