In order to facilitate the implementation of compensation, support and relocation, budget estimation for implementation plays a crucial role. Understanding that spirit, on October 5th, 2022, the Ministry of Finance issued Circular 61/2022/TT-BTC ("Circular 61") replacing Circular 74/2015/TT-BTC ("Circular 74") stipulating the estimation, use and payment and finalization of expenditure for compensation, support and relocation in case of land expropriation by the state. Circular 61 has the following notable contents:
Classification of types of projects, sub-projects and expenditures for compensation, support, relocation and coercive inventory, coercive expropriation of each type of project or sub-project
Circular 61 inherited the provision in Circular 74 that expenditures for compensation, support, relocation, coercive expropriation and coercive inventory for projects and sub-projects shall be calculated based on the actual workload and shall be applied the limit rate of 2% of the total compensation cost, except for projects and sub-projects implemented in areas having difficult socio-economic conditions, the limit rate shall not apply.
However, in cases of projects or sub-projects not implemented in areas having difficult socio-economic conditions being applied the 2% limit rate, Circular 61 is also classified into 02 types with 02 different expenditure calculation regimes, specifically:
- Regarding projects and sub-projects not subject to coercive inventory: the expenditure amount for compensation, support and relocation shall not exceed 2% of the total cost for compensation, support and resettlement of the projects or sub-projects[1].
- Regarding projects and sub-projects subject to coercive inventory: the expenditure amount for compensation, support and relocation (excluding expenditures for coercive inventory) shall not exceed 2% of the total cost for compensation, support and resettlement of the projects or sub-projects; the expenditure amount for coercive inventory shall be based on the actual workload[2].
Supplementation of expenditures for compensation, support, relocation, coercive inventory and coercive expropriation
Under Circular 74, the expenditure for compensation, support, relocation, coercive inventory and coercive expropriation includes 02 main types:
- Expenditures for compensation, support and relocation; and
- Expenditures for coercive inventory and coercive expropriation.
Circular 61 has added 01 more types of expenditure for: "Salaries, salary-based contributions and salary allowances according to regulations applicable to authorized organizations relating to compensation, support, relocation, coercive inventory, and coercive expropriation shall conform to financial regulations applicable to these organizations”[3]. In which, salaries and salary-based contributions shall be determined in accordance with current legal provisions.
Amendment of the procedure for estimating expenditures for compensation, support, relocation and coercive inventory
The estimation procedure in Circular 74 is generally applied for all projects, but according to Circular 61, this process has differed between each type of project, specifically:
- Regarding projects and sub-projects implemented in areas having difficult socio-economic conditions: Organizations authorized to compensate, support, and relocate in case of land expropriation (“Authorized organizations”) rely on the expenditure types and expenditure amount specified in Articles 4 and 5 of Circular 61 and the estimated workload to make a budget estimation for compensation, support, relocation and coercive inventory (if any)[4].
- Regarding projects and sub-projects not implemented in areas having difficult socio-economic conditions:
- For projects and sub-projects implemented by the Council for compensation, support, and relocation: The expenditure estimation shall be carried out as in the case of projects and sub-projects implemented in areas having difficult socio-economic conditions.
- For projects and sub-projects implemented by Authorized organizations: Authorized organizations shall rely on the expenditure amount prescribed in Points b and c, Clause 1, Clause 2, Article 3 of Circular 61 to estimate the expenditure amount for compensation, support and relocation.
Expenditure estimations of projects and sub-projects after being made must be sent to competent agencies for appraisal and approval.
The Council for compensation, support, and relocation shall be in charge of using and finalizing the expenditures for compensation, support, relocation and coercive inventory in addition to the Authorized organizations
Previously, the use of expenditures for compensation, support, relocation and coercive inventory was only carried out by the Authorized organizations, however, Circular 61 has additionally assigned this task to the Council for compensation, support, and relocation – a new unit specified in Circular 61, specializes in performing compensation, support, relocation and coercive inventory.
The expenditure use and finalization of this Council is basically similar to that of the Authorized organizations as previously.
Amendments of the procedure for estimating, using and paying and finalizing expenditures for coercive expropriation
Under Circular 74, this procedure coincided with the one for compensation, support, relocation and coercive inventory, but Circular 60 was separated and simplified it. Accordingly, the procedure for estimating, using and paying and finalizing expenditures for coercive expropriation shall be required to rely only on the types of expenditure and expenditure amount specified in Articles 4 and 5 of Circular 61, no need to base on the actual amount of workload to make an expenditure estimation of the cost for coercive expropriation. In addition, this procedure shall also apply to all projects and sub-projects.
Circular 61 shall take effect from 20/11/2022.
[1] Article 3.1(b) of Circular 61.
[2] Article 3.1(c) of Circular 61.
[3] Article 4.3 of Circular 61.
[4] Article 6.1(a) of Circular 61.
Comment: