JOINT CIRCULAR No. 04-TT-LB ON THE IMPLEMENTATION OF TAX POLICIES FOR SLAUGHTERED ANIMALS IN STATE TRADING OF MEAT

JOINT CIRCULAR

REGARDING THE IMPLEMENTATION OF THE TAX POLICY ON SLAUGHTERED ANIMALS FOR STATE TRADING ENTERPRISES DEALING IN MEAT

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PURSUANT TO THE PROPOSAL OF THE STATE COUNCIL, THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY HAS ISSUED RESOLUTION NO. 37-NQ-TVQH ON NOVEMBER 20, 1964 TO AMEND THE TAX POLICY ON SLAUGHTERED ANIMALS AND THE PRIME MINISTER HAS ISSUED CIRCULAR NO. 125-TTg-TN ON DECEMBER 31, 1964 TO IMPLEMENT BEFORE THE LUNAR NEW YEAR 1965.

BASED ON THE RESOLUTION OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY AND THE CIRCULAR OF THE PRIME MINISTER, THE JOINT MINISTRY OF FINANCE AND DOMESTIC TRADE REGULATES THE IMPLEMENTATION OF THE TAX POLICY ON SLAUGHTERED ANIMALS FOR STATE TRADING ENTERPRISES DEALING IN FOOD AND RURAL MARKETING COOPERATIVES AS FOLLOWS:

I. ON THE COLLECTION OF THE SLAUGHTER TAX

ACCORDING TO THE REGULATIONS OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY AND THE PRIME MINISTER, WHILE AWAITS THE NATIONALIZATION OF THE STATE TRADING ENTERPRISES DEALING IN MEAT, STATE DOMESTIC TRADE ENTERPRISES AND RURAL MARKETING COOPERATIVES WILL CONTINUE TO PAY THE SLAUGHTER TAX AT A RATE OF 10% CALCULATED ON THE WEIGHT OF THE RAW MEAT AND THE GUTS OF THE SLAUGHTERED ANIMALS AND ACCORDING TO THE GUIDELINE RETAIL PRICE OF THE DOMESTIC TRADE ENTERPRISE.

II. ON THE COLLECTION AND PAYMENT OF THE SLAUGHTER TAX, EXEMPTION FROM THE SLAUGHTER TAX FOR FARMERS AND DISTRIBUTION OF THE SLAUGHTER TAX TO THE BUDGETS OF DIFFERENT LEVELS

TO ENCOURAGE THE DEVELOPMENT OF ANIMAL RAISING AND THE SALE OF LIVE ANIMALS TO THE STATE, THE PRIME MINISTER HAS REGULATED THE REDUCTION RATE OF THE SLAUGHTER TAX FOR FARMERS AND THE DISTRIBUTION RATE OF THE SLAUGHTER TAX REVENUE TO THE BUDGETS OF THE VILLAGE FARMING BUDGET, THE PROVINCE FARMING BUDGET, AND THE CITY OR PROVINCE SLAUGHTERING BUDGET IN CIRCULAR NO. 125-TTg-TN. TO ENSURE THE FULL IMPLEMENTATION OF THE STATE POLICY TOWARDS FARMERS, FAIRNESS TOWARDS THE VILLAGE BUDGET AND THE PROVINCE FARMING BUDGET, AND TO AVOID ANY LOOPS IN THE TAX COLLECTION WORK AND SIMPLIFY ACCOUNTING RECORDS, THE JOINT MINISTRY OF FINANCE AND DOMESTIC TRADE REGULATES:

- WHEN PURCHASING LIVE ANIMALS, THE FOOD COMPANIES OR RURAL MARKETING COOPERATIVES MUST ADVANCE MONEY TO PAY THE AMOUNT OF THE EXEMPT SLAUGHTER TAX TO THE FARMER AND SUBMIT THE PORTION OF THE TAX DEDICATED TO THE VILLAGE BUDGET AND THE PROVINCE FARMING BUDGET; THE PORTION OF THE TAX DEDICATED TO THE PROVINCE OR CITY SLAUGHTERING BUDGET WILL BE SUBMITTED AFTER THE SLAUGHTERING OF THE ANIMAL.

THE LOCAL FINANCIAL AUTHORITY IS RESPONSIBLE FOR COLLECTING THE PORTIONS OF THE SLAUGHTER TAX DEDICATED TO THE BUDGETS OF THE DIFFERENT LEVELS OF THE STATE AND ASSIST IN CHECKING THE COLLECTION OF THE PORTION OF THE TAX DEDICATED TO THE VILLAGE BUDGET AS WELL AS THE PAYMENT OF THE AMOUNT OF THE EXEMPT SLAUGHTER TAX TO THE FARMER.

THE WAY TO EXEMPT THE SLAUGHTER TAX FOR FARMERS AND DISTRIBUTE THE SLAUGHTER TAX TO THE BUDGETS OF THE DIFFERENT LEVELS IS REGULATED AS FOLLOWS:

1. PAY THE AMOUNT OF THE EXEMPT SLAUGHTER TAX TO THE FARMER.

a) THE AMOUNT OF THE EXEMPTION IS AS FOLLOWS:

IN THE PLAINS: 2.70 DONG PER WATER BUFFALO OR CATTLE,

0.90 DONG PER PIG;

0.45 DONG PER GOAT.

IN THE MOUNTAINOUS AREAS: 3.60 DONG PER WATER BUFFALO OR CATTLE;

1.20 DONG PER PIG;

0.60 DONG PER GOAT.

WHEN PAYING FOR THE PURCHASE OF LIVE ANIMALS, THE PURCHASE AUTHORITY WILL PAY THE AMOUNT OF THE EXEMPT SLAUGHTER TAX TO THE FARMER AT THE SAME TIME. WHEN ISSUING THE MEAT PURCHASE VOUCHERS TO THE FARMER, THE PURCHASE AUTHORITY WILL ISSUE A TYPE OF MEAT PURCHASE VOUCHER WITH THE GUIDELINE RETAIL PRICE INCLUDING THE SLAUGHTER TAX (NOT TWO TYPES OF VOUCHERS: WITH TAX AND WITHOUT TAX AS CURRENTLY).

b) IN THE PAYMENT OF THE AMOUNT OF THE REDUCED SLAUGHTER TAX TO THE FARMER, THE FOLLOWING POINTS NEED TO BE NOTED:

- THE PERSON ELIGIBLE FOR THE EXEMPTION FROM THE SLAUGHTER TAX MUST BE THE ONE WHO ACTUALLY RAISED THE ANIMAL FOR MORE THAN FOUR MONTHS BEFORE SELLING IT TO THE STATE. FOR YOUNG PIGS SOLD TO THE PURCHASE AUTHORITY, IF THE FARMER ACTUALLY RAISED THEM FOR MORE THAN FOUR MONTHS, THEY ARE STILL ELIGIBLE FOR THE EXEMPTION FROM THE SLAUGHTER TAX, BUT FOR PIGS MEETING THE SLAUGHTERING STANDARDS BUT THE OWNER OF THE PIGS DID NOT RAISE THEM FOR MORE THAN FOUR MONTHS BEFORE SELLING THEM TO THE STATE, THEY ARE NOT ELIGIBLE FOR THE EXEMPTION FROM THE SLAUGHTER TAX. THE PURCHASE STAFF WILL RELY ON THE PARTY COMMITTEE AND THE LOCAL ADMINISTRATION, THE LOCAL TAX COLLECTORS, THE MANAGEMENT BOARD OF THE COOPERATIVE, AND THE PRODUCTION TEAMS TO CONFIRM THE RAISING PERIOD.

- FOR LIVE ANIMALS PURCHASED BEFORE THE IMPLEMENTATION OF THE NEW SLAUGHTER TAX POLICY, BUT STILL KEPT BY THE FARMER, WHEN HANDING OVER THE LIVE ANIMALS TO THE PURCHASE AUTHORITY, THE FARMER WILL ALSO RECEIVE THE AMOUNT OF THE EXEMPT SLAUGHTER TAX, IF THEY HAVE NOT RECEIVED THE MEAT PURCHASE VOUCHERS WITHOUT TAX FOR THOSE ANIMALS.

- FOR THE NUMBER OF VOUCHERS ISSUED TO PURCHASE MEAT WITHOUT TAX, WHICH WERE ISSUED BY THE STATE DOMESTIC TRADE ENTERPRISE OR RURAL MARKETING COOPERATIVE TO THE FARMER PRIOR TO THIS, THE FARMER STILL HAS THE RIGHT TO USE THEM TO PURCHASE MEAT WITHOUT TAX. THE STATE DOMESTIC TRADE ENTERPRISE WILL SETTLE THE TAX WITH THE LOCAL FINANCIAL AUTHORITY AS BEFORE. BUT TO FACILITATE THE SETTLEMENT WITH THE PURCHASE AUTHORITY, IT IS NECESSARY TO ENCOURAGE THE FARMER TO USE UP THESE VOUCHERS IN FEBRUARY 1965. BEYOND THE DEADLINE, THE STATE DOMESTIC TRADE ENTERPRISE OR RURAL MARKETING COOPERATIVE WILL REVOKE THESE VOUCHERS AND RETURN THE AMOUNT OF THE REDUCED TAX TO THE FARMER. (THIS AMOUNT IS CALCULATED BASED ON THE WEIGHT OF THE EXEMPT MEAT AND THE GUIDELINE PRICE OF 2.20 DONG PER KILOGRAM OF MEAT). AT THE SAME TIME, THE PURCHASE AUTHORITY WILL ISSUE TO THE FARMER A MEAT PURCHASE VOUCHER WITH THE PRICE INCLUDING TAX TO REPLACE THE EXEMPT VOUCHER THAT WAS REVOKED. THE LOCAL FINANCIAL AUTHORITY WILL BASE THE SETTLEMENT WITH THE STATE DOMESTIC TRADE ENTERPRISE OR RURAL MARKETING COOPERATIVE ON THE REVOKED EXEMPT VOUCHERS.

FOR THE LIVE ANIMALS OF THE STATE ANIMAL RAISING ORGANIZATIONS (STATE FARMS, DOMESTIC TRADE ENTERPRISE RAISING UNITS, ETC...) TRANSFERRED TO THE STATE DOMESTIC TRADE ENTERPRISE FOR SLAUGHTERING OR TO FOREIGN TRADE FOR EXPORT, THE RAISING UNIT DOES NOT ENJOY THE AMOUNT OF THE REDUCED SLAUGHTER TAX AS THEY ALREADY RECEIVE THE SALARY FROM THE STATE AND THE RAISING CAPITAL PROVIDED BY THE STATE.

2. PAY THE PORTION OF THE SLAUGHTER TAX DEDICATED TO THE VILLAGE BUDGET.

WHEN PURCHASING LIVE ANIMALS IN THE VILLAGE, THE STATE DOMESTIC TRADE ENTERPRISE OR RURAL MARKETING COOPERATIVE MUST ISSUE A CERTIFICATE TO THE VILLAGE ADMINISTRATION CONFIRMING THE NUMBER OF LIVE ANIMALS PURCHASED IN THE VILLAGE; AND EVERY 15 DAYS, THEY MUST SETTLE WITH THE VILLAGE ADMINISTRATION THROUGH BANK TRANSFERS THE AMOUNT OF THE SLAUGHTER TAX DEDICATED TO THE VILLAGE BUDGET AT THE FOLLOWING RATE (IN THE PLAINS AS WELL AS IN THE MOUNTAINOUS AREAS):

2.20 DONG PER WATER BUFFALO OR CATTLE,

0.80 DONG PER PIG;

0.40 DONG PER GOAT.

FOR LIVE ANIMALS PURCHASED ON DEPOSIT FROM THE PEOPLE BUT DELIVERED TO THE PURCHASE AUTHORITY AFTER THE IMPLEMENTATION OF THE NEW SLAUGHTER TAX POLICY, THE VILLAGE BUDGET WILL STILL RECEIVE A PORTION OF THE SLAUGHTER TAX ACCORDING TO THE ABOVE REGULATED RATE.

For livestock from state-run breeding farms and state-owned agricultural farms transferred to state trading food enterprises for storage and slaughter or for transfer to other provinces, no tax shall be deducted for the communal budget.

3. Pay the slaughter tax to the provincial breeding budget.

To facilitate the accounting of commercial agencies dealing with meat sales, the payment of the slaughter tax to the provincial breeding budget will be carried out as follows:

a) At the slaughterhouse preparation warehouse:

For livestock purchased from individuals and cooperatives for slaughter or for transfer to other provinces, or for export, Food Companies must pay to local financial authorities the portion of the slaughter tax allocated to the provincial breeding budget (both in plains and mountainous areas) at the following rates:

Cattle and buffalo: 8đ00 per head

Pigs: 2,80 per head

Goats: 1,40 per head

Therefore, if the slaughter tax payable to breeders and the communal budget is added, the Food Company must prepay:

In plains:

1 head of cattle or buffalo:

8đ00 + 2đ70 + 2đ20 = 12đ90

1 pig: 2,80 + 0,90 + 0,80 = 4,50

1 goat: 1,40 + 0,45 + 0,40 = 2,25

In mountainous areas:

1 head of cattle or buffalo:

8đ00 + 3đ60 + 2đ20 = 13đ80

1 pig: 2,80 + 1,20 + 0,80 = 4,80

1 goat: 1,40 + 0,60 + 0,40 = 2,40

Specifically, for livestock purchased from state-owned agricultural farms or transferred from state-owned trade breeding farms to the storage warehouse for slaughter, since there is no need to pay reduced tax to breeders and the communal budget, the rate of tax paid to the provincial breeding budget for each type of livestock is:

In plains: Cattle and buffalo: 12đ90 per head

Pigs: 4,50 per head

Goats: 2,25 per head

In mountainous areas: Cattle and buffalo: 13đ80 per head

Pigs: 4,80 per head

Goats: 2,40 per head

For livestock purchased before the implementation of the new slaughter tax policy and stored until that date, since when purchasing, state trading food enterprises or county buying-selling cooperatives did not have to prepay the slaughter tax to breeders and communal budgets, they will also pay the provincial breeding budget the following amount of tax:

In plains: Cattle and buffalo: 12đ90 per head

Pigs: 4,50 per head

Goats: 2,25 per head

In mountainous areas: Cattle and buffalo: 13đ80 per head

Pigs: 4,80 per head

Goats: 2,40 per head

In summary, for livestock in the storage warehouse for slaughter or for transfer to other locations, regardless of whether it is purchased or transferred from state-run breeding farms, state trading food enterprises must prepay:

In plains: Cattle or buffalo: 12đ90 per head

Pigs: 4,50 per head

Goats: 2,25 per head

In mountainous areas: Cattle or buffalo: 13đ80 per head

Pigs: 4,80 per head

Goats: 2,40 per head

At the slaughterhouse: When slaughtering animals, Food Companies or county buying-selling cooperatives must pay a slaughter tax of 10% based on the weight of the carcass and entrails calculated according to the directed selling price of meat and this amount can be deducted from the taxes already prepaid to breeders, communal budgets, and the provincial breeding budget.

The formula for calculating the slaughter tax to be paid is as follows:

Total slaughter tax = average selling price per kg of meat x weight of carcass and entrails x 10%.

Remaining tax to be paid = Total slaughter tax - prepaid tax (tax exempted for breeders and tax paid to communal and provincial breeding budgets).

Example:

Hanoi Food Trading slaughtered 50 pigs with a total weight of carcass and entrails of 1,500kg, the average tax calculation price (directed selling price) per kg of meat was 2đ20; the tax calculation is as follows:

The total slaughter tax to be paid is:

2đ20 x 1,500 x 10% = 330đ

Deducting the prepaid tax is:

4đ50 x 50 heads = 225đ

105đ

The remaining tax to be paid is:

b) For exported livestock: For livestock purchased from individuals as well as from state-owned agricultural farms, when transferred to Foreign Trade for export by Food Companies, the following amounts will be added to the export price of live animals:

Livestock purchased in plains:

Cattle and buffalo: 12đ90 per head

Pigs: 4,50 per head

Goats: 2,25 per head

Livestock purchased in mountainous areas: Cattle and buffalo: 13đ80 per head

Pigs: 4,80 per head

Goats: 2,40 per head

Since these animals are not slaughtered, the financial authority at the exporting location will not collect the difference in slaughter tax.

III. REGARDING TAX REFUND

- In cases where livestock purchased within or outside the province where the slaughter takes place dies and must be buried, the purchasing agency must prepare a record confirmed by a financial officer or the local administrative committee.

Responsibility for dead livestock will be handled separately. As for the prepaid tax (tax exemption for breeders, part paid to the commune, and provincial breeding budget), the provincial and municipal financial authorities where the livestock died will refund it after reviewing the record of dead livestock and relevant tax payment receipts. To ensure timely tax refunds, local financial departments will deduct the refundable tax from the next period's tax payment.

- In cases where livestock suffers an accident but still sells meat, the slaughter tax must still be paid based on the actual selling price of the state trading food enterprise.

- In cases where livestock suffers an accident and cannot sell meat but only yields fat or skin for industrial raw materials, the state trading food enterprise does not have to pay the slaughter tax but must pay corporate tax as previously stipulated.

IV. ISSUES REGARDING THE ADVANCEMENT OF FUNDS FOR Slaughter Tax

Funding for the meat business activities of the state trade sector will continue under the current system. Specifically:

- Regarding purchase funds, banks will lend 100%.

- Regarding inventory funds for livestock reserved for slaughter, banks will lend 70% and finance will provide 30%.

Specifically, the additional funds provided to trade agencies to prepay the slaughter tax (as mentioned above) will be fully provided by the Ministry of Finance to the Ministry of Commerce. The additional funds for prepaying the slaughter tax will be divided into two parts:

- The inventory fund at the purchase stage, the Ministry of Finance will provide the Ministry of Commerce 100% of the advance payment to cover the tax exemption for breeders.

- The inventory fund for livestock reserved for slaughter, the Ministry of Finance will provide the Ministry of Commerce 100% of the advance payment to cover the tax reduction for breeders and to pay the slaughter tax to the communal and provincial breeding budgets.

To distinguish the working capital for regular business operations (30% financial capital and 70% bank loan) from the advance capital for slaughter tax, after receiving capital from the Ministry of Finance, the Ministry of Commerce will allocate the advance capital according to each stage of purchase and reserve storage quotas for slaughtering meat to each province. At the same time, it will guide the provinces to open accounts for advance slaughter tax capital, the method of distributing capital to purchasing teams and stations to pay slaughterers with reduced taxes, the method of deducting and paying slaughter taxes to communal, provincial budgets, and settling advance slaughter tax payments between provinces exchanging animals.

Regarding the accounting treatment of advance slaughter tax capital and the accounting treatment of state-owned trade's meat business, the Ministry of Commerce will establish specific regulations after reaching consensus with the Ministry of Finance.

Upon receipt of this Circular, the Departments and Bureaus of Finance and the Departments and Bureaus of Trade shall discuss with local food companies to unify the implementation plan.

Effective date: February 1, 1965.