Do the costs of contractor selection include taxes and fees in Vietnam?
Do the costs of contractor selection include taxes and fees in Vietnam?
Based on clause 2, Article 39 of the Law on Bidding 2023, the regulations are as follows:
Content of the contractor selection plan
- Name of the bidding package:
The name of the bidding package reflects the nature, content, and scope of work of the package. In cases where the bidding package consists of several separate parts, the contractor selection plan must state the name that reflects the basic content of each part.
- The price of the bidding package:
a) The price of the bidding package is the value of the package approved in the contractor selection plan. This price includes all costs to perform the package, including contingency costs, fees, charges, and taxes. The price can be updated within 28 days before the bid opening if necessary;
b) For divided packages, specify the package price and the estimated price for each part.
c) For packages applying additional purchase options as specified in clause 8 of this Article, the package price does not include the value of additional purchase options.
The Government of Vietnam details the content of the package price in the contractor selection plan.
- Source of funds:
For each package, the source of funds must be clearly identified or approved. In cases using ODA funds, concessional loans from foreign sponsors, the name of the sponsor and the source structure, including sponsor funds and domestic counterpart funds, must be specified. For procurement estimates, if a package has an execution period longer than one year, the source of funds may be identified based on the procurement estimate of the budget year and the anticipated estimates for the subsequent budget years.
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Thus, the costs of contractor selection include fees, charges, and taxes.
Do the costs of contractor selection include taxes and fees in Vietnam? (Image from the Internet)
What are cases where the package price does not include taxes, fees, and charges in Vietnam?
According to clause 1, Article 16 of Decree 24/2024/ND-CP, the regulations are as follows:
package price and duration for organizing contractor selection
- The package price is calculated accurately and completely for all costs to perform the package, including contingency costs (for price slippage and volume arising), fees, charges, and taxes. For construction bidding packages using fixed price contracts and adjustable price contracts, contingency costs include provisional sums (if any) and are only used when actual costs arise. For packages with a short execution period and low risk of price slippage, the contingency for price slippage is calculated as zero. The contingency cost is determined by the investor based on the nature of each package but must not exceed the maximum level prescribed by law (if available). If the law provides for goods to be tax and fee-exempt, the package price will not include the exempted taxes and fees. The package price can be updated within 28 days before the bid opening if necessary. For packages with separate parts, specify the estimated value of each part.
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According to the above regulations, if the law stipulates that goods are subject to tax and fee exemption, then the package price does not include the exempted taxes and fees.
Taxes and fees are only exempt in determining the package price, meaning in all cases, charges are not exempt in determining the package price.
Thus, the package price does not include taxes and fees in the cases where the law provides for goods to be exempt from taxes, fees, and charges.
What do the costs for contractor selection include according to Decree 24?
Based on Article 12 of Decree 24/2024/ND-CP, the costs for contractor selection are as follows:
(1) Cost for preparing and verifying the overall contractor selection plan
The cost for preparing or verifying the overall contractor selection plan is calculated at 0.5% of the cost of preparing the feasibility study report but a minimum of 5 million VND and a maximum of 40 million VND.
(2) Cost for preparing and verifying the bidding documents
- The cost for preparing interest notice documents, pre-qualification documents is calculated at 0.1% of the package price but a minimum of 2 million VND and a maximum of 30 million VND;
- The cost for verifying interest notice documents, pre-qualification documents is calculated at 0.06% of the package price but a minimum of 2 million VND and a maximum of 30 million VND;
- The cost for preparing bidding documents, request documents is calculated at 0.2% of the package price but a minimum of 3 million VND and a maximum of 60 million VND;
- The cost for verifying bidding documents, request documents is calculated at 0.1% of the package price but a minimum of 2 million VND and a maximum of 60 million VND.
(3) Cost for evaluating bidding documents
- The cost for evaluating interest documents, pre-qualification documents is calculated at 0.1% of the package price but a minimum of 2 million VND and a maximum of 30 million VND;
- The cost for evaluating bidding documents, proposal documents is calculated at 0.2% of the package price but a minimum of 3 million VND and a maximum of 60 million VND.
(4) Cost for verifying contractor selection results (including cases where no contractor is selected)
The cost for verifying contractor selection results, even when no contractor is selected, is calculated at 0.1% of the package price but a minimum of 3 million VND and a maximum of 60 million VND.
(5) For packages with similar content under the same project or procurement estimate of the same investor, or packages that need re-organizing contractor selection, the costs: preparing, verifying interest notice documents, pre-qualification documents; preparing, verifying bidding documents, request documents are calculated at a maximum of 50% of the cost rate stated in (2); if it is necessary to re-tender part of the package (for divided packages) the cost is calculated at a maximum of 50% of the costs based on the estimated value of the retendered part.
In cases of re-organizing contractor selection, costs must be calculated and supplemented into the project, procurement estimate appropriate to the practical situation of the package. For international bidding, document translation costs are calculated according to market prices, ensuring the effectiveness of the package.
(6) Cost for the Advisory Council for resolving contractor's complaints about contractor selection results
The cost for the Advisory Council for resolving contractor's complaints about contractor selection results is calculated as a percentage of the bid price of the contractor who made the complaint. Specifically:
- For a bid price under 50 million VND, the rate is 0.03% but a minimum of 5 million VND;
- For a bid price from 50 million VND to under 100 million VND, the rate is 0.025% but a minimum of 15 million VND;
- For a bid price from 100 million VND to under 200 million VND, the rate is 0.02% but a minimum of 25 million VND;
- For a bid price from 200 million VND or more, the rate is 0.015% but a minimum of 40 million VND and a maximum of 60 million VND.
For packages applying the one-stage two-envelope process, two-stage two-envelope process, if the contractor has a complaint not to open the financial proposal envelope, the cost for the Advisory Council is based on the package price.
(7) Cost for preparing and verifying contents during the contractor selection process:
- If a tender consultancy is hired to perform one or several tasks in the contractor selection process, the consultancy hiring cost is not based on the costs in (1), (2), (3), (4), and (5);
- If the competent person assigns an affiliated agency or unit to carry out the preparation, verification of the overall contractor selection plan, the cost for these tasks is calculated in the procurement operation cost estimate at (1);
- If an expert group or verification team is decided by the investor to implement preparation, verification of pre-qualification documents, interest notice documents, bidding documents, request documents; evaluation of pre-qualification interest documents, bidding documents, proposal documents; verification of contractor selection results, the cost for these tasks is calculated in the procurement operation cost estimate at (2), (3), (4), and (5);
- The costs in (1), (2), (3), (4), and (5) are determined in the total investment level, procurement estimates, or the investment preparation task estimate or regular cost estimate of the unit;
- The management and use of costs stated in (1), (2), (3), (4), and (5) are implemented according to the financial mechanism of the investor.
