Circular No. 222-TC/TQĐ stipulates procedures and measures for collecting interest and price differential taxes from state-owned trading enterprises under the domestic trade sector.

CIRCULAR

Regulations on procedures and measures for collecting taxes, interest, and price differences from state-owned trading enterprises under the domestic trade sector.

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THE MINISTER OF FINANCE

Based on Decree No. 235-CP dated December 4, 1969, issued by the Council of Ministers regarding the temporary financial collection system and profit distribution regulations for state-owned enterprises in the domestic trade sector; based on Decision No. 258-CP dated December 29, 1969, issued by the Council of Ministers determining the revenue of local budgets from the submission of agricultural products and food; based on Circular No. 93-TT/LB dated April 16, 1970, jointly issued by the Ministry of Finance, the Domestic Trade Department, and the State Bank guiding the implementation of the aforementioned decrees and decisions, the Ministry of Finance hereby issues this circular to regulate the procedures and measures for collecting into the State budget the price difference revenues generated from implementing new collection systems at enterprises under the domestic trade sector; reiterating the procedures and measures for collecting into the State budget taxes, interest, basic depreciation, and revenues collected according to current regulations and practices in activities such as catering, service provision, animal husbandry, and other non-pure circulation activities within the domestic trade sector (Circular No. 93-TTg dated September 17, 1962, issued by the Prime Minister, and Decree No. 45-CP dated September 23, 1960, issued by the Council of Ministers).

I. COLLECTION OF PRICE DIFFERENCES

Due to the application of new financial collection systems in the domestic trade sector and the accounting requirements of domestic trade enterprises, there has been a rearrangement of the pricing system applied in transactions between purely circulating enterprises under the domestic trade sector and their selling or purchasing customers.

As explained in Circular No. 93 jointly issued by the Ministry of Finance, the Domestic Trade Department, and the State Bank, the rearrangement of the pricing system aims to shift the national revenue, taxes, and the majority of commercial profits that, under the old collection system, were typically submitted by first and second-tier trading enterprises to the state budget, to now, under the new collection system: - a portion is transferred to the production stage and submitted by industrial enterprises to the state budget, or transferred to the foreign trade sector and submitted by foreign trade corporations to the state budget; - another portion is converted into price difference revenues. These revenues arise whenever there is economic activity by trading enterprises, such as:

- When goods enter the warehouse for circulation, there are price differences arising from processing (in units where processing is a dependent activity); price differences from purchasing handicrafts; price differences from purchasing agricultural products and food;

- When selling goods, there are price differences arising from processing (for units that have independent accounting); regional price differences; price differences from selling industrial goods at two prices; price differences from consuming agricultural products and food locally; etc...

The fundamental principle is: Any price difference arising when goods enter the warehouse or during sales must be immediately declared clearly and specifically by the trading enterprise to the collection agency for submission to the state budget.

In cases where the price difference is subsidized by the budget (meaning losses incurred due to pricing policies or accounting requirements), the enterprise must account for and declare it clearly, and the budget will provide timely subsidies according to the enterprise's requirements. Absolutely, no revenue should be used to offset losses, nor should it be directly recorded in the profit and loss account.

A. Collection of price differences arising when goods enter the warehouse for commercial circulation;

This includes:

- Processing and production price differences arising in dependent processing and production facilities that have not yet achieved independent economic accounting:

The price difference amount = warehouse guidance price minus (-) planned cost.

- Price differences from purchasing handicrafts, imported industrial goods, and other industrial goods:

The price difference amount = warehouse guidance price minus (-) actual purchase price.

- Price differences from purchasing agricultural products and food:

The price difference amount = procurement guidance price minus (-) actual purchase price;...

Under the new collection system, for industrial goods, trading enterprises must record the goods entering the warehouse at the warehouse guidance price (retail price minus (-) trade discount); for agricultural products and food, they must record them at the procurement guidance price at the main local market.

Banks also base their loans for procurement or circulation and reserves on these warehouse prices.

If the warehouse price is higher than the price paid by the trading enterprise to the seller, the enterprise must submit the excess price difference to the state budget; if lower, the enterprise receives a subsidy from the budget for the shortfall.

Declaration and collection methods:

a) When goods enter the commercial warehouse, or when the enterprise receives payment demand documents from the seller, the enterprise must immediately complete the necessary procedures (warehouse inventory list, invoices, etc.) to request a loan from the bank at the warehouse price, ensuring compliance with the three-day deadline set by the bank for payment, while simultaneously submitting a declaration form to the collection agency (combined with a payment authorization) requesting the State Bank to deduct and submit the price difference arising from the goods entering the warehouse to the state budget.

b) The bank bases its loans to the enterprise on the warehouse price, and based on the declaration form (combined with a payment authorization), it deducts and submits the price difference to the state budget.

On the commercial warehouse inventory list, the warehouse entry invoice, and the declaration form (combined with a payment authorization), the item, quantity, price according to the warehouse guidance price and actual purchase price, and the price difference to be submitted to the state budget (or to be subsidized by the budget) must be clearly stated. The declaration form (combined with a payment authorization) submitted to the state budget must be made in six copies according to Model No. 1 attached to this circular.⁽¹⁾.

- One copy is sent to the local collection agency as a substitute for the payment notification to the state budget.

- Four copies are sent to the bank. After the bank has provided the loan and deducted the price difference to the state budget, it returns one copy to the local collection agency to inform that the funds have been deposited into the treasury.

c) Companies at Level I must declare and pay price differences to the state budget on a per-lot basis upon warehouse entry. For companies at Level II, local revenue authorities shall determine payment schedules for each company (daily, every 3 to 5 days, or twice to three times a month).

d) If within the same lot of goods entering the warehouse there are both excess and shortage price differences, the enterprise must clearly record these in the warehouse entry declaration, invoices, customs declarations, etc., to balance out payments to the state budget or request budget subsidies; depending on the enterprise's requirements, financial authorities will either immediately process the subsidy or carry out offsetting in the next incoming lot.

e) Specifically regarding the collection of processing price differences from dependent processing facilities. Trading enterprises must:

- Register with the revenue authority (using Form No. 2 attached to this Circular)(1): names of processing facilities, processed items, unit product cost (planned cost or cost calculated according to a formula);

- Add two columns to the processing goods entry declaration form and the processing goods entry journal (commonly known as the entry ledger): "planned unit product cost" and "processing price difference amount payable to the state budget (or eligible for budget subsidy)."

- For processing goods subject to commodity tax, when entering the warehouse, trading enterprises must declare the commodity tax payable, so that the bank can simultaneously transfer this tax along with the collected processing price difference to the state budget. The declaration of commodity tax payment and the declaration of the price difference should be on the same declaration form (combined with a payment authorization).

The calculation of processing price differences shall be carried out in accordance with the provisions of the Joint Circular No. 93-TT/LB issued by the Ministry of Finance, State Bank, and Internal Trade on April 16, 1970, and the taxable price for processing goods is the wholesale selling price of the trading enterprise for processing.

B. Collection of price differences arising from sales and receipt of proceeds.

1. This section includes:

- Processing price differences arising from independent economic accounting units:

Price difference amount = retail selling price minus (-) trade discount, minus (-) planned cost;

- Regional price differences:

Price difference amount = retail market price at the place of sale minus (-) retail market price at the place of purchase;

- Price differences due to high-priced sales of bicycles, bicycle parts, imported MSG, etc...

Price difference amount = free retail price minus (-) supply price;

- Other price differences (arising from local consumption of agricultural products and foodstuffs, sales of technical materials and production means at retail prices, etc...).

All such price differences mentioned above arise when trading enterprises sell goods and receive proceeds, meaning that the total proceeds include the cost of goods sold, the fixed trade discount, and the aforementioned price differences.

It should be noted that not all purely trading enterprises generate all the aforementioned price differences; therefore, specific calculations of each price difference to be paid to the state budget must be based on the characteristics of business operations and buying and selling prices of each unit. At Level I trading companies, price differences typically arise from processing, commodity taxes, regional price differences, and agricultural product sales price differences; at Level II wholesale and retail enterprises, in addition to the aforementioned items, there are also price differences from high-priced sales of bicycles, bicycle parts, sales of technical materials and production means at retail prices, local consumption of agricultural products and foodstuffs at retail prices, etc.

2. Declaration and payment procedures:

a) Each time goods are dispatched from the warehouse, the trading enterprise issues a sales invoice and a bank collection request (collection receipt) form, on which the enterprise must clearly indicate the generated price difference amount. On the sales invoice, the enterprise adds a line horizontally to record the total price difference amount payable to the state budget. In cases where sales proceeds are received through fixed amount checks or cash, when preparing the check submission form or cash deposit form, the price difference amount payable must be clearly recorded.

b) Based on the specific circumstances of each unit, the procedures for declaration and payment are carried out:

Level I companies submit payments based on each collection request form.

When issuing the collection request form, they must attach a declaration form (combined with a payment authorization) and send it to the revenue authority and the State Bank, allowing the bank to calculate and transfer the payment to the state budget immediately upon receipt of the sales proceeds (the declaration form and its number of copies are as specified in Part I, Point A; 2/b).

For Level II companies, local revenue authorities shall determine payment schedules for each company based on sales invoices or periodic payments.

If the enterprise pays periodically, when the payment period arrives, they must prepare a declaration form (combined with a payment authorization) indicating the generated price difference amount; the bank will base this on the documentation to transfer the price difference amount payable by the enterprise to the state budget.

c) At retail trading enterprises that have not yet achieved independent economic accounting, the generated price differences occur directly when the retail enterprise sells to consumers. At the end of each day, the total sales proceeds of these units are deposited into the bank, including the price differences payable to the state budget. Since they have not yet achieved independent economic accounting, these units do not directly deduct and pay the price differences to the state budget, even though the money has been deposited into the bank. Therefore, these price differences must be fully and promptly calculated and deducted by the trading company and submitted to the state budget according to the following procedure:

When trading companies prepare their financial plans, in the profit and loss statement, the difference between the purchase price and the selling price must be separately listed, distinguishing the fixed trade discount allocated to the company and the price differences payable to the state budget, recorded as absolute amounts and calculated as a percentage (%) of sales volume.

Periodically (how many times per month is determined by the local revenue agency), the company has the duty to send a notice requesting the Bank to deduct and transfer to the State budget the price differentials calculated on sales volume according to the aforementioned plan ratio. Within the first five days of the following month, the company must recalculate based on actual figures and settle with the State budget, paying any additional amount due or receiving a refund for overpayment, which can be carried forward to the next period at the company's request.

The companies must guide the retail trade enterprises to periodically report fully and promptly their sales volumes and the price differentials arising from sales that need to be paid to the State budget.

d) In cases where among the goods sold there are items with price differentials resulting in shortages, the State budget will provide compensation, handled as stipulated in point A2/d of Part I above.

e) Each time funds from goods sales arrive, the Bank, based on the relevant documents, immediately deducts and transfers to the State budget the price differentials that the enterprise must pay, if the enterprise pays according to each invoice; thereafter, it deducts the commercial discount or fixed commercial premium into the enterprise’s deposit account; or periodically deducts and transfers to the State budget the price differentials payable to the State budget according to the declaration form submitted by the enterprise.

g) For enterprises engaged in processing work, operating independently economically, the enterprise must register with the revenue agencies of the processing units, the processed products, the unit cost (planned cost or cost calculated according to a formula); add a column for planned unit cost in the declaration form for processed goods received into inventory as well as in the inventory journal (commonly called the inventory entry journal); add a column for price differential payable to the State budget (or compensated) in the sales journal. Each time goods are sold, the price differential payable to the State budget (or compensated) must be recorded directly on the sales invoice and stock withdrawal slip.

The collection and payment to the State budget shall be conducted as prescribed above. In cases where processed goods are subject to commodity tax, the enterprise must handle the tax payment procedures upon receipt into inventory, as stipulated in point A2/c of Part I above.

II. COLLECTION OF TAXES, INTERESTS, DEPRECIATION... FROM BUSINESS ACTIVITIES, FOOD SERVICE, SERVICES, ANIMAL HUSBANDRY...

In the domestic trade sector, in addition to the price differentials required to be paid into the State budget as prescribed above, trading enterprises must also pay taxes, interests, basic depreciation... to the State budget regarding business activities not involving circulation such as food service, services, animal husbandry, transportation, storage, production, etc.

Below are the current regulations regarding the collection and payment to the State budget of the financial accumulations mentioned above:

1. In the domestic trade sector, all enterprises (food service, services, animal husbandry, transportation, storage, production, etc.) operating independently economically must pay corporate tax (or commodity tax for goods subject to commodity tax), interest, basic depreciation (and other items such as fixed asset valuation changes, etc.).

a) Corporate Tax: Calculated on the sales volume or income from services, at the tax rate prescribed by the State for each type of activity (production 2%, services 3%, etc.)

b) Commodity Tax: Enterprises producing goods subject to commodity tax do not have to pay corporate tax on those goods. Commodity tax must be paid immediately upon sale. Therefore, each month when selling goods, enterprises must handle the declaration procedures and be allowed by the Bank to borrow to cover both the cost of production and the commodity tax. The taxable price is the wholesale industrial price, i.e., the retail price minus (-) the commercial discount.

b) Interest: Enterprises must pay interest to the State budget according to Decree No. 45-CP dated September 23, 1960 of the Council of Ministers.

Specifically, for dependent processing production activities, in addition to the processing production price differentials as mentioned in Part I above, they must also pay processing interest and production interest (as stipulated in Circular No. 27-TT/LB dated December 10, 1964 of the Ministry of Finance, Ministry of Domestic Trade, and the State Bank), specifically, dependent processing interest and production interest are the differences between actual costs and planned costs (or costs calculated according to a formula). If the enterprise cannot immediately determine the actual costs, the enterprise must base on the actual processing interest ratio from the previous settlement period to calculate the deduction ratio, adjusting and settling according to actual figures once the settlement is completed.

Transportation, service, and repair enterprises operating independently economically are entitled to establish three new funds (business development incentive fund, welfare fund, and reward fund), thus, the interest paid to the State budget is the realized interest, after deducting (-) the portion retained for the three funds as prescribed.

c) Regarding basic depreciation: All enterprises mentioned above must deduct and pay basic depreciation to the State budget according to the prescribed rates by the State. Specifically, transportation, service, and repair enterprises only pay 30% of the basic depreciation to be deducted to the State budget, while the enterprise retains 30% of the basic depreciation to allocate to the business development incentive fund and transfers 40% to the Trading Department.

2. All taxes, interests, and basic depreciation mentioned above, enterprises must pay to the State budget once or twice a month, the deduction amount is calculated based on the plan and adjusted according to actual figures once the settlement is completed (paying any additional amount due or receiving a refund for overpayment). Specifically, for processing interest, it is handled as stipulated in Part II, point 1/b above. The specific payment schedule is determined by the local revenue agency for each individual unit.

III. INSPECTION AND SUPERVISION WORK OF THE REVENUE AGENCY

The local revenue agency (financial agency or State-owned Enterprise Tax Collection Bureau), directly through dedicated staff, has the responsibility to assist trading enterprises in implementing the provisions of this circular thoroughly, delving into each production and business activity to accurately grasp the prices of each shipment and specific product; assisting and promoting enterprises to clearly account for and reflect each item to be paid to the State budget; urging enterprises to ensure timely and sufficient financial accumulation payments to the State budget.

The inspection and urging of payment collection must be carried out strictly, regularly, and periodically, specifically as follows:

Urge enterprises to timely prepare declarations (combined with payment authorization forms) in accordance with economic situations arising (at the time goods enter the warehouse, at the time of consignment collection and payment, when preparing lists for depositing checks and cash into the Bank, etc.) to promptly identify incomplete declarations for shipments and periods.

Upon receiving declarations (combined with payment authorization forms), first review the declared figures to check whether the enterprise has calculated correctly, then periodically reconcile the figures on the declaration with original invoices and documents regarding the items, quantities, prices, and amounts payable to verify the accuracy of the declaration. Through inspections, if errors are found, a verification report should be prepared in three copies (according to the attached Circular model) (1), one copy to be left with the enterprise, one copy retained by the collection agency, and one copy sent to the management department and immediately notify the enterprise to adjust the amount collected (make up for underpayment, offset overpayment). Local collection agencies (or State-owned Collection Bureaus and Tax Departments) shall determine the number of times specialized staff must conduct inspections at enterprises based on the characteristics of their business operations and accumulated revenue collection for the budget of each trading enterprise.

In cases where enterprises are required to pay taxes, interest, price differences, etc., according to planned schedules or actual occurrences, but fail to process payment procedures in a timely manner, the collection agency shall issue a payment notice to the enterprise and the Bank based on the assigned plan or actual activities. The Bank shall automatically deduct from the enterprise's deposit account and transfer the amount due as stated in the collection agency's notice into the budget. If the enterprise's deposit account does not have sufficient funds, the Bank will deduct and transfer the remaining amount to the budget once additional funds are deposited, following the priority sequence established by the State. Completing the plan for accumulating and paying the required amounts to the State budget on time is a crucial condition for establishing enterprise funds; the collection agency must record the efforts of enterprises in fulfilling their budget obligations as well as violations of financial regulations to provide a basis for appropriately establishing enterprise funds.

For handicraft cooperatives and small-scale industrial cooperatives that engage in processing for trading enterprises, local collection agencies, in addition to urging timely and full payments to the budget for corporate tax, commodity tax, income tax, must also closely manage and supervise the use of raw materials and delivery of goods to enhance State management of materials and goods.

Implementing these collection procedures aims to further strengthen economic and financial management at the grassroots level, quickly establish new collection systems, and ensure compliance.

The Ministry requests all Financial Departments and State-owned Collection Bureaus and Tax Departments to carefully study this Circular, organize detailed guidance for specialized staff to implement it in each trading unit, and simultaneously seek directives from Administrative Committees in revenue accumulation work for the State budget, as well as closely coordinate among relevant sectors to ensure effective implementation of this Circular.

During implementation, if encountering difficulties, they must promptly report to the Ministry for research and resolution.