Circular No. 25-TC/TCT guiding the implementation of Decision No. 180-TTg dated December 22, 1992 of the Prime Minister on establishing a fund to combat illegal business activities.

CIRCULAR

DIRECTIVE NO. 25-TC/TCT OF THE MINISTRY OF FINANCE ON MARCH 24, 1993 GUIDING

IMPLEMENTATION OF DECISION NO. 180-TTg OF THE PRIME MINISTER DATED DECEMBER 22, 1992

REGARDING THE ESTABLISHMENT OF FUNDS TO COMBAT ILLEGAL BUSINESS PRACTICES

Implementing Decision No. 180-TTg dated December 22, 1992 of the Prime Minister on the establishment of funds to combat illegal business practices, the Ministry of Finance provides detailed guidance on implementation as follows:

I. SUBJECTS ELIGIBLE FOR FUND ESTABLISHMENT

According to Article 1 of Decision No. 180-TTg, the agencies permitted to establish funds to combat illegal business practices (hereinafter referred to as the fund) include market management, police, customs, tax, and border guard.

II. PRINCIPLES AND SOURCES FOR FUND ESTABLISHMENT

1. Principles for establishing the fund.

- Only allowed to establish the fund after having a decision from a competent state agency to impose administrative penalties or a court's judgment, and there being no appeal within the time prescribed by law. In cases where there is an appeal, the fund can only be established after the appeal has been resolved.

- Only allowed to establish the fund based on the amount received from selling goods, seized items, fines, and hidden taxes discovered and actually paid into the temporary account of the tax authority or customs office at the treasury, not based on amounts received from overdue payments or late payment penalties to establish the fund.

2. Sources for establishing the fund.

Article 2 of Decision No. 180-TTg stipulates the sources for establishing the fund as follows:

a. Deduct 30% of the total amount received from selling goods and seized items and fines after deducting costs for investigation, verification, unloading, transportation, storage, inspection, and testing of goods and items, and compensation for losses due to objective reasons (if any).

b. Deduct 2% of the amount of hidden taxes discovered and recovered from state-owned enterprises.

c. Deduct 5% of the amount of hidden taxes discovered and recovered from other businesses and individual traders.

- The total amount received from selling goods and seized items, according to the decision of the Trial Council or the court.

Specifically as follows:

- Fines are the entire amount actually collected and reflected on valid collection documents for administrative penalties.

- Costs for investigation, verification, unloading, transportation, storage, inspection, and testing of goods and items are deducted from the total amount received when there are valid documents and consistent with current regulations. The tax authority is responsible for reviewing the validity of these cost documents.

- Hidden taxes discovered and recovered are additional taxes found outside declarations for tax calculation or annual financial reports of businesses or outside monthly records of the tax authority; excluding taxes collected from short-term trading activities.

III. PROCEDURES FOR PAYING INTO TEMPORARY ACCOUNTS, ESTABLISHING THE FUND, AND DISTRIBUTING AND USING THE FUND

1. Opening a temporary account at the treasury.

Tax authorities at all levels may open a temporary account at the same-level treasury to deposit and settle amounts collected from direct inspections as specified in Section 1 of this Circular (market management, police, border guards, tax). Customs offices may open a temporary account at the treasury to deposit and settle amounts collected from their own direct inspections.

2. Procedures for paying money and establishing the fund.

Competent state agencies imposing administrative penalties for illegal business practices must follow the procedures and formalities for administrative penalty imposition as stipulated in Articles 21, 27, and 33 of the Administrative Penalty Law dated November 30, 1989. For the handling of seized goods listed in Directive No. 01-TTg dated October 6, 1992 of the Prime Minister, it shall be carried out according to the provisions in Points 1, 2, and 3 of Part I of Circular No. 77 TC/TCT dated December 5, 1992 of the Ministry of Finance regarding the handling of seized goods.

a. For seized goods and items:

The file for seized goods and items includes: receipt for temporarily holding goods and items, decision on handling by the competent authority, revenue receipt (Form CTT 11), export goods and item seizure form, payment voucher to the state budget, auction sale record, decision to establish the fund, other expense documents (if any) such as investigation, verification, unloading, transportation, storage, inspection, testing, organization costs for selling seized goods and items...

When selling seized goods and items, a revenue receipt (Form CTT 11) must be used. All proceeds must be deposited into the temporary account of the tax authority opened at the national treasury where the incident occurred.

b. For hidden taxes and fines (excluding late payment fines) collected:

- For fines: Based on the penalty decision, the inspection unit issues a revenue receipt (Form CTT 11) to the penalized entity. The inspection unit is responsible for depositing the fine (or guiding the penalized entity to deposit the fine) into the temporary account of the tax authority opened at the treasury where the incident occurred.

- For hidden taxes: Based on the inspection record, the competent authority issues a decision to recover hidden taxes and immediately sends that decision to the inspected entity (person), requiring them to immediately deposit the hidden taxes into the temporary account of the tax authority opened at the treasury where the incident occurred.

c. The tax authority establishes the fund according to the following procedure:

- Based on the amount deposited into the temporary account as reported by the national treasury and related files, the tax authority pays any expenses (if any).

- The tax authority issues a decision to establish the fund for the inspection unit according to the ratio specified in Article 2 of Decision No. 180-TTg dated December 22, 1992 of the Prime Minister.

- The tax authority prepares documentation to send to the national treasury where the temporary account is opened to transfer the amount deducted from the temporary account to the fund account of the inspection unit.

- The tax authority issues a decision to establish a fund for the inspection unit at the ratio specified in Article 2 of Decision 180-TTg dated December 22, 1992, of the Government Prime Minister.

- The tax authority prepares documentation to send to the State Treasury branch where the temporary holding account is opened to transfer the amount deducted from the temporary holding account to the inspection unit's fund account.

- At the same time, the tax authority shall immediately proceed with the procedures to deposit the remaining amount into the State Budget according to Section 30, Chapter, type, clause, category. The unit entitled to establish a fund has the responsibility to distribute the fund to combat illegal business activities in accordance with Article 4 of Decision 180-TTg dated December 22, 1992 and Point 3 of Part III of this Circular.

In cases where the subject under inspection must pay both concealed taxes and fines at the same time, the inspection unit must clearly record each type of payment due in the inspection report and decision on handling to avoid confusion when establishing the fund. If the inspection unit intentionally violates regulations and policies, such as converting concealed taxes into fines to receive more bonuses, they will be required to return the improperly distributed funds and face disciplinary action, administrative penalties, or criminal prosecution.

d. For revenues from the sale of seized goods, fines, and concealed export taxes collected from violations detected by customs authorities and deposited into the temporary account of the customs department at the state treasury, the customs department is permitted to establish a fund but must comply with the provisions of Decision 180-TTg dated December 22, 1992 and the guidelines set forth in this Circular.

e. When the agencies specified in Section I of this Circular jointly conduct inspections, the agency responsible for organizing the inspection shall be entitled to establish a fund.

3. Distribution and use of the fund.

a. Distribution of the fund:

After the treasury transfers the established fund amount into the fund account of the unit, the head of the unit entitled to establish the fund shall proceed with the distribution as follows:

- Allocate 25% to establish a bonus fund for the unit;

- Allocate 65% to establish a supplementary fund for anti-illegal business activity expenses of the unit;

- Allocate 10% to submit to the superior management agency to establish a fund for combating illegal business activities and rewarding cooperative units.

b. Use of the fund:

+ Bonus fund: The head of the unit entitled to establish the fund is responsible for awarding bonuses to individuals who directly and indirectly contribute to combating illegal business activities based on the principle that those with greater contributions receive larger awards. The maximum individual bonus per case does not exceed 200,000 VND/case and 600,000 VND/month.

- In cases where an inspection extends over multiple months, the number of months eligible for bonuses is calculated based on the duration recorded in the inspection report. It is strictly prohibited to divide a large case into smaller ones to benefit from the bonus system.

- Bonuses must be awarded conclusively for each case, prohibiting offsetting between cases with lower allocations against those with higher allocations to achieve absolute bonus levels.

- Staff from outside the industry who directly participate in inspections also enjoy the same reward system as staff within the industry.

- For indirect participants in combating illegal business activities (staff involved in leadership, compilation, and support work), if recommended for bonuses by inspection units, they may receive up to 100,000 VND/case and 300,000 VND/month.

- Any remaining funds after distributing bonuses shall be retained in the bonus fund for use in rewarding cases without revenue deposits, such as inspections of counterfeit goods and confiscated items requiring destruction.

+ Supplementary fund for anti-illegal business activity expenses shall be used for the following purposes: - Supplementing operational expenses based on regular budget plans reviewed by financial authorities;

- Purchasing equipment;

- Conducting summary and commendation activities;

- Funding press conferences and publicity campaigns;

- Providing allowances for staff injured while performing duties;

- Assisting regions facing difficulties in funding anti-illegal business activity operations.

+ Sectoral fund shall be used for the following purposes:

- Funding press conferences and publicity campaigns; - Purchasing additional equipment;

- Awarding commendations and summarizing sector-wide anti-illegal business activity efforts and rewarding cooperative sectors.

IV. RESPONSIBILITIES OF THE ORGANIZATIONS PARTICIPATING IN COMBATING ILLEGAL BUSINESS ACTIVITIES

COMBATING ILLEGAL BUSINESS ACTIVITIES

1. Responsibilities of the direct inspection and penalty enforcement agencies.

- Direct inspection and penalty enforcement agencies must retain all files related to inspected cases, seizures, and penalties, including records: temporary detention reports, seizure reports, penalty reports, sales invoices, and decisions on individual and collective bonuses.

- Quarterly and annually, they must settle accounts with the same-level financial authorities regarding the establishment and use of the anti-illegal business activity fund. For purchases of equipment, detailed records must be kept and managed as per state budget regulations.

- The head of the direct inspection agency must conduct summaries and evaluations of inspection experiences, award bonuses to individuals, and handle disciplinary actions against staff who commit errors during inspections, according to their management level.

For cases discovered by direct inspection agencies that require criminal prosecution, the agency must manage and monitor the disposition of seized goods and follow the procedures for depositing and allocating them to the temporary account as outlined in this Circular.

2. Responsibilities of the tax and customs agencies.

The tax and customs agencies, which are authorized to open temporary accounts at the same-level treasury to track the collection and allocation of funds by direct inspection agencies combating illegal business activities, must promptly process deposits into and withdrawals from the temporary account upon receipt of the necessary documentation as stipulated in Section 3, Point 2 of this Circular.

Quarterly and annually, district tax offices report on the income and expenditure of the temporary account to provincial tax bureaus, and customs offices report to the General Customs Department. Provincial tax bureaus and the General Customs Department are responsible for compiling these reports and submitting them to the Ministry of Finance (as attached).

 V. IMPLEMENTATION PROVISIONS

1. This Circular takes effect from January 1, 1993. The Circular No. 04-TC/TCT dated January 4, 1991 of the Ministry of Finance guiding the extraction of rewards for persons who discover and apprehend smuggled goods and the Circular No. 29-TC/TCT dated May 25, 1991 of the Ministry of Finance guiding rewards for tax revenue protection teams and other provisions contrary to this Circular are hereby abolished.

2. For cases that have been inspected and processed but have not yet had a decision on the fund for combating illegal business activities, they shall also enjoy the reward system as guided by this Circular.

In the course of implementation, any difficulties encountered should be promptly reported to the Ministry of Finance for further guidance and supplementation.

                                          MINISTER

                                               VICE MINISTER

                                             (Signed)

                                                 Phan Van Dinh