Circular No. 164/2007/TT-BTC guiding the establishment, management, and use of the Tobacco Raw Material Cultivation and Processing Fund

CIRCULAR

Guidelines for the establishment, management, and utilization of the Tobacco Raw Material Cultivation and Processing Fund

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Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance.

Pursuant to Decree No. 119/2007/NĐ-CP dated July 18, 2007 of the Government on tobacco production and trade.

The Ministry of Finance provides guidelines for the establishment, management, and utilization of the Tobacco Raw Material Cultivation and Processing Fund as follows:

I- SCOPE AND APPLICABLE ENTITIES:

1. The Tobacco Raw Material Cultivation and Processing Fund (hereinafter referred to as the Fund) is established for the purpose of developing tobacco raw material regions to improve the quality of tobacco products and meet market demands.

2. Enterprises that have the necessary conditions to produce and trade in tobacco (as stipulated in Decree No. 119/2007/NĐ-CP dated July 18, 2007 of the Government) investing in tobacco cultivation according to approved planning by the Prime Minister may establish the Fund if they satisfy the following conditions:

- Paying all taxes due to the State budget in full and on time as prescribed by current tax laws.

- Allocating sufficient depreciation of fixed assets as prescribed by current regulations of the State.

- Operating with profit from tobacco sales.

Enterprises solely purchasing raw tobacco materials for production (without investing in tobacco cultivation) are not eligible to establish the Fund.

II- SOURCES OF FUNDS FORMATION

1. Contribution rate to the Fund: From 1% to 5% of the purchase price of the quantity of raw tobacco materials sold during the period or the purchase price of the quantity of raw tobacco materials put into production to create consumed products during the period. The specific annual contribution rate of enterprises shall be decided by the Board of Directors of the enterprise; in case the enterprise does not have a Board of Directors, it shall be decided by the General Director of the enterprise based on ensuring that the profit of the following year is not lower than the previous year.

+ Purchase price: Is the actual price recorded on invoices, purchase lists, or the average actual inventory price of the enterprise excluding tax and procurement costs.

+ Quantity of raw tobacco materials sold during the period: Is the amount of raw tobacco materials cultivated domestically by the enterprise and consumed during the period.

- All quantities of raw tobacco materials purchased must have complete invoices and documents as prescribed by the State.

- The amount contributed to the Tobacco Raw Material Fund shall be included in the cost of raw tobacco materials of enterprises investing in tobacco cultivation.

2. Other sources to form the Fund

a. Depreciation of fixed assets invested using Fund resources.

b. Revenue from the liquidation or sale of assets formed from the Fund after paying taxes as prescribed by Law;

Liquidation or sale of assets must comply with current regulations of the State;

c. Recovered value of scientific research projects (projects producing goods after paying taxes as prescribed by Law) funded from the Fund's resources.

III- CONTRIBUTION AND MANAGEMENT OF THE FUND

1. Contribution to the Fund

- Based on the business situation of the planned year, the conditions stipulated, enterprises investing in tobacco cultivation must develop plans for contributions and utilization of the Fund consistent with their production and business plans.

- Enterprises investing in tobacco cultivation must submit their plans for contributions and utilization of the Fund to the Enterprise Financial Authority at the same level and the Tax Authority where the enterprise is headquartered for inspection and supervision purposes. If the enterprise does not submit the plan, it will not be allowed to contribute or utilize the contribution.

- The timing for developing and submitting the Fund contribution plan is concurrent with the development of the production and business plan - financial plan of the unit for the year.

- For State-owned Joint Stock Corporations: They are responsible for compiling the annual contribution and utilization plans of their member units and reporting them to the Ministry of Finance (Enterprise Financial Department and General Tax Department), and the Ministry of Industry and Trade.

2. Utilization of the Fund

The Fund is used for the following purposes:

a. Investment in building stations, farms, technical centers of enterprises investing in tobacco cultivation to improve seed varieties, cultivation techniques, preliminary processing, and technology transfer to tobacco farmers; supporting investment in building technical facilities (drying ovens, drying houses, warehouses, etc.) of raw tobacco material producers; supporting capital investment in raw material processing projects or interest subsidies for loans to build factories and processing lines for raw tobacco materials.

b. Expenditure on scientific research, experimental, and application of technological advancements aimed at improving seed varieties, cultivation techniques, preliminary processing, and raw material processing; purchasing research equipment and tools for tobacco seed breeding centers managed and used by enterprises investing in tobacco cultivation in tobacco raw material regions approved by the State.

c. Supporting tobacco farmers through advance funding, seeds, and agricultural inputs, and purchasing tobacco leaves when harvested, which must be implemented through commodity crop sales contracts between enterprises and raw material producers as stipulated in Decision No. 80/2002/QĐ-TTg dated June 24, 2002 of the Prime Minister on policies encouraging the consumption of agricultural commodities through contracts.

d. Supporting to mitigate consequences and compensate for part of losses caused by natural disasters to tobacco farmers who have signed tobacco cultivation contracts with enterprises investing in tobacco cultivation after deducting the compensation from insurance companies (if any).

đ. Expenditure on agricultural extension work, propaganda, and dissemination of cultivation techniques for tobacco farmers, supporting the adoption of new high-yield and quality tobacco varieties in production.

e. Expenditure on propaganda and dissemination to tobacco farmers about implementing production and business methods through contracts.

g. Supporting infrastructure investment in transportation and irrigation for tobacco raw material cultivation areas to create long-term benefit linkages between investors, localities, and tobacco growers;

h. Supporting management of investment and procurement of raw tobacco materials.

3. Management responsibilities unions

a. For enterprises with a Board of Directors: The Fund is managed and utilized by the General Director of the enterprise according to the plan approved by the Board of Directors.

b. For enterprises without a Board of Directors: The Fund shall be managed and utilized by the Enterprise's General Director.

c. For State-owned Corporations: In cases of supporting infrastructure investment for transportation, irrigation... in tobacco growing regions according to common objectives, State-owned Corporations are permitted to mobilize the Fund based on agreements with enterprises (subsidiaries or member companies) that have established the Fund. State-owned Corporations manage the Fund in accordance with the provisions of this Circular.

4. Accounting and Settlement

- All income and expenditures from the Fund must be documented with invoices and receipts in compliance with current state regulations. If the expenditure involves basic construction investment, it must be carried out in accordance with current state regulations on basic construction investment management.

- Units utilizing the Fund are responsible for accounting for income and expenditures from the Fund in compliance with current regulations.

- At the end of the fiscal year, enterprises investing in tobacco cultivation are responsible for preparing reports on the establishment and utilization of the Fund and consolidating them in the annual financial settlement report of the unit to be submitted to the enterprise's financial authority at the same level, the Tax Authority where the enterprise's main office is located, and other relevant management authorities in accordance with current regulations. Any remaining balance of the Fund that has not been used will be carried over to the next year.

- The recording of increases in fixed assets shall be conducted in accordance with the current accounting system.

IV - IMPLEMENTATION

This Circular takes effect fifteen days after its publication in the Official Gazette and replaces Circular No. 50/2004/TT-BTC dated June 8, 2004, issued by the Ministry of Finance. All other provisions regarding the establishment, management, and utilization of the Fund that conflict with this Circular are hereby abolished.

Enterprises that previously established a raw material investment fund for tobacco in accordance with the guidance provided in Circular No. 50/2004/TT-BTC may continue to manage and utilize the Fund in accordance with the guidance provided in this Circular if there is a remaining balance.

Specifically, for member units of State-owned Corporations, based on the settlement of the Fund for the year 2007, the unit shall transfer the surplus to the Corporation to supplement the Development Investment Fund of the Corporation and use it in accordance with current state regulations.

Enterprises investing in tobacco cultivation are responsible for managing and utilizing the Fund in accordance with the provisions of Section III of this Circular and current financial management regulations. In cases where the Fund is used for purposes other than those intended, the improperly expended amount must be recovered and returned to the Fund, and the person who made the improper expenditure decision shall bear legal responsibility.

During implementation, if difficulties arise, units are requested to promptly reflect these issues to the Ministry of Finance for study, guidance, and supplementation./.