Chapter VI
INVESTMENT IN SCIENTIFIC AND TECHNOLOGICAL DEVELOPMENT
Section 1. INVESTMENT FROM STATE
Article 49. State budget for science and technology
1. The State shall ensure at least 2% of total state budget spending annually for the cause of science and technology and gradually increase at the request of scientific and technological development.
2. Budgets for scientific and technological development should be recorded in a separate entry in the table of contents for annual state budgets of ministries, departments and localities.
3. Allocation of state budget for scientific and technological development in the following year shall be based on actual demands and the use of allocated budgets.
Article 50. Purposes of state budget spending for science and technology
1. Implement science and technology tasks of priority and importance, science and technology tasks at all levels to serve common interests of the public with much importance attached to fundamental research in the areas of science and technology;
2. Maintain and develop national scientific and technological capability, invest in and support construction of material and technical bases for scientific and technological organizations; ensure regular activity of fundamental research conducted by public scientific and technological organizations.
3. Develop human resources for scientific and technological development;
4. Finance state funds for science and technology as prescribed in Article 59 hereof;
5. Support implementation of applied research and technological innovation in the areas of priority and great importance;
6. Strengthen application of scientific and technological development in localities;
7. Purchase findings from scientific research and technological development, support importation of source technology, high technology, designs, employment of domestic and foreign experts for the areas of priority.
8. Disseminate and communicate knowledge and information in relation to science and technology; support registration for protection of intellectual property rights; announce findings from scientific research and technological development, prizes in science and technology;
9. Support other science and technology activities;
Article 51. Construction of cost estimates and management of state budget for science and technology
1. The Ministry of Science and Technology shall preside over and cooperate with ministries, ministerial-level agencies, Governmental agencies, other central state agencies and People’s committees of provinces shall establish and propose annual state budget spending estimates for scientific and technological development as prescribed;
2. The Ministry of Planning and Investment, the Ministry of Finance shall establish investment cost estimates, non-business expenditure estimates for scientific and technological development at the request of the Ministry of Science and Technology.
3. Financial agencies at all levels shall be responsible for allocating expenditures for scientific and technological development in an adequate and timely manner and in accordance with science and technology plans; step up inspection of sectors, levels to ensure purposeful and effective use of expenditures for scientific and technological development.
Article 52. Application of allocated expenditures for state-funded science and technology tasks; purchasing findings from scientific research and technological development
1. Application of allocated expenditures for state-funded science and technology tasks are prescribed as follows:
a) Allocated expenditures for state-funded science and technology tasks in the areas of natural science, humanities and social science, technical and technological science shall be approved by competent agencies in terms of targets, contents, requirements for research products and budget estimates;
b) For science and technology tasks with criteria for end-product being clearly defined on the basis of assessment of explanation and budget estimates, allocated expenditures shall be applied until end-product.
c) For science and technology tasks that allocated expenditures cannot be applied until end product and science and technology tasks at high risks, allocated expenditures shall be applied on the basis of individual parts of work with criteria clearly defined.
2. In case of need, the State shall purchase findings from scientific research and technological development in an agreement with organizations, individuals.
3. The Government shall detail criteria and procedures on application of allocated expenditures for state-funded science and technology tasks and the purchase of findings from scientific research and technological development.
Article 53. Allocation, use and management of expenditures for state-funded science and technology tasks
1. Allocation of expenditures for state-funded science and technology tasks should be timely and appropriate to the progress of order placement and approval of science and technology tasks.
2. Expenditures for science and technology tasks shall be allocated by state funds for scientific and technological development or transferred to deposit accounts of agencies that preside over the implementation of science and technology tasks;
3. Use of expenditures for science and technology tasks shall be based on order for payment issued by agencies that preside over the implementation of science and technology tasks and shall be finalized upon completion of the contract without depending fiscal year.
4. The Government shall detail this Article.
Article 54. Special investment mechanism for special science and technology tasks
1. Science and technology tasks of large scale serving national defense and security, having strong impact on productivity, quality and strength of national product shall be eligible for special investment mechanism.
2. Make submission to the National Assembly for consideration and decision on science and technology tasks of projects, works of national importance advocated by the National Assembly.
3. The Prime Minister shall decide implementation of special science and technology tasks unless otherwise regulated in Clause 2, this Article.
4. The Government shall define criteria for determination of tasks, special investment mechanism and implementation measures for science and technology tasks eligible for special investment mechanism as prescribed in this Article.
Section 2. INVESTMENT OF ENTERPRISES, ORGANIZATIONS AND INDIVIDUALS
Article 55. Mobilization of investment capital outside state budget for science and technology
1. The State shall encourage investment and sponsorship for scientific and technological development from organizations and individuals.
2. Organizations, individuals may establish funds for scientific and technological development prescribed in Articles 62 and 63 hereof;
3. Organizations and individuals that invest in and sponsor scientific and technological development shall enjoy following preferential treatment:
a) Tax incentives according to laws;
b) Be honored, commended according to laws;
Article 56. Investment of enterprises for scientific and technological development
1. Enterprises should reserve budgets for investment to innovate and improve technological levels, productivity, quality and competitiveness of products, goods.
2. Investment made in scientific and technological development by enterprises shall be considered as actual expenses arising in relation to activities of production and business of enterprises.
3. Enterprises that make investment in or form associations for investment in scientific and technological research in the areas of national priority and importance, innovate and enhance technology, improve productivity, quality and competitiveness of products, goods shall be considered for financial assistance, loans and other incentives by state funds for scientific and technological development as prescribed hereof.
Article 57. Encouraging application of findings from scientific research and technological development by enterprises
1. Enterprises that apply findings from scientific and technological development to innovate and enhance technology, improve productivity, quality and competitiveness of products, goods shall be considered for financial assistance, preferential loans, loan interest subsidy and loan guarantees by state funds for scientific and technological development.
2. Enterprises that apply high technology shall be entitled to maximum incentives according to laws on high technology. Enterprises that apply findings from science and technology tasks in the country shall be eligible for loan interest subsidy.
Article 58. Development of scientific and technological enterprises
1. Scientific and technological enterprises are the enterprises that implement production, business and services in relation to science and technology to create products, goods from findings from scientific research and technological development.
2. Development of scientific and technological enterprises should meet following requirements:
a) An enterprise that is established and registered for operation according to the Law on Enterprise;
b) Have capacity for implementation of science and technology tasks;
c) Turnover from production and trading of products, goods from findings from scientific research and technological development achieves a proportion as prescribed.
3. Apart from incentives as prescribed in Article 57 hereof, scientific and technological organizations shall enjoy following preferential treatment:
a) Be eligible for consideration and assignment of ownership or right of use of state-owned findings from scientific research and technological development;
b) Be entitled to enterprise income tax incentives, exemption from registration fee upon registration for land use rights, home ownership rights according to laws;
c) Be given priority in leasing lands, infrastructure in industrial zones, processing and exporting zones, economic zones and hi-tech zones;
d) Enjoy investment credit incentives from the Vietnam Development Bank, National Fund for technological innovation and other funds for the implementation of investment projects on production and business;
dd) Be given priority in using facilities serving activities of scientific research and technological development in laboratories of national importance, technology incubators, science and technology business incubators; state-owned scientific and technological research facilities;
4. The Government shall detail this Article.
Section 3. INVESTMENT SUPPORT FUND FOR SCIENCE AND TECHNOLOGY ACTIVITIES
Article 59. Investment support funds for science and technology activities
1. The State shall establish, encourage organizations, individuals to establish the funds to mobilize social resources for providing investment support to science and technology activities .
2. The funds for scientific and technological development are established according to this Law;
Funds for technological innovation, funds for venture hi-tech investment are established according to the Law on Technology transfers and the Law on high technology.
3. Mechanism, manners of investment support funds for science and technology activities are instructed in the Fund’s charter.
Article 60. National fund for science and technology development
1. The Government shall establish national funds for scientific and technological development to provide budgets for activities of fundamental research and applied research, unexpected science and technology tasks of great scientific and practical importance, potential science and technology tasks, to grant loans with low or no interest rates for application of findings from scientific research and technological development to production and life, guarantee loans for special science and technology tasks, support young scientists in participating in international conferences and seminars; support activities of enhancing capability of science and technology at national level.
2. National funds for scientific and technological development are formed from initial capitals, annual additional capitals from state budget for scientific and technological development, funds' business results; voluntary contributions, donations, grants from organizations, individuals and other legal sources.
3. The Government shall prescribe Charter of the National fund for science and technology development.
Article 61. Funds for scientific and technological development of ministries, ministerial-level agencies, Governmental agencies, central-affiliated cities and provinces
1. Ministries, ministerial-level agencies, Governmental agencies, People’s Committees of provinces shall establish funds for scientific and technological development to meet their own demands for scientific and technological development .
2. Funds shall be used for purposes prescribed in Clause 1, Article 60 hereof;
3. Funds are formed from initial capitals from state budgets for scientific and technological development of ministries, ministerial-level agencies, Governmental agencies, central-affiliated cities and provinces; annual additional capitals from state budgets for science and technology tasks of ministries, provinces and funds’ business results; contributions of enterprises according to laws; voluntary contributions, donations, grants from organizations, individuals and other legal sources.
4. The Minister of Science and Technology shall prescribe charter of funds for scientific and technological development of ministries, ministerial-level agencies, Governmental agencies, central-affiliated cities and provinces.
Article 62. Fund for science and technology development of organizations, individuals
1. The State encourages establishment of the fund for scientific and technological development by organizations, individuals according to laws;
The fund for scientific and technological development of organizations, individuals is a not-for-profit organization that provides non-refundable sponsorship, loans with low or no interests, loan guarantees for scientific and technological development of organizations, individuals.
2. The fund for scientific and technological development of organizations, individuals is formed from contributions of founding organizations, individuals outside state budget; voluntary contributions, donations, grants from organizations, individuals and other legal sources.
3. Charter of the fund shall be written by founding organizations, individuals and registered with competent finance authorities.
Article 63. Fund for scientific and technological development of enterprises
1. Non-state owned enterprises are encouraged to form funds for scientific and technological development of their own or contribute to the funds for scientific and technological development of sectors and localities and enjoy benefits according to the fund’s regulations.
2. The state-owned enterprise should put aside a minimum amount of taxable income to establish its fund for scientific and technological development.
The Government shall prescribe amount of taxable income to be put aside for the establishment of the fund and mechanism of managing and using the enterprise's fund for scientific and technological development.
3. Enterprises may exercise autonomy and take responsibility for managing and using the fund purposefully and reporting the establishment of the fund to state administration agencies on science and technology in localities where the enterprise is headquartered.
Section 4. TAX AND CREDIT INCENTIVES FOR SCIENCE AND TECHNOLOGY ACTIVITIES
Article 64. Tax policies on science and technology activities
Followings cases are eligible for tax incentives as prescribed in the law on taxation:
1. Earnings come from the implementation of the contract for scientific research and technological development;
2. Earnings from products made from technologies applied for the first time in Vietnam; products in the process of trial production;
3. Hi-tech enterprises, agricultural enterprises applying high technology and a number of activities in the areas of high technology;
4. Scientific and technological services;
5. Machinery and equipment, accessories, materials imported for activities of scientific research and technological development;
6. Grants from organizations, individuals for scientific research; grants received for scientific research;
7. Transfer of technology of priority areas to organizations, individuals in socio-economically disadvantaged administration divisions;
8. Other cases as prescribed;
Article 65. Credit policies on science and technology activities
1. Organizations, individuals that apply for middle-term or long-term loans for science and technology activities shall receive preferential interests from the national fund for scientific and technological development and other state funds.
2. Organizations, individuals that apply for loans for science and technology activities shall receive credit incentives according to charter of the fund where loans are granted.
3. Organizations, individuals that apply for loans at commercial banks to make investment in science and technology activities, especially activities of conducting experimentation and trial production shall be considered by the Vietnam Development Bank for interest subsidy or investment credit guarantees, putting aside a certain proportion of outstanding credit balance for science and technology activities.
4. Programs, topics and projects on science and technology that directly serve key socio-economic programs of the State and develop national scientific and technological potential, especially projects on conducting experimentation and trial production requiring use of large capital shall be favored with access to official development assistance (ODA) as follows:
a) Non-refundable sponsorship or concessional loans for activities of scientific research and technological development;
b) Grant loans for projects on investment and construction of scientific and technological potential or refundable loans for projects applying findings from scientific research and technological development;
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