Circular No. 111/2004/TT-BTC guiding certain points regarding the organization and implementation of the state budget for the year 2005

CIRCULAR

Guidelines on certain aspects regarding the organization and implementation of the budget estimate

state budget for 2005

Pursuant to Resolution No. 33/2004/QH11 on the state budget estimate for 2005 adopted by the National Assembly, the 11th term, sixth session on November 9, 2004;

Pursuant to Resolution No. 34/2004/QH11 on the allocation of the central government's budget estimate for 2005 adopted by the National Assembly, the 11th term, sixth session on November 11, 2004;

Pursuant to Decision No. 194/2004/QĐ-TTg dated November 17, 2004 of the Prime Minister on allocating the state budget estimate for 2005;

The Ministry of Finance guides certain points regarding the organization and implementation of the state budget estimate for 2005 as follows:

I. ON THE ALLOCATION AND ASSIGNMENT OF THE STATE BUDGET ESTIMATE FOR 2005:

1. On the division of revenue sources and expenditure responsibilities between the central and local budgets:

In 2005, which is the second year of the period for stabilizing local budgets (2004-2006), the stable percentage (%) of revenue distribution between the central budget and each local budget will be maintained, with the amount of supplementary balance from the central budget to each local budget being allocated according to the level assigned by the Prime Minister for each province and centrally administered city under Decision No. 242/2003/QĐ-TTg dated November 17, 2003.

Implementing the mechanism for dividing revenue sources and expenditure responsibilities between the central budget and local budgets as stipulated in Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government and Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance guiding the implementation of the State Budget Law.

The division of revenue sources and expenditure responsibilities between budgets at various levels of local authorities and the supplementary balance from higher-level budgets to lower-level budgets must be implemented stably in accordance with the resolutions of People's Councils and decisions of People's Committees at provincial level already decided for the five-year budget period during the stabilization period.

Implementing the mechanism for balancing land use fee revenues within the local budget for investment in economic and social infrastructure construction (land clearance, capital matching, project infrastructure investment, etc.). At the same time, starting from 2005, using part of these revenues and the local budget estimate for expenditures related to land management: surveying, mapping, creating various types of land maps; evaluating and classifying land; preparing, reviewing, announcing, and adjusting land use plans and programs; preparing land records, issuing land use right certificates; statistics, inventory of land, and other public land administration activities; to complete the issuance of land use right certificates in 2005 in accordance with the resolution of the National Assembly.

2. Allocation and assignment of the budget estimate:

2.1. Allocation and assignment of budget revenue estimates:

Ministries, central agencies, provincial and municipal people's committees directly assign revenue collection tasks for 2005 to subordinate units and lower-level authorities, ensuring that they meet or exceed the revenue collection budget estimates assigned by the Prime Minister and guided by the Ministry of Finance.

The allocation and assignment of budget revenue estimates must be based on a comprehensive assessment of the results of revenue collection in 2004, taking into account tax laws, revenue policies, economic growth rates of each sector and field, the specific development potential of businesses, organizations, and individual traders, and the requirements for implementing measures to combat revenue loss and commercial fraud.

2.2. Allocation and assignment of state budget expenditure estimates:

2.2.1. Allocation and assignment of development investment expenditure estimates:

Ministries, central agencies, provinces, and centrally administered cities must allocate and assign development investment expenditure estimates in compliance with regulations on investment management and construction, while ensuring the following main requirements:

First, allocate the budget for basic construction investment to repay all due debts, including: credit loans for implementing the program of reinforcing irrigation canals, rural transportation, village industry infrastructure, and aquaculture infrastructure (for localities); funds advanced by the central budget that must be recovered into the 2005 budget estimate; unfinished construction volumes of projects under the budget investment mission according to the prescribed regulations, including unfinished construction volumes of 2004 projects allowed to increase due to rising material and commodity prices; other due debts for basic construction investment under the budget that must be repaid.

Ensure matching funds for projects and programs using ODA funds; funds to implement Decision No. 134/2004/QĐ-TTg dated July 20, 2004 of the Prime Minister, with local budgets ensuring the minimum required ratio (at least 20% of the central budget support); funds for important ongoing projects to concentrate on completing them decisively, resolutely addressing the issue of scattered and prolonged projects.

After allocating funds for the above tasks, allocate funds for new projects and works. For new projects and works, ensure full investment procedures according to prescribed regulations and guarantee sufficient budget sources for implementation according to prescribed regulations.

The total budget estimate for basic construction investment allocated and assigned to projects and works within the 2005 fiscal year and the amounts for repaying basic construction investment debts shall not exceed the total development investment expenditure estimate assigned by the Prime Minister. For localities, if the People's Council at the provincial level decides on a higher revenue budget estimate than the one assigned by the Prime Minister, the additional portion shall be implemented in accordance with Point 2.2.8, Clause 2, Section I of this Circular.

Provinces and centrally administered cities must allocate and assign development investment expenditure estimates to subordinate agencies and units and lower-level authorities in the fields of education, training, vocational training, and science and technology, ensuring that they are not lower than the development investment expenditure estimates for these fields assigned by the Prime Minister to the locality.

2.2.2. Allocation and assignment of expenditure estimates for economic and social development, national defense, and security:

a) Ministries and central agencies allocate and assign the state budget expenditure plan for economic and social public services, national defense, security, administrative management of the state, the Party, and mass organizations (including salary reform expenses) to subordinate agencies and units must match and comply with the expenditure plan assigned by the Prime Minister in terms of total amount and detailed breakdown by each spending category; ensure that important tasks as prescribed by law and those decided by the Prime Minister are met; the allocation of expenditure plans must be in accordance with the regulations, standards, and quotas set forth by law.

b) Provinces and centrally-administered cities allocate and assign the state budget expenditure plan for economic and social public services, national defense, security, state administration, the Party, and mass organizations (including salary reform expenses) for 2005 to subordinate agencies and units and lower-level authorities must meet the following main requirements:

The allocation of the 2005 state budget expenditure plan to subordinate agencies and units and lower-level authorities for education, training, vocational training, and science and technology sectors must not be lower than the expenditure plan assigned by the Prime Minister; for other sectors such as national defense, security, health care public services, cultural information public services, economic public services, administrative management of the state, the Party, mass organizations, price subsidies, freight subsidies for policy goods, and other budget expenditures, the People's Committees at provincial level shall base on the budget expenditure policies, workload of each sector, actual needs of the locality, and guidelines issued by the Ministry of Finance, submit to the People's Councils at the same level for decisions on allocating and assigning expenditure plans to subordinate agencies and units and lower-level authorities in line with the actual situation of the locality.

The upper-level budget unit allocating and assigning the state budget expenditure plan to lower-level units must match and comply with the expenditure plan assigned by the People's Committee in terms of total amount and detailed breakdown by each spending category.

Ensure funding for implementing various systems, policies, and tasks decided by the Government and the Prime Minister from the central budget support with specific targets for localities and the local budget balance according to regulations, to implement major systems, policies, and tasks attached as an appendix to this circular.

Allocate the state budget to implement tasks decided by the Prime Minister, central budget support from previous years, and the 2005 local budget balance as follows: medical examination and treatment costs for the poor under Decision No. 139/2002/QĐ-TTg dated October 15, 2002 of the Prime Minister; costs to implement Decision No. 161/2002/QĐ-TTg dated November 15, 2002 on certain policies for developing preschool education; Decision No. 253/QĐ-TTg dated March 5, 2003 approving the project "Several measures to consolidate and improve grassroots governance in the Central Highlands during 2002-2010"; costs to implement preferential policies for teachers and educational managers in specialized schools and areas with extremely difficult socio-economic conditions under Decree No. 35/2001/NĐ-CP dated July 9, 2001 of the Government; Decision No. 155/2003/QĐ-TTg dated July 30, 2003 amending and supplementing certain special allowances for civil servants and employees in the healthcare sector,...

2.2.3. Allocation and assignment of the state budget to implement national target programs, projects, and tasks in 2005:

Based on the expenditure plan for implementing national target programs, important projects, and some other objectives and tasks assigned by the Prime Minister, ministries, central agencies, and People's Committees of provinces and centrally-administered cities must allocate and assign to subordinate units and lower-level authorities to ensure matching and timely compliance with the expenditure plan assigned by the Prime Minister. At the same time, integrate national target program funds on the same territory according to established regulations to effectively utilize these funds; in addition to targeted financial support from the central budget, provinces and centrally-administered cities should proactively arrange local budget funds and legitimate financial sources to implement them. For the education and training program, the central budget supplements targeted financial support for difficult localities to implement the project of reforming curricula and textbooks for grades 4 and 9, provinces and centrally-administered cities must strictly follow the central budget support goals, while also arranging local budgets to implement at least the minimum level announced by the Ministry of Finance in Decision No. 86/2004/QĐ-BTC dated November 17, 2004 of the Minister of Finance.

2.2.4. On budget allocation and implementation of financial mechanisms to create resources for salary reform in 2005 (the Ministry of Finance will issue a circular to guide this task specifically), pay attention to implementing the following main contents:

Ministries, central agencies, and provinces and centrally-administered cities, when allocating and assigning the state budget expenditure plan to subordinate units and lower-level budgets, must determine and assign the task of saving 10% of the additional regular expenditure in the 2005 budget compared to the 2004 budget (excluding salaries and salary-like payments, contributions to international organizations, national target program costs, price and freight subsidies for policy goods); not less than the savings level required for salary reform announced by the Ministry of Finance. Local government budgets at all levels must manage and concentrate the 10% savings from their affiliated agencies and units (excluding public service units with income operating under Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government and agencies implementing administrative cost contracts under Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister) to harmonize between units when determining the funding for salary reform for each agency and unit under their budget.

Administrative state management agencies with revenue sources and public service units with income must use at least 40% of the retained revenue (except for the healthcare sector which must use at least 35%, after deducting drug, blood, transfusion fluids, and chemical costs) to implement salary reform.

The local budget shall allocate at least 50% of the increase in local revenue realized in 2004 compared to the 2004 estimate and 50% of the increase in local revenue estimated for 2005 compared to the 2004 estimate, as assigned by the Prime Minister (excluding land use fee revenue), to implement salary reform.

Unspent funds from previous years' salary reform implementation may be carried over to 2005 to continue implementing salary reform as stipulated.

After implementing the measures mentioned above, if there is still insufficient funding, the central government budget will provide support to ensure the funding for implementing salary reform in 2005. In cases where the funding determined according to the provisions above for budgetary units at all levels and local government budgets exceeds the actual expenditure required for implementing salary reform as stipulated, this funding can continue to be used to transfer to subsequent years to create sources for salary reform, and not to be used for other purposes.

2.2.5. Regarding subsidy costs for postage, price subsidies, and free provision of certain policy goods (the portion of the central government budget supplement with specific objectives for the local budget). Based on the level of support from the central government budget and the balanced budget within the local government's budget estimate, the People's Committee of the province shall submit to the People's Council at the same level for decision on the objectives, methods, and contents of implementation (products, products, support standards, areas, beneficiaries of postage and price subsidies and free provision of certain policy goods) in accordance with the specific conditions of the locality, or issue policies and allocate and utilize these funds to fulfill tasks such as supporting production and business activities of ethnic minority groups, providing preferential credit for poor households to purchase production means and materials, etc., and report to the Ministry of Finance and the State Ethnic Affairs Commission for monitoring and directing the implementation process.

2.2.6. Regarding the allocation and assignment of expenses for implementing the allowance system for non-professional cadres at the commune level and village, hamlet, ward, group, and neighborhood cadres (hereinafter referred to as village and neighborhood) in accordance with Decree No. 121/2003/NĐ-CP dated October 21, 2003 of the Government:

Based on the actual situation and the budget capacity of the locality, the People's Committee of the province shall decide specifically the number of non-professional cadres for each commune, town, and township and the specific allowance amount for each position of non-professional cadres, while allocating and balancing the local budget to implement in accordance with Decree No. 121/2003/NĐ-CP dated October 21, 2003 of the Government and Circular Joint No. 34/2004/TTLT-BNV-BTC-BLDTBXH dated May 14, 2004 of the Ministry of Home Affairs, Ministry of Finance, and Ministry of Labor, Invalids, and Social Affairs.

2.2.7. Allocate contingency reserves for local government budgets at all levels in accordance with the Law on State Budget, not lower than the contingency reserve level assigned by the Prime Minister.

2.2.8. During the process of deciding on the budget revenue and expenditure estimates, if the People's Council decides on a higher budget revenue estimate than that assigned by the higher level, then the additional budget expenditure (excluding increases in expenditures from land use fee revenue) shall allocate at least 50% for salary reform implementation; the remaining 50% shall be added to the local budget contingency reserve to ensure proactive management of the budget, fulfilling important tasks, systems, and policies decided by authorized bodies, and handling overdue construction project payments in accordance with regulations.

2.3. On the time for allocation and assignment of budget estimates:

2.3.1. Ministries and central agencies shall complete the assignment of budget estimates to their subordinate budget-using units before December 31, 2004, in accordance with the Law on State Budget.

2.3.2. The People's Committee of the province, based on the Prime Minister's decision on the assignment of revenue and expenditure tasks for the state budget, shall submit to the People's Council at the same level for decision on the provincial budget revenue and expenditure estimates, the provincial budget allocation plan, and the provincial budget supplementation level for lower-level budgets before December 10, 2004; simultaneously, based on the Provincial People's Council Resolution, assign revenue and expenditure tasks to each agency and unit under the province, and the provincial budget supplementation level for each district, county, town, and city under the province.

The People's Committee of the province shall report the results of the decision and allocation of the provincial budget to the Ministry of Finance no later than five days after the People's Council decides on the budget estimate in accordance with Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

The People's Committee of the district, based on the decision of the People's Committee of the province on the assignment of revenue and expenditure tasks for the state budget, shall submit to the People's Council at the same level for decision on the district budget revenue and expenditure estimates and the district budget allocation plan before December 20, 2004; simultaneously, based on the District People's Council Resolution, assign revenue and expenditure tasks to each agency and unit under the district, and the district budget supplementation level for each commune, town, and township.

The People's Committee of the commune, based on the decision of the People's Committee of the district on the assignment of revenue and expenditure tasks for the state budget, shall submit to the People's Council at the same level for decision on the commune budget revenue and expenditure estimates and the commune budget allocation plan, and implement the regular expenditure allocation according to the types listed in the State Budget Manual in four categories as guided by Circular No. 7541/TC-NSNN dated July 8, 2004 of the Ministry of Finance, and send it to the State Treasury office for payment and expenditure control before December 31, 2004.

2.3.3. Based on the 2005 budget revenue and expenditure estimates assigned by the Prime Minister, the People's Committees of provinces and districts, central state agencies, and first-level budgetary units shall allocate and assign budget expenditure estimates to their subordinate budget-using units in accordance with Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance guiding Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the Law on State Budget, paying attention to the following points:

The primary budget unit must prepare a plan for allocating regular expenditures to subordinate budget-using units, detailing down to the type of items in the State Budget Classification into four groups of expenses, and submit it to the financial authority at the same level for review.

Within seven working days from the date of receiving the budget allocation plan, the financial authority shall issue a notification on the results of the review. In case the financial authority agrees with the allocation plan, the head of the budget-allocating agency or unit shall immediately allocate the budget to the subordinate budget-using units, and send copies to the financial authority, the State Treasury at the same level (a summary of all units) and the State Treasury where transactions take place (send detailed versions through the budget-using units). In case the financial authority proposes adjustments, within three working days from the receipt of the financial authority's document, the budget-allocating agency or unit shall adopt and adjust accordingly; if there is no agreement on the adjustment content, report to the competent authority for consideration and decision in accordance with Point 1.5, Part IV, Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

If the primary budget unit has not allocated the budget to the budget-using units by December 31, 2004, the financial authority and the State Treasury may temporarily provide funds for the budget-using units to carry out salary payments and other allowances of a similar nature; business fees, travel expenses; implementation of ongoing projects under national target programs and some necessary expenses to ensure the operation of the administrative machinery (excluding equipment procurement and repair costs). The maximum monthly temporary provision shall not exceed the average expenditure of one month in 2004. The period for providing temporary funds shall not exceed March 31, 2005.

After March 31, 2005, if the primary budget unit has not allocated the budget to the subordinate budget-using units or has not fully allocated the budget, the financial authority shall compile a report to the competent authority to reduce the budget expenditure or transfer it to other agencies or units in accordance with the law.

II. MANAGEMENT AND CONTROL OF THE STATE BUDGET:

1. Organization of management and collection, strengthening efforts to prevent revenue loss:

At all levels of People's Committees, Tax Authorities, Customs, and other responsible agencies must implement tax collection tasks in accordance with established regulations; start tax collection activities from the beginning of the year to ensure timely, full, and accurate collection according to the law. Strengthen propaganda, education, and guidance for taxpayers to understand tax policies, procedures for calculating and declaring taxes, and timely payment into the state budget. Increase inspection efforts against smuggling, commercial fraud, and tax evasion; promptly collect overdue taxes and arrears into the state budget.

Enhance the supervision of VAT refunds, ensuring strict control, compliance with regulations, and timely processing to facilitate businesses. Simultaneously, effectively implement post-refund and post-clearance inspections to prevent fraudulent refund claims and ensure timely tax payments. Collaborate with relevant agencies to strictly handle violations of laws concerning tax collection.

Emphasize the application of information technology in tax management. Expand pilot mechanisms for enterprises to self-declare and pay taxes. Implement effective management and inspection measures to ensure that self-declaring entities fulfill their obligations to the state budget in a timely manner.

Strengthen land management and usage from planning, issuing land use certificates, monitoring usage and transfers to ensure full and timely collection of the state budget in accordance with established regulations.

2. Management and control of the state budget:

2.1. Regarding capital mobilization for construction:

Ministries, localities, and units must manage and use the budget in accordance with regulations, standards, and within the allocated budget; strictly prohibit any form of illegal appropriation, borrowing, or lending. For provinces and centrally-administered cities requiring capital mobilization for infrastructure construction projects funded by provincial budgets within the five-year investment plan approved by the Provincial People's Council, they may mobilize funds, but the maximum debt shall not exceed 30% of the annual domestic construction investment budget of the provincial government. For Hanoi and Ho Chi Minh City, capital mobilization shall be carried out in accordance with Decree No. 123/2004/NĐ-CP dated May 18, 2004, and Decree No. 124/2004/NĐ-CP dated May 18, 2004 of the Government.

2.2. Organizing the execution of the state budget:

2.2.1. For the central budget:

In cases where revenues exceed the budget, at least 50% of the excess revenue shall be used for salary reform; the remaining portion shall be allocated to increase debt repayment for budget balance; to settle construction debts, supplement expenditures to accelerate the completion of important urgent projects; increase budget reserves to prevent and mitigate natural disasters, implement important defense and security tasks, and urgent important tasks.

Implement an incentive system for excess revenue in local budgets, with a reward rate of 30% of the excess revenue from shared revenue between the central and local budgets compared to the Prime Minister's allocated budget, but not exceeding the increase in central revenue from shared revenue between the central and local budgets in 2005 compared to the actual amount in 2004.

For Hanoi and Ho Chi Minh City, the incentive system for excess revenue shall be implemented in accordance with Decree No. 123/2004/NĐ-CP dated May 18, 2004, Decree No. 124/2004/NĐ-CP dated May 18, 2004 of the Government, and guiding documents.

The use, management, accounting, and reporting time for rewards shall be carried out in accordance with Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

2.2.2. Regarding local budgets:

In cases where local budget revenues collected according to the decentralization scheme exceed the estimates set forth by the Prime Minister and the higher-level People's Councils, at least 50% (excluding land use fee revenues) shall be used to increase funding for salary reform; the remaining 50% shall be used to increase payments for construction debts, supplement expenditures to accelerate the completion of important urgent projects; increase budget reserves to prevent and mitigate natural disasters, implement important tasks related to national defense and security, and other urgent important tasks.

The People's Council shall develop a plan for using the increased local budget revenues, unify opinions with the Standing Committee of the same-level People's Council before implementation; report the results of implementation at the nearest session of the same-level People's Council.

In cases where revenue does not meet the estimate, the People's Council shall develop a plan to reduce expenditures accordingly, focusing on cutting or deferring non-essential expenditure tasks, and report to the Standing Committee of the same-level People's Council for consideration and decision.

2.2.3. In organizing state budget implementation: Ministries, central agencies, and localities shall use the allocated budget estimates to fulfill assigned tasks and unexpected expenditure tasks arising during the year. In 2005, only requests for additional expenditures outside the budget estimates for agencies, units, and subordinates will be addressed, except for cases of widespread natural disasters causing significant damage exceeding the budget capacity of ministries and localities, newly emerging important and urgent tasks.

In cases where prices of materials and goods fluctuate during the year affecting assigned expenditure tasks, ministries, central agencies, and centrally-administered cities and provinces shall proactively use the allocated budget estimates and budget reserves (for local budgets) to handle the situation in accordance with regulations.

2.2.4. Financial authorities at all levels shall proactively plan to allocate funds from the beginning of the year for important projects and works according to prescribed regulations, especially for the repair and construction of dike, water conservancy, disaster prevention, and flood control works.

Ministries, central agencies, and localities shall regularly organize, inspect, and evaluate the progress of projects and works; for projects and works that are not progressing according to schedule, timely decisions or reports to competent authorities for adjustment and transfer of capital to projects with faster progress and potential for completion but insufficiently funded according to prescribed regulations must be made.

Ministries, central agencies, and localities shall intensify the implementation of financial systems applicable to public service units with income according to Decree No. 10/20002/NĐ-CP dated January 16, 2002 of the Government; expand pilot programs of staffing quotas and administrative management expenses for state administrative agencies according to Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister.

2.3. On procedures for budget allocation and payment:

Units using the budget shall implement regulations on payment, disbursement, and withdrawal of budget estimates according to Circular No. 59/2003/TT-BTC dated June 23, 2003, and Circular No. 114/2003/TT-BTC dated November 28, 2003 of the Ministry of Finance. Agencies implementing staffing quotas and administrative management expenses and public service units with income shall implement regulations on payment and disbursement according to relevant documents.

2.4. Method of transferring supplementary amounts from the central budget to local budgets:

Based on the supplementary amount from the central budget to the local budget for 2005 assigned by the Prime Minister, the Ministry of Finance shall provide monthly balance adjustments before the 25th day of each month; for localities with seasonal and uneven budget revenues and expenditures throughout the year, the Ministry of Finance shall determine monthly balance adjustments based on the progress of revenue and expenditure tasks to suit local realities; for targeted supplements, capital transfers to localities shall be made according to the requirements of the specified objectives. For mobilization preparation funds and East Sea - island program funds, temporary advances shall be provided according to prescribed regulations, and payments shall be made after localities report on the volume of work completed.

3. Practicing thrift, combating waste, and organizing financial and budget transparency:

Ministries, central agencies, and localities shall strengthen guidance and regularly organize inspections of budget usage by subordinate units, ensuring compliance with budget regulations, standards, and estimates. At the same time, they shall promptly and fully address any issues or violations discovered through inspection, audit, and investigation, clarify the responsibility of each organization and individual, and implement accountability for the heads of budget-using units when there is loss, waste, or improper use of the budget.

Ministries, central agencies, local governments at all levels, budgetary units at all levels, budget-using units, and units supported by the state budget shall strictly and promptly implement financial and budget transparency according to Decision No. 192/2004/QĐ-TTg dated November 16, 2004 of the Prime Minister and the circulars guiding this decision issued by the Ministry of Finance.

This circular takes effect in the 2005 fiscal year. Ministries, central agencies, and provincial people's councils under the central government shall base their directives to subordinate agencies and units and lower-level local governments on this circular to organize its implementation.

III. IMPLEMENTATION:

This Circular takes effect during the fiscal year 2005. Ministries, central agencies, People's Committees of provinces and centrally governed cities shall base themselves on this Circular to direct subordinate agencies and units and lower-level local authorities to organize its implementation.

During the implementation process, if there are any difficulties, please report them promptly to the Ministry of Finance for coordination and resolution./.