Công văn 15862/BTC-TCT

To: Provincial-level Tax Offices

Recently, in a number of provinces and cities, house and urban center development enterprises have been allocated land for urban development investment. The People’s Committees of some provinces and cities have ruled that enterprises must reserve certain land areas with built infrastructure (or commercial houses) for the People’s Committees to distribute to social policy beneficiaries or auction them to collect state budget revenue. After enterprises handed over these land areas to the provincial-level People’s Committees, some localities indemnified these enterprises investment expenses for these areas while others did not.

In implementing the Prime Minister’s direction in the Government Office’s Official Letter No. 7069/VPCP-KTTH of October 21, 2008, on accounting investment expenses for land areas handed over by housing investment enterprises to provincial-level People’s Committees without indemnities, the Ministry of Finance gives the following guidance:

1. Subjects of application

Housing investment enterprises that are allocated land for carrying out housing and urban center development projects and have written decisions of provincial-level People’s Committees ruling that they have to hand over without indemnity to the People’s Committees certain land areas with built infrastructure (or commercial houses).

Housing development enterprises include enterprises investing in urban center infrastructure development and enterprises investing in building houses for sale.

2. Determination of reasonable expenses for enterprise income tax calculation

Expenses related to land areas or material foundations handed over without indemnity to provinces or centrally run cities according to regulaions of their People’s Committees shall be accounted as reasonable expenses for enterprise income tax calculation if satisfying the following conditions:

- Expenses actually paid by enterprises with payment vouchers for land areas under housing or urban center development projects handed over to provinces or cities for which investment expenses are not indemnified by their People’s Committees.

- Expenses for land areas under housing or urban center development projects handed over to provinces or cities are part of expenses of projects already approved by competent authorities and have been paid strictly according to current financial regulations.

- Enterprises have to submit adequate invoices and documents for expenses invested in land areas handed over to provinces or cities according to regulations; decisions of People’s Committees of provinces or cities, written records of handover of land areas to competent agencies and other related papers which evidence that the provincial-level People’s Committees did not indemnify for expenses for such land areas.

The Ministry of Finance notifies the above guidance to provincial-level Tax Offices for information. Any problems arising in the course of implementation should be reported to the Ministry of Finance (General Department of Taxation) for timely handling.