The Ministry of Planning and Investment (MPI) has just submitted to the Government a draft decree revising Decree No. 78/2007/ND-CP of May 11, 2007, on investment in the form of BOT, BTO and BT contracts.
The draft decree specifies domains, conditions, order, procedures and incentives for investment projects executed in the form of build-operate-transfer (BOT), build-transfer-operate (BTO) or build-transfer (BT) contracts as well as rights and obligations of parties to these contracts.
Under the draft, the Government would encourage the execution of BOT, BTO and BT projects on such infrastructure facilities as roads, bridges, tunnels, railways and tramways, airports, seaports, river-ports and ferry-landings; water plants, water drainage systems, wastewater and waste treatment systems; power plants and power transmission lines.
As compared to Decree No. 78/2007/ND-CP, the draft decree contains more specific provisions on investment incentives for BOT, BTO and BT enterprises.
BOT and BTO enterprises would be entitled to corporate income tax (CIT) incentives applicable to projects on the list of domains eligible for special investment incentives. They would be also exempted from import duty and from land use levy for the whole land areas allocated by the State or land rents throughout the project implementation duration.
BT enterprises would be exempted from paying import duty on machinery, equipment and goods imported for the construction of BT facilities and land rents for land areas for the construction of BT facilities. As for other projects carried out by BT enterprises in parallel with BT projects for commercial purposes, depending on the goal and nature of these projects, competent agencies may agree on measures to support investors through deduction of CIT or land use levy from investment capital of BT facilities or grant of other priority rights.
The draft decree also relaxes some financial requirements on investors currently prescribed in Decree No. 78/2007/ND-CP.
As for projects capitalized at VND 1.5 trillion or more, the minimum rate of investors’ equity capital and the amount of money to secure the performance of project contracts are kept unchanged at 10% and 1% of the projects’ total investment capital, respectively. For projects worth less than VND 1.5 trillion, the required rate of investors’ equity capital is lowered to 15% from 30% or 20% as currently prescribed while the amount of security is fixed at 2% of the total investment capital.