Circular No. 06 TC/TQD on the temporary financial revenue regime to be applied to state-owned enterprises in southern provinces and cities

 CIRCULAR

Regarding the temporary financial collection regime to be applied to state-owned enterprises in southern provinces and cities

businesses in southern provinces and cities 

After liberation, in southern provinces and cities, the revolutionary government has implemented a temporary financial collection regime for private and state-owned economic entities to ensure regular and timely revenue for the state budget (Directive No. 11-CT/75 of the Central Office's Standing Committee and Circular 296 dated August 6, 1975 of the Ministry of Economy and Finance, Government of the Provisional Revolutionary Administration of the Republic of South Vietnam). Provisional Revolutionary Government of the Republic of South Vietnam).

Currently, state-owned economic organizations are developing increasingly in southern provinces and cities. Old "publicly managed" enterprises, those that have been nationalized, or those directly managed by the state such as state-owned enterprises are becoming more numerous. All these enterprises must be managed under the state enterprise management regime as prescribed. To facilitate the management of economic and financial accounting according to the correct economic accounting system, closely aligned with the activities of state-owned enterprises, ensuring timely and full concentration of monetary accumulation into the state budget, moving towards the application of a unified financial collection regime for state-owned enterprises nationwide after obtaining approval from the Standing Committee of the Council of Ministers, the Ministry of Finance issues this circular to stipulate the temporary financial collection regime to be applied to state-owned enterprises in southern provinces and cities as follows:

1. Financial contributions of state-owned enterprises to the state budget

The state financial collection regime for central and local state-owned enterprises in southern provinces will include:

1. State-owned enterprise revenue

2. Revenue from price differential payments

3. Revenue from profit contributions of state-owned enterprises

4. Revenue from basic depreciation payments

5. Revenue from excess working capital recovery (if applicable)

6. Revenue from surplus asset sales (if applicable)

The regulations on commercial and industrial taxes and agricultural taxes shall not be applied to central and local state-owned enterprises.

Current tax contribution rates will be replaced by the above forms of contribution.

a) Regarding state-owned enterprise revenue This applies to state-owned enterprises engaged in industrial production that produce their own products or undertake processing.

In principle, the level of state-owned enterprise revenue for each type of product is the difference between the wholesale industrial selling price and the cost price plus (+) the fixed profit margin. However, currently, given the situation where state-owned enterprises in the south have yet to establish cost prices, trade discounts, and profit margins, the temporary revenue level is determined by consolidating the current tax rates (corporate tax, income tax, special consumption tax - if applicable) into a consolidated revenue rate. For enterprises that can temporarily determine retail product prices and cost prices, specific profit margins (ranging from 3% to 10% of the cost price of individual products or total cost price of the enterprise) and temporary trade discounts should be calculated to determine appropriate state-owned enterprise revenue levels.

b)Regarding price differential revenue This applies to trading and transportation enterprises

The implementation of pricing policies, purchasing methods, and accounting systems according to the state-regulated pricing system in the state trading sector creates price differentials when enterprises purchase and sell goods. These price differentials, which lie outside the state-owned enterprise revenue already included in the wholesale industrial selling price and outside the profit margin of trading enterprises included in the trade discount, must be paid to the state budget in the form of price differential revenue when they occur as follows:

When goods enter storage, enterprises must pay to the state budget the following amounts:

1) Price differential revenue from purchasing handicrafts, imported industrial goods, and other industrial goods.

The price differential = directed retail price minus (-) trade discount minus (-) actual purchase price

2) Price differential revenue from purchasing agricultural products and foodstuffs.

The price differential = directed purchase price at the main market of the locality minus (-) actual purchase price.

3) Price differential revenue from purchasing processed goods (for trading and material supply enterprises that undertake processing and dependent production tasks).

The price differential = directed retail price minus (-) trade discount minus (-) planned cost price.

When selling goods enterprises must pay to the state budget the following amounts: 

1) Regional price differential.

The price differential = main market retail price where the enterprise sells minus (-) main market retail price where the enterprise purchases.

2) Dual price differential (supply price and high price).

The price differential = free market retail price minus (-) inventory accounting price (supply price or normal selling price).

3) Other price differentials arising: Due to agricultural products and foodstuffs being left for local consumption, there is a difference between the retail price and the directed purchase price (+) purchase premium, plus (+) retail selling costs; due to the sale of technical materials and production supplies at retail prices, there is a difference between wholesale and retail prices.

In cases where there is no purchase or selling price, the actual transaction price between the buyer and seller according to the plan should be used to calculate the price differential to be paid.

c) For other enterprises such as service businesses, catering, cargo and passenger transport, port services, agency services, etc., the state-owned enterprise revenue form shall not be applied but rather the profit contribution regime.

d)Regarding profit contributionAll independently accounting state-owned enterprises that operate profitably (total monetary accumulation, minus (-) the contributions already specified in points a and b above) after retaining a portion of profits to establish enterprise funds according to state regulations, must contribute the remaining profits to the state budget.

For enterprises permitted to incur planned losses, the state budget will provide loss compensation according to the prescribed regulations.

Regarding basic depreciation contribution:

All state-owned enterprises with independent economic accounting and fixed assets must calculate the value of their fixed assets according to the guidelines of the Central Appraisal Commission, and deduct basic depreciation and major repair depreciation at the prescribed rates; they must pay basic depreciation of fixed assets into the State budget at the levels stipulated by the State. In cases where fixed assets are financed through loans from the State Bank for construction purposes, the basic depreciation of these fixed assets may be used to repay bank loans until the debt is fully repaid, after which the enterprise must continue to deduct and pay the basic depreciation of these fixed assets into the State budget.

2. Procedures for payment and deadlines for payment:

a) Regarding the payment of state revenue based on products:

Each time goods are sold, the enterprise must accurately calculate the amount of state revenue to be paid and submit a declaration of state revenue to the collection agency and the bank directly related to the enterprise.

The enterprise selling products must pay the state revenue into the State budget according to the following deadlines:

- If the sale proceeds are settled through collection on delivery, direct debit, etc., then the payment date is the day the sale proceeds reach the enterprise's account at the bank.

- If the sale proceeds are paid by check, then the payment date is the next day after receiving the check.

In cases where the payment deadline falls on a Sunday, weekly holiday, or public holiday, the payment date will be the next working day.

When the deadline for paying state revenue arrives and the enterprise has not made the payment, the enterprise must bear a fine of one ten-thousandth (0.01%) of the overdue amount for each day of delay.

b) Regarding the payment of price differences (for commercial circulation enterprises and material supply enterprises)

For price difference amounts arising upon entry into inventory or sale, domestic trade enterprises and material supply enterprises must declare them clearly to the collection agency according to the prescribed procedures to pay into the State budget.

In cases where price differences are compensated by the budget (i.e., losses due to national pricing policies), the enterprise must record and declare them clearly so that the budget can provide timely compensation as required by the enterprise.

c) Regarding the deduction and payment of profits and basic depreciation:

- Enterprises must deduct and pay profits into the State budget twice a month: the first time before the 14th day, paying 40% of the approved profit plan; the second time, two days before the end of the month, paying the remaining 60%.

At the end of each month or quarter..., after receiving the final report prepared within the prescribed period under the State's settlement reporting system, the enterprise must recalculate the actual profit achieved in the previous month, compare the amount due for payment with the amount actually paid, and if the payment to the State budget is insufficient, the enterprise must immediately pay the shortfall; if there is an overpayment, the enterprise may request the collection agency to refund the excess to the enterprise, or offset this overpayment against the amount due to the State budget in the next period.

- Enterprises must pay the basic depreciation into the State budget simultaneously with the planned profit deduction.

When the deadline for deducting and paying profits and basic depreciation arrives and the enterprise has not made the payment, the enterprise must bear a fine of one thousandth (0.1%) of the overdue amount for each day of delay.

d) The penalty for late payment of the above revenues shall be decided by the collection agency, and the enterprise must implement this decision immediately, including in cases where the enterprise lodges an appeal.

3. This collection regime shall take effect from July 1, 1977, and apply to all newly established central and local state-owned enterprises, as well as enterprises under "public management," production and business establishments of certain foreign entities, military and puppet authorities, comprador bourgeoisie, and reactionaries who fled abroad and whose properties have been nationalized, converted into public ownership, or directly managed by the State, and must comply with the management regulations for state-owned enterprises as stipulated in the Government Council Decision No. 90-CP dated April 4, 1977.

For joint ventures between state and private sectors, separate provisions will be made.

The Ministry of Finance requests all Ministries, Provincial People's Committees, Companies, and Associations of Enterprises to guide relevant units to implement this collection regime effectively. During implementation, any issues requiring resolution should be reported and discussed with the Ministry of Finance for timely guidance to the implementing units./.