Circular No. 06 TC/NSNN guiding certain points on Finance and Budget in Decision No. 829/TTg dated December 30, 1994 of the Prime Minister.

CIRCULAR

||| DIRECTIVE NO. 06 TC/NSNN OF THE MINISTRY OF FINANCE ON JANUARY 6, 1995 GUIDING CERTAIN POINTS REGARDING FINANCE AND BUDGET IN RESOLUTION NO. 829/TTG OF THE PRIME MINISTER ON DECEMBER 30, 1994 ON SOME POLICIES AND MEASURES TO MANAGE THE ECONOMIC AND SOCIAL DEVELOPMENT PLAN FOR 1995 

Pursuant to Decree No. 15/CP dated March 2, 1993 of the Government stipulating the tasks, powers, and responsibilities for state management of ministries and ministerial-level agencies; pursuant to Decree No. 178/CP dated October 28, 1994 of the Government on the tasks, powers, and organizational structure of the Ministry of Finance; pursuant to Decision No. 829/TTg dated December 30, 1994 of the Prime Minister on some policies and measures to manage the economic and social development plan for 1995; the Ministry of Finance hereby provides specific guidance on the following points:

I. ON THE ALLOCATION AND ASSIGNMENT OF REVENUE AND EXPENDITURE BUDGET TASKS TO SUBORDINATE UNITS.

1\. Provinces, centrally governed cities, and the General Department of Customs must assign revenue plans to subordinate units, at a minimum equal to the revenue plan assigned by the Prime Minister to each locality and sector. Depending on the specific circumstances of each locality and border gate, it may be possible to assign higher revenue targets to grassroots units.

2\. Ministries, sectors, provinces, and centrally governed cities when allocating and assigning expenditure budget plans to subordinate units must align with the expenditure budget plans of the ministry or locality already assigned by the Prime Minister. For provinces and cities with higher revenue targets than the prescribed norm, these localities will be prioritized to allocate resources to repay foreign debts (if any), increase investment expenditures, and reserve funds to enhance financial reserves from the portion of the provincial budget revenue received according to the specified ratio from additional revenues.

II. ON THE GRADATION OF BUDGET MANAGEMENT FOR LOCALITIES IN 1995

1. Expenditure tasks of the local state budget:

1.1\. The expenditure tasks of the provincial budget in 1995 will generally follow those of 1994 (as stipulated in Decision No. 60/TTg dated February 8, 1994 of the Prime Minister and Circular No. 30 TC/NSNN dated April 5, 1994 of the Ministry of Finance).

1.2\. In addition, there are certain supplementary points as follows:

a\. The provincial budget no longer has the task of funding State Economic Arbitration and local statistical systems (since State Economic Arbitration bodies at all levels have been dissolved and the statistical system has been organized vertically; costs for the activities of Economic Courts and local statistical systems will be covered by the central budget).

b\. The central budget and provincial budgets no longer have the task of reinvesting state capital contributions (SKCB) into enterprises from SKCB paid into the budget (since all SKCB extracted from fixed assets belonging to budgetary funds are left with enterprises for reinvestment in fixed assets and deepening investments within industries).

Ministries, sectors, and localities need to strictly manage and direct state-owned enterprises under their jurisdiction to effectively utilize the aforementioned SKCB, closely monitor the sources of SKCB and the reinvestment needs of each enterprise, review, allocate, and transfer SKCB funds for rational reinvestment by industry, regularly inspect the reinvestment process, and evaluate the results of reinvestment...

Management of reinvestment using SKCB funds for state-owned enterprises will be further detailed.

c\. Regarding national target programs:

c.1\. Target Programs: Universal primary education and literacy eradication, implementing educational policies for mountainous areas and ethnic minorities, strengthening material infrastructure for schools, secondary school division, teacher training, rewriting teaching materials, upgrading hospitals, upgrading training institutions (including repair and upgrade of training equipment, computers, phonetics), restoration of historical sites, bringing cultural information to the grassroots, developing cinema, broadcasting coverage in mountainous, highland border, and remote island regions, combating drug abuse, combating prostitution, supporting particularly disadvantaged ethnic groups, bringing television to mountainous, highland border, and remote island regions.

The above target programs are allocated by the central government. For parts implemented by central ministries and agencies, the funds are included in the regular expenditure plans of these ministries and agencies; for parts implemented by localities, the funds are included in the local budget (as a task of the local budget) and managed by the localities. Localities are responsible for detailed allocation to units tasked with implementation in accordance with the overall framework of each program and target announced by the central government, while strictly managing each target program to achieve the intended goals and effectiveness.

c.2\. Target Programs: Malaria control, brucellosis control, leprosy control, tuberculosis control, HIV control, population and family planning, assistance to malnourished and disadvantaged children, expanded immunization, labor resettlement and employment, afforestation of bare hills (327) are managed by the relevant ministries in collaboration with the Ministry of Finance and the State Planning Commission, which allocate and inform localities for coordinated management. The central budget directly disburses funds for programs implemented by central agencies and authorizes through the Provincial Finance and Price Departments. For the afforestation program and labor resettlement and employment program, the method of disbursing loans through the People's Committees continues as in 1994.

2\. Allocation of revenue sources between the central budget and provincial budgets:

Revenue items retained by the provincial budget will remain as in 1994; in addition, certain amendments and supplements are made as follows:

- Revenue from the sale of state-owned housing managed by localities (including land use rights fees attached to such housing) will be fully retained by the local budget for investment in housing development.

- Revenue from land use rights fees will be retained by the provincial budget at 70% for investment in infrastructure construction.

- Revenue from the transfer of land use rights will be retained by the provincial budget at 50%.

- Personal income tax will be fully retained by the provincial budget (except for personal income tax from employees of oil companies in Ba Ria-Vung Tau).

- Natural resource taxes will be fully retained by the provincial budget (except for water resource taxes from the Hoa Binh hydroelectric plant).

- Customs duties on cross-border trade through land borders: provinces Ha Tinh, Lao Cai, Long An, Cao Bang, Thanh Hoa, Ha Giang, Nghe An, Dak Lak, Tay Ninh, Kien Giang, Song Be, Dong Thap, Gia Lai, Lai Chau, Quang Binh, Quang Tri shall retain 50% for provincial state budget; Lang Son province retains 35%; Quang Ninh province retains 30% for provincial state budget.

- Corporate income tax (excluding corporate income tax of units under central ministries and agencies that are centrally accounted) is a revenue adjustment item.

- Traffic fees paid into the State Treasury amount to 100% (as traffic fees collected through fuel prices only occur and are paid in some provinces and cities).

- Revenues from economic enterprises of the Party shall be remitted to the State Treasury at 100% so that the State Treasury has funds to allocate back to the Central Financial Management Board.

3/ Regarding the mechanism for rewarding excess revenues:

In 1995, to strongly encourage localities to increase revenues, the Government decided to retain the entire amount of excess revenues submitted beyond the legal decree plan for the following revenue items:

- Revenue items where the provincial state budget enjoys 100%.

- Corporate income tax (excluding corporate income tax of economic enterprises of the Party and corporate income tax of units under central ministries and agencies that are centrally accounted).

- Customs duties on cross-border trade through land borders.

- Land use fees and land transfer taxes. For the excess revenue from business taxes, in addition to the portion enjoyed by the provincial state budget according to the prescribed ratio, the locality will retain 60% of the excess revenue of the State Treasury (excluding the excess revenue from business taxes from enterprises of the Party and local lotteries which have already retained 100%).

At year-end, localities must consolidate the results of business tax revenue submission with confirmation from the Treasury Office and the local Tax Department and send them to the Ministry of Finance for consideration of awarding the excess revenue bonus according to the above regulations no later than January of the following year. The entire amount of excess revenue enjoyed by the provincial state budget must be used according to the provisions in Section I mentioned above, with at least 30% allocated to the financial reserve fund.

III- REGARDING THE IMPLEMENTATION, MANAGEMENT AND CONTROL OF THE BUDGET IN 1995.

1/ On revenue collection:

- Ministries, sectors, and localities need to urgently and effectively allocate revenue plans to subordinate units, thereby providing a basis for good revenue collection guidance right from the beginning of the year.

- The Customs Service needs to closely cooperate with the Tax Service to effectively organize the collection of customs duties on cross-border trade through land borders; at the same time, direct the collection system to clearly account for customs duty revenues from cross-border trade through land borders at each border gate.

- The Tax and Customs sectors need to urgently innovate tax collection measures:

+ Evaluate specifically the results of budget revenue collection in 1994, thereby identifying causes and lessons learned to implement effective revenue collection measures in 1995.

+ Continue to seek leadership and guidance from superiors, party committees, and local governments in urging and implementing tax collection in the locality.

+ Guide state-owned enterprises and non-state-owned enterprises (especially large households) to properly implement accounting systems and manage sales invoices to ensure accurate revenue sources, urge timely submission of generated revenues to the state budget; adjust taxable revenue promptly to effectively prevent revenue loss.

+ Rectify and strengthen revenue collection inspection to prevent revenue loss. Prevent revenue loss from taxpayers, unreasonable revenues and expenses.

+ Continuously strengthen and improve the organization to ensure sufficient manpower to fulfill assigned revenue collection tasks.

2/ On budget expenditure:

2.1- Budget expenditures must be allocated specifically and according to purpose based on the 1995 budget expenditure tasks assigned by the Prime Minister to each ministry, sector, and locality. During implementation, expenditures must be managed according to target, object, and approved budget. Heads of ministries, sectors, Chairmen of Provincial People's Committees directly under the Central Government, and heads of grassroots units are responsible for managing and using state budget funds invested in their units, ministries, and localities efficiently and economically. Units using state budget funds must prepare quarterly expenditure plans (divided by month) and submit quarterly settlement reports to the same-level finance authority; in cases where there is no report on the previous quarter's state budget fund usage without a valid reason, the finance authority must suspend the issuance of the next quarter's budget (except for salary-related expenditures) until the unit submits a report.

2.2- For construction investment expenditures from land and housing funds, provinces and cities must on one hand organize management well to ensure effective and economical spending, and on the other hand need to establish separate monitoring to ensure that only revenues from housing and land funds can supplement investment capital and the results of revenue and expenditure must be reflected in the budget.

2.3- In the coming years starting from 1995, new office building construction, car purchases, and expensive interior furnishings for government offices, party organizations, and mass organizations funded by the state budget will be suspended. Special cases requiring resolution must be approved by the Government.

2.4- In 1995, the state budget will not subsidize health resorts except for those specified in Document No. 6223/KGVX dated November 7, 1994, and health resorts belonging to the Health, Defense, Civil Affairs, and Social Welfare sectors.

2.5- Revenue from health insurance and hospital fees according to established policies are important sources to support medical examination and treatment work and must be strictly managed to ensure effective use. Concentrate state budget funds on disease prevention, treatment for policy beneficiaries, extremely poor people, and the implementation of important national programs.

2.6- Social Insurance agencies must quickly organize and complete their organizational structure, closely coordinate with the finance sector to ensure full social insurance contributions according to established policies and properly manage payments to retirees and social beneficiaries.

2.7- In 1995, a year with many significant anniversaries, sectors and levels should organize solemnly but economically, avoiding ostentatious displays and unnecessary sightseeing tours and festivals.

2.8- Regarding salaries: In 1995, the minimum wage level and the gap between salary grades will remain unchanged at the adjusted levels of 1994.

The increased expenditure requirements due to adjustments in salary allowances and annual salary grade increases by ministries, sectors, and localities will be arranged within the budget expenditure plan assigned at the beginning of the year.

Regarding cost savings: Ministries, localities, and grassroots units including the fields of state budget management, construction investment, national security, and defense, upon receiving the plan, must develop specific cost-saving measures for the expenses to be reduced and organizational methods for implementation; they shall register with their superior managing authorities and financial agencies. The amount saved shall be retained by the unit for use in practical and effective matters, and the unit must have a usage plan reported to the same-level financial agency for monitoring and management. For State-owned enterprises, they must register the level and methods of cost savings, the additional profit gained from implementing cost savings, which State-owned enterprises are entitled to retain for investment and business operations after paying corporate income tax as prescribed.

The development of cost-saving plans by ministries and provinces must be completed by February 1995. The Ministry of Finance will compile a nationwide report to submit to the Government and National Assembly by the end of March 1995.

- For national target programs, ministries and localities must manage them strictly, prioritizing the provision of funds in a timely manner to ensure project progress as stated in the National Assembly's Resolution; the ministries and main managing agencies of the programs must strengthen inspection and supervision during the implementation process to ensure that the target programs are carried out according to the intended beneficiaries and regulations.

IV- IMPLEMENTATION

1/ Ministries, sectors, People's Committees of provinces and centrally governed cities shall base themselves on Decision No. 829/TTg dated December 30, 1994 of the Prime Minister and this Circular to organize and guide agencies, units, and local government levels to implement.

2/ This Circular takes effect from January 1, 1995. During the implementation process, if there are any difficulties, please reflect them to the Ministry of Finance for supplementary guidance.