Circular No. 23/1998/TT-BTC guiding the classification and handling of overdue tax debts and other amounts payable to the State budget.

CIRCULAR

Guidelines for Classifying and Handling Overdue Taxes and Budget Payments

In recent times, the implementation of tax laws and ordinances has gradually become more systematic, with many organizations and individuals engaged in taxable income activities paying their taxes fully and on time. However, there are still some units that have been拖欠税款多年，这影响了已颁布的税法的执行。政府也有集中解决一些企业在过去已经努力发展、深入投资和扩大生产但因旧体制遗留的影响和其他客观原因而无法缴纳所欠税款的企业困难的政策，为这些企业更好地进行生产和经营活动以及严格履行向国家预算缴纳税收义务创造条件。

Based on the actual situation described above; according to current tax laws and budget collection systems;

According to Directive No. 790/TTg dated October 26, 1996 of the Prime Minister on Strengthening Management of Budget Collection, Resolving the Persistent Overdue Tax Situation, and Ensuring Completion of the 1996 Revenue Plan; Circular No. 2700/KTTH dated May 30, 1997 and Circular No. 5949/KTTH dated November 22, 1997 of the Government on Handling Overdue Taxes;

The Ministry of Finance guides the classification and handling of overdue taxes and budget payments from before 1996 (excluding import and export duties, surcharges, fees, and fines) that remain unpaid due to objective reasons as follows:

I. OBJECTS AND MEASURES FOR HANDLING OVERDUE TAXES:

1. Considering partial investment capital support through recording receipts and expenditures via the State Budget:

Enterprises eligible for this form of treatment must be state-owned enterprises that, due to insufficient investment capital, have occupied taxes and other budget payments due up to December 31, 1996 for investment purposes, and now it is recognized that the use of investment capital is truly effective, demonstrated by production and business results and the amount of budget payments in subsequent years being higher than previous years.

The maximum level of investment capital support through recording receipts and expenditures shall not exceed the amount of taxes and revenues that the enterprise has used for investment, after exhausting all sources of funds within the unit in previous years and up to the end of 1996.

2. Considering write-off of overdue taxes for state-owned enterprises that owe taxes and other budget payments due to losses from production and business operations and lack the ability to pay the State Budget.

Enterprises encountering difficulties and suffering losses due to reasons such as:

Production and business operations encountering difficulties due to natural disasters, enemy attacks, accidents, and unexpected risks.

Production and business operations being ineffective due to issues left over from the old system, such as the formation of fixed assets and outdated production technology that is not synchronized or suitable for current production and business conditions without having been updated.

Production and business operations facing market export difficulties due to inability to fulfill supply contracts signed with countries in the former SEV bloc or selling goods and providing services at state-set prices, which are insufficient to cover production and business costs.

Enterprises producing special consumption tax items that are small-scale, mainly using domestically produced equipment and technology, suffering losses and unable to pay the full special consumption tax as stipulated by the Law, now have outstanding tax debts.

For enterprises suffering losses and unable to pay taxes as mentioned in this point, loss transfer according to the Law and current regulations will be considered. If the measures mentioned above are implemented but the enterprise still suffers losses and lacks the ability to pay the remaining budget debts, write-off of budget debts may be considered (except in cases where debt cancellation is requested). The maximum amount for write-off shall not exceed the remaining losses determined after implementing the aforementioned measures.

For enterprises with overdue taxes that have been consolidated into another entity or have formed joint ventures with foreign entities, the consolidated or joint venture enterprises must bear responsibility for paying the overdue tax debts to the State Budget. If these enterprises also lack the ability to pay the remaining tax debts, write-off may be considered. 3. Considering debt cancellation for:

a. State-owned enterprises that have been dissolved due to objective reasons causing losses in previous years, after implementing decisions on asset and debt management, if the overdue taxes and other budget payments still remain, they will be cancelled.

Enterprises previously producing explosive fireworks subject to special consumption tax, implementing Directive No. 406/TTg dated April 8, 1994 of the Prime Minister on Prohibiting the Sale and Burning of Explosive Fireworks; now having changed their business and product lines, encountering difficulties, suffering losses, and unable to pay the outstanding special consumption tax on fireworks.

b. Households that owe taxes but whose tax debtor has died, if the estate's value exceeds the tax debt, the heir must pay the tax on behalf of the deceased according to the Inheritance Ordinance. If the deceased does not have an estate or the estate's value is less than the tax debt, the debt will be cancelled. Households that have suffered significant property damage due to natural disasters, fires, or relocation to another place, after verification and investigation cannot locate the debtor or lack the ability to repay the outstanding taxes, may request cancellation of the debt.

State-owned enterprises and households that owe taxes and suffer losses due to subjective reasons related to individual responsibility, currently undergoing inspection and investigation without a specific conclusion or already having a conclusion on individual responsibility handling, do not fall under the scope of consideration for debt write-off or cancellation according to these guidelines.

II. PROCEDURES, SEQUENCES, AND AUTHORITY
CONSIDERING DEBT WRITE-OFF AND DEBT CANCELLATION FOR TAXES:

1. Procedures and documents:

1.1. For state-owned enterprises requesting capital investment support in the form of recorded income and expenditure through the State Budget as specified in point 1, Section I, the application package shall include:

a. A request letter (official document) for resolving the provision of capital investment support, detailing:

The total investment value according to the approved investment project.

The construction investment value according to the final account or the purchase value of machinery and equipment put into investment that have been completed and handed over for production and business operations.

Sources of investment funds:

Where:

Corporate funds (development fund for production and business operations, other business capital).

Bank loans and other organizations or individuals.

Amounts due to the State Budget (with each revenue item clearly stated) that have been utilized for investment purposes.

b. An expanded production and business investment project approved by the competent authority.

c. Final accounts for basic construction investment projects approved in accordance with current regulations; in cases where there is no investment final report, a handover value and quantity record of completed basic construction investment projects must be provided, along with a report on purchased assets or detailed invoices and receipts for major machinery and equipment purchases, which have been reviewed by the Provincial/City Investment Development Department.

d. Financial final accounts and tax final accounts of the year prior to investment and during the investment period.

1.2. For state-owned enterprises requesting debt write-off as specified in point 2, Section I, the application package shall include:

a. A request for tax debt write-off and other amounts due to the State Budget, clearly stating the subjective and objective reasons leading to the accumulation of tax debts and other amounts due to the State Budget; the enterprise's proposal for handling outstanding tax and revenue debts from before 1996 (analyzed annually) but now unable to pay.

b. Decisions on mergers, consolidations, dissolutions, and business registration certificates indicating changes in business activities (if applicable).

c. Financial final accounts and tax final accounts up to the time of cessation of production and business operations or the time of requesting debt write-off, clearly identifying the tax and State Budget debts. If the enterprise has accumulated tax debts over multiple years, it must submit financial final accounts and tax final accounts for each year.

1.3. For state-owned enterprises and individual businesses requesting debt cancellation as specified in point 3, Section I, the application package shall be prepared similarly to those for debt write-off requests, with a clear statement of the reasons for requesting debt cancellation. For dissolved or bankrupt enterprises, a record of decisions and resolutions regarding capital, assets, receivables, and payables must be included.

Applications for resolving tax arrears as specified in points 1.1, 1.2, and 1.3 shall be prepared by the enterprises themselves. In cases of dissolved enterprises, the liquidation committee of the dissolved entity shall prepare the application, while merged enterprises shall have the currently operating entity prepare the application. After completion, the application must be submitted to the local tax authority managing the enterprise.

All applications for resolving tax arrears and other State Budget revenues mentioned above must be original documents. If they are copies, they must be certified as true copies or notarized.

2. Procedure and Authority for Resolution:

2.1. For recording income and expenditure of tax arrears and other payments through the State Budget:

The direct tax authority managing entities with applications for recording income and expenditure through the State Budget for tax arrears shall be responsible for verifying and confirming the remaining tax arrears, compiling the complete application package (if it is a Tax Branch, it shall send the application to the Tax Bureau).

The Tax Bureau shall transfer the application to the Investment Development Bureau and the State Capital Management and Asset Bureau at enterprises for examination and review of the final accounts for basic construction investment or assets put into use.

The Tax Bureau shall compile the application for recording income and expenditure of tax arrears from units within its jurisdiction and submit it to the People's Committee of the province or city for consideration, providing written comments to the Ministry of Finance for decision-making.

The Ministry of Finance shall record income and expenditure for centrally-managed enterprises and enterprises with special consumption taxes; the Central Budget shall benefit 100% of these recorded revenues.

The Provincial Department of Finance shall record income and expenditure for locally-managed enterprises, benefiting 100% of the local budget after obtaining approval from the Ministry of Finance.

2.2. For cases of debt write-off and cancellation:

The direct tax authority managing entities with applications for debt write-off and cancellation shall be responsible for verifying and confirming the remaining tax arrears, compiling the complete application package (if it is a Tax Branch, it shall send the application to the Tax Bureau).

For state-owned enterprises, the Tax Bureau shall transfer the application to the State Capital Management Bureau at enterprises for examination and review of the final financial accounts. Subsequently, the Tax Bureau shall compile the application for debt write-off and cancellation from units within its jurisdiction and submit it to the People's Committee of the province or city for consideration, providing comments to the Ministry of Finance (General Department of Taxation) for resolution.

The Ministry of Finance shall issue a decision on debt write-off for state-owned enterprises.

In cases of debt cancellation requests, the Ministry of Finance shall report to the Prime Minister for final resolution. During this period, the enterprise shall be subject to debt write-off as announced by the Ministry of Finance.

For individual businesses requesting debt cancellation, the Tax Bureau shall issue a decision after receiving comments from the People's Committee of the province or city.

Based on the above guidance, please instruct subordinate units to implement promptly. Applications (compliant with the provisions above) must be submitted to the Ministry of Finance (General Department of Taxation) no later than June 30, 1998; beyond this deadline, the Ministry of Finance will not consider and resolve according to this Circular. Taxes and other revenues payable to the State Budget in 1997 for entities within the scope of this Circular must still be fully paid into the State Budget according to current regulations; violations will be handled according to the law.

This Circular takes effect from the date of issuance. Any issues encountered during implementation should be reported to the Ministry of Finance for review and supplementary guidance.

 Provincial/City Tax Bureaus...

COMBINED TABLE

THE AMOUNT OF THE STATE BUDGET DEBT FROM 1996 AND PRIOR YEARS AS OF
DECEMBER 31, 1997 THAT ENTERPRISES UNDER THE MANAGEMENT OF THE PROVINCE OR CITY ARE UNABLE TO PAY

..., day... month... year 199...

Tax Department

Requirement: Summarize the amount of overdue tax from enterprises from 1996 and prior years but as of December 31, 1997, they are unable to pay the State budget; list state-owned enterprises in order according to their level of management. Classify the amount of tax and revenue proposed for handling according to the type of enterprise. Provide specific comments from the Committee on whether they agree or disagree with each enterprise. The proposed tax and revenue handling does not include import-export taxes, surcharges, fees, fines. These amounts are not included in the State budget revenue plan for 1998.

REPORT

LIST OF INDIVIDUAL BUSINESS HOUSES PROPOSING TAX DEBT CANCELLATION
AND THE AMOUNT OF TAX PROPOSED FOR CANCELLATION

Unit of measurement: Vietnamese Dong

Note: The Tax Branch compiles the number of individual businesses on its territory proposing tax debt cancellation and the amount of tax proposed for cancellation (according to the model) and sends it to the Provincial or Municipal Tax Bureau for review and submission to the Provincial or Municipal People's Committee.

REPORT

SUMMARY OF TAX DEBT CANCELLATION FOR INDIVIDUAL
BUSINESSES IN DEBT

Unit of measurement:...

Date 1998

Director of the Tax Bureau

Note: After the Provincial or Municipal Tax Bureau issues a decision to cancel tax debts for individual businesses within its jurisdiction, it compiles and sends the summary to the General Tax Department.