Circular No. 26/2008/TT-BTC guiding the implementation of certain provisions of Decree No. 154/2007/NĐ-CP dated October 15, 2007 amending and supplementing some articles of Decree No. 143/2003/NĐ-CP dated November 28, 2003 of the Government detailing the implementation of certain provisions of the Law on Exploitation and Protection of Irrigation Works.

CIRCULAR

Guidelines for implementing certain provisions of Decree No. 154/2007/NĐ-CP dated October 15, 2007 amending and supplementing certain provisions of Decree No. 143/2003/NĐ-CP dated November 28, 2003 of the Government detailing the implementation of certain provisions of the Ordinance on Exploitation and Protection of Irrigation Works.

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. 143/2003/NĐ-CP dated November 28, 2003 of the Government detailing the implementation of certain provisions of the Ordinance on Exploitation and Protection of Irrigation Works (hereinafter referred to as Decree No. 143/2003/NĐ-CP);

Pursuant to Decree No. 154/2007/NĐ-CP dated October 15, 2007 of the Government amending and supplementing certain provisions of Decree No. 143/2003/NĐ-CP dated November 28, 2003 of the Government detailing the implementation of certain provisions of the Ordinance on Exploitation and Protection of Irrigation Works (hereinafter referred to as Decree No. 154/2007/NĐ-CP);

The Ministry of Finance guides the confirmation of land areas exempted from and not exempted from irrigation fees, the preparation of budgets, allocation, settlement, and final accounts of the subsidy for exempted irrigation fees; financial support for the implementation of debt write-off and losses due to objective reasons for units responsible for managing, exploiting, and protecting irrigation works as follows:

I. SCOPE AND OBJECTS OF EXEMPTION FROM IRRIGATION FEES AND FUNDS FOR IMPLEMENTATION.

1. Objects exempted from irrigation fees:

1.1. Households and individuals with land and water surfaces used for agricultural production, forestry, aquaculture, and salt-making within the limit of allocated agricultural land, including land assigned by the State, inherited, given, gifted, legally transferred, including the 5% public utility land area managed by localities that households and individuals have been assigned or won through bidding for the right to use.

1.2. Land and water surface areas used for agricultural production, forestry, aquaculture, and salt-making by households, individuals, and organizations located in areas with extremely difficult socio-economic conditions and areas with difficult socio-economic conditions as stipulated in Article 22 of Decree No. 108/2006/NĐ-CP dated September 22, 2006 of the Government detailing and guiding the implementation of certain provisions of the Investment Law shall be exempted from all land and water surface areas used for agriculture, forestry, aquaculture, and salt-making; regardless of whether they are within or outside the limit of allocated land.

2. Objects not exempted from irrigation fees:

2.1. Land area exceeding the limit allocated to households and individuals (excluding the land area specified in Point 1.2, Clause 1, Section I of this Circular).

2.2. Organizations, individuals, and households using water surfaces and reservoir basins of irrigation works for exploitation and aquaculture, which have paid irrigation fees according to Decree No. 143/2003/NĐ-CP.

2.3. Enterprises engaged in supplying water for industrial production, draining water for industrial production, providing clean water to factories, operating hydropower businesses, tourism, transportation through sluices and harbors, and other activities benefiting from irrigation works.

2.4. Organizations and individuals paying irrigation fees to water user cooperatives according to agreements to serve the operations of water user cooperatives from the headgate of the cooperative to the field surface.

2.5. Areas within the scope of irrigation, drainage, and water supply of irrigation systems constructed by organizations and individuals using non-state budget funds and paying irrigation fees according to agreed rates between the irrigation management unit and water users.

2.6. Other beneficiaries of irrigation works not specified in Clause 1, Section I above.

3. Units responsible for managing and operating irrigation works (hereinafter referred to as irrigation management units) are supported by the state budget when implementing exemptions from irrigation fees, including:

3.1. State-owned companies, limited liability companies wholly owned by the state, joint-stock companies, and other companies participating in the management and operation of irrigation works.

3.2. Organizations and units entrusted by the state to manage and operate irrigation works: Irrigation Management and Operation Centers, Irrigation Management and Operation Boards, Irrigation Management and Operation Stations.

3.3. Water user cooperatives: Irrigation Management Boards, water route teams, irrigation teams, water user associations, water user cooperatives, agricultural cooperatives entrusted to manage primary irrigation works up to the headgate of the water user cooperative serving irrigation and drainage for agricultural, forestry, and aquaculture production, which collect irrigation fees.

Irrigation management units must be established by competent authorities (Provincial People's Committees), or have business registration certificates, or have their members' congress approve operational regulations and charters, and obtain written approval from district or town people's committees where their main offices are located.

4. Sources of funds for subsidies due to exemptions from irrigation fees as prescribed in Decree No. 154/2007/NĐ-CP:

4.1. The central budget ensures funding for subsidies to central-level irrigation management units and provincial-level irrigation management units receiving subsidies from the central budget.

4.2. Provincial budgets with revenue remitted to the central budget provide subsidies for local irrigation management and operation units.

5. State-owned companies and limited liability companies wholly owned by the state responsible for operating and protecting irrigation works, in addition to subsidies for exemptions from irrigation fees, also receive state budget support for revenue-expenditure discrepancies, major repair costs for irrigation works, and two welfare and reward funds as prescribed by law, including:

- The central budget allocates and supports funding for irrigation management and operation companies under central management.

- Local budgets allocate and support funding for irrigation management and operation companies under local management.

II. PROCEDURES, FORMS, FILES, AUTHORITY TO DECIDE ON LAND AREAS EXEMPTED FROM IRRIGATION FEES.

1. Procedures for confirming the objects and areas of land exempt from water resource fees:

1.1. The water management unit shall cooperate with the People's Committee of communes, wards, towns based on the cadastral map, water supply form, irrigation, drainage, water supply, irrigation, drainage contracts between the water management unit and organizations, households, individuals to prepare a list of objects and areas of land receiving water supply, irrigation, drainage exempt from water resource fees according to the model prescribed in the appendix attached to this Circular.

1.2. The People's Committee of districts, counties, towns where the objects exempt from water resource fees reside shall confirm in the list prepared by the water management unit.

1.3. After preparing the list, the water management unit shall establish an application file for exemption from water resource fees to submit to the competent authority for consideration and decision.

2. Authority to decide on the area exempt from water resource fees:

2.1. The Ministry of Agriculture and Rural Development for the areas of irrigation, drainage, and water supply for central water management units.

2.2. The People's Committee of provinces, centrally governed cities for the areas of irrigation, drainage, and water supply for local water management units.

3. Documents to be submitted to the competent authority for deciding on the area exempt from water resource fees include:

3.1. A proposal from the water management unit requesting issuance of a decision on the area exempt from water resource fees.

3.2. A list of areas for irrigation, drainage, and water supply by household according to the locality, confirmed by the People's Committee of districts, counties, or towns.

3.3. Irrigation, drainage, and water supply contracts (or water supply ledgers) between the water management units and water users (cooperatives, cooperatives...), household water users.

4. The determination of the area exempt from water resource fees for the year 2008 must be completed before June 30, 2008. For subsequent years, the People's Committee of provinces, centrally governed cities will issue decisions to adjust and supplement the area of land and water surface exempt from water resource fees if there are changes in the area of irrigation, drainage, and water supply.

The list of areas for irrigation, drainage, and water supply attached to the decision of the People's Committee of provinces, centrally governed cities serves as the basis for assigning plans or placing orders for water management units; it is the basis for state agencies to supervise the provision of irrigation, drainage, and water supply services by water management units; it is the basis for preparing the budget estimate for subsidizing the water resource fee exemption of water management units.

III. ESTABLISHING, ASSIGNING PROJECTIONS, ISSUING, SETTLING ACCOUNTS FOR SUBSIDY FUNDS FOR WATER RESOURCE FEE EXEMPTION.

1. Subjects for budget preparation:

These are the water management units specified in Clause 3, Section I of this Circular, specifically as follows:

1.1. For water management units that are state-owned companies, limited liability companies wholly owned by the state, revenue-generating public service units established by the State:

a) Each year, these water management units must prepare plans for irrigation, drainage, and water supply, budget estimates requesting state budget support, and report to the competent authority for assignment of plans. The estimates of these units must have explanations suitable for each unit's characteristics.

- For local water management units, they report to the People's Committee of provinces, centrally governed cities.

- For central water management units, they report to the Ministry of Agriculture and Rural Development and the Ministry of Finance.

b) Some issues to note when preparing estimates:

- For areas of irrigation, drainage, and water supply: Based on the area contracted with water users in the implementation year, the planting plan of the preparation year, the budget estimate for subsidy funds for water resource fee exemption is prepared.

- For water conservancy works managed and operated by the company and cooperative water users jointly managing the works, the company managing and operating the water conservancy works has the responsibility to prepare a combined estimate including the estimate of the cooperative water users.

1.2. For water management units that are joint-stock companies, cooperative water users: These units prepare plans for areas of irrigation, drainage, and water supply exempt from water resource fees and budget estimates for state budget subsidies for the water resource fees exempted. This plan is sent to the following agencies:

a) For cooperative water users managing part of the works within the system of water conservancy works managed by state-owned companies, limited liability companies wholly owned by the state, revenue-generating public service units established by the State, the plan of the cooperative water users is sent to the above water conservancy work management units for consolidation in the general plan of the company.

b) For joint-stock companies, other cooperative water users: The plan is sent to the Department of Finance, Department of Agriculture and Rural Development of the province or centrally governed city where the company or cooperative water user is headquartered for the Department of Finance, Department of Agriculture and Rural Development to consolidate and submit to the People's Committee of provinces, centrally governed cities for decision.

2. Method of preparing estimates:

2.1. The estimate for financial support due to reduction in water resource fees is based on the area (or cubic meters of water) irrigated, drained, supplied and the water resource fee rate, water fee rate stipulated by the People's Committee of provinces, centrally governed cities in accordance with Decree No. 143/2003/ND-CP and determined according to the following formula:

Total estimated support for water resource fees exempted = Total area (or m3) per crop season X (multiplied by) Water resource fee rate stipulated by the competent authority.

2.2. During the process of preparing estimates, it is recommended that units pay attention to:

a) For localities that have already issued decisions on water resource fee rates in accordance with Decree No. 143/2003/ND-CP before the effective date of Decree No. 154/2007/ND-CP, the water resource fee rates should not be adjusted again.

b) For localities that have not yet issued decisions on water resource fee rates in accordance with Decree No. 143/2003/ND-CP, they must issue decisions on water resource fee rates in accordance with Decree No. 143/2003/ND-CP but not higher than the actual collection rate in 2007.

c) In cases where the 2007 collection rate is not equal to the lowest rate stipulated in Decree No. 143/2003/ND-CP, it can be adjusted to the minimum rate stipulated in Decree No. 143/2003/ND-CP.

2. The training and insurance budgets shall be submitted to the superior management agency mentioned in Clause 3 of this Article for consolidation.

3.1. The Department of Finance shall take the lead in coordinating with the Department of Agriculture and Rural Development to compile the budget estimates of local water management units for reporting to the People's Committees of provinces and centrally governed cities, including:

a) For localities receiving subsidies from the central budget, the People's Committees of provinces and centrally governed cities shall compile them separately, including the portion of water resource fees exempted for compensation, for reporting to the Ministry of Finance and the Ministry of Agriculture and Rural Development to request support from the central budget.

b) For localities that allocate revenue to the central budget, the budget estimate for compensating the exemption of water resource fees for water management units shall be compiled together within the local budget estimate for submission to the People's Councils of provinces and centrally governed cities for approval, while also reporting to the Ministry of Finance.

3.2. The Ministry of Agriculture and Rural Development shall compile the budget estimates of central-level water management units and submit them to the Ministry of Finance for consolidation.

3.3. The Ministry of Finance shall consolidate the budget estimates for compensating the exemption of water resource fees for central-level water management units and for localities into the central budget estimate for reporting to the Government for submission to the National Assembly for approval.

3.4. After the State budget has been approved by the National Assembly, the Ministry of Finance shall notify the levels of compensation and support to the Ministry of Agriculture and Rural Development and localities.

4. Allocation of budgets to water management units:

4.1. Based on the approved local budget estimates by the People's Councils and the notification from the Ministry of Finance regarding the amount of compensation for exempted water resource fees, the People's Committees of provinces and centrally governed cities shall implement the allocation of budgets to water management units eligible for planning. The budget allocation must be completed before December 31 of the year preceding the planned year.

4.2. Based on the approved national budget by the National Assembly and the notification from the Ministry of Finance, the Ministry of Agriculture and Rural Development shall allocate plans to central-level water management units.

5. For water management units under procurement orders, the People's Committees of provinces and centrally governed cities shall authorize relevant departments (Department of Finance, Department of Agriculture and Rural Development) to sign procurement contracts. The signing of procurement contracts must be completed before December 31 of the year preceding the planned year.

Water management companies shall enter into contracts with cooperative groups managing part of the system of water works under joint management by the company and the cooperative groups.

6At the end of the year, the unit allocated the budget must report on the implementation of the budget to the allocating authority and the financial department (Ministry of Finance for central-level water management units, Department of Finance for local water management units).

The report on the implementation of the budget estimate serves as the basis for settling accounts for the financial support provided to exempt water resource fees for agricultural water management units.

At the end of the year, the procuring entity and the recipient of the procurement order must prepare a record of settlement of the procurement contract. The record of settlement of the procurement contract serves as the basis for the procuring entity to settle and finalize the funds for the recipient of the procurement order and for the procuring entity to finalize the funds provided by the State budget for the exemption of water resource fees.

7. Issuance, payment, and finalization of compensation funds for the exemption of water resource fees for water management units:

7.1. Issuance of funds to compensate for the exemption of water resource fees for water management units:

a) Based on the allocated budget, the water management unit shall prepare an annual budget divided into quarters and submit it to the financial department as the basis for issuance. Central-level water management units shall send to the Ministry of Finance, and local water management units shall send to the Department of Finance.

b) The issuance of funds shall be carried out in accordance with the Law on State Budget, Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the Law on State Budget, and related guiding documents. Specifically, as follows:

- The issuance of central budget funds to compensate for the exemption of water resource fees for localities is determined as targeted assistance.

- Issuing funds to compensate for the exemption of water resource fees for water management units assigned plans: Based on the approved budget and the budget of the water management unit, the financial department shall issue funds to the water management unit twice a year in the first and third quarters. The issuance shall be carried out through payment orders.

7.2. Payment of funds to compensate for the exemption of water resource fees for water management units not assigned plans:

Based on the procurement contract signed between the procuring entity and the recipient, the financial department shall pay funds to the recipient. After the procurement contract is signed, the financial department shall temporarily advance 50% of the contract funds to the recipient. After the mid-year report on the implementation of the contract, the financial department shall advance another 40% of the contract funds, and the remaining 10% shall be paid after the contract is settled.

For cooperative groups using water that manage part of the system of water works under the management and operation of water works companies, the Company shall undertake the advance and payment of funds to the cooperative groups using water according to the contract signed between the two parties.

7.3. Finalization of funds to compensate for the exemption of water resource fees:

Financial finalization of funds to compensate for the exemption of water resource fees shall be carried out in accordance with current regulations. Water management units must have all necessary documents as the basis for settling and finalizing financial support such as: Irrigation, drainage, and water supply contracts between the water management unit and users, acceptance records of irrigated, drained, and supplied areas, and settlement records of irrigation, drainage, and water supply contracts.

For localities required to receive subsidies from the central budget, provinces and centrally governed cities must prepare final reports to the central budget for the subsidy program as stipulated by the Law on State Budget.

Annually, the Ministry of Agriculture and Rural Development shall coordinate with the Ministry of Finance to organize the inspection and approval of the subsidy amount due to the exemption of water resource fees by central irrigation management units. The People's Committees of provinces and centrally governed cities shall organize the inspection and approval of the subsidy amount due to the exemption of water resource fees by local irrigation management units. Such inspections and approvals of the subsidy amounts due to the exemption of water resource fees shall be conducted concurrently with the approval of the annual financial reports of the irrigation management units.

IV. FINANCIAL SUPPORT FOR THE ELIMINATION OF OVERDUE WATER RESOURCE FEES AND LOSSES DUE TO EXTERNAL CAUSES.

1. Recipients of support for the elimination of overdue water resource fees and losses due to external causes:

1.1. State-owned enterprises;

1.2. Limited liability state-owned companies operating under the mandate to manage and exploit waterworks projects.

2. Time frame for considering the elimination of overdue water resource fees and losses due to external causes: Overdue water resource fees and losses due to external causes arising before December 31, 2007.

3. Sources of budgetary funds for financial support for the elimination of overdue water resource fees and losses due to external causes:

3.1. Central government budget supporting central irrigation management and exploitation companies.

3.2. Local government budget supporting irrigation management and exploitation companies under the People's Committees of provinces and centrally governed cities. In cases where localities face difficulties with their budgets, they shall report to the Ministry of Finance and the Ministry of Agriculture and Rural Development for consolidation and reporting to the Prime Minister for consideration and decision.

4. Authority to decide on the elimination of overdue water resource fees, losses due to external causes, and the level of support:

4.1. The Ministry of Agriculture and Rural Development shall decide on the elimination of overdue water resource fees, losses due to external causes, and the level of support for central irrigation management and exploitation companies after receiving written comments from the Ministry of Finance.

4.2. The People's Committees of provinces and centrally governed cities shall decide on the elimination of overdue water resource fees, losses due to external causes, and the level of support for local irrigation management and exploitation companies.

5. Duration of support:

Depending on the ability to balance the state budget, the support may be implemented over the two years 2008 and 2009.

The disbursement of financial support for the elimination of overdue water resource fees and losses due to external causes to irrigation management and exploitation companies shall be carried out through payment orders according to current regulations.

6. Procedures for support:

6.1 For overdue water resource fees:

a) Irrigation management and exploitation companies must base their assessment on the overdue water resource fees of water users up to December 31, 2007, and classify the causes of the overdue fees:

- Fees overdue due to economic difficulties;

- Fees overdue due to intentional non-payment;

- Fees exempted from collection that have been decided by the People's Committee of the province or centrally governed city but not yet provided to the irrigation management and exploitation companies;

- Other reasons for overdue fees.

b) Documents for requesting the elimination of overdue water resource fees and compensation:

- A request for the elimination of overdue water resource fees and compensation for the eliminated fees;

- Financial statements up to December 31, 2007;

- Detailed lists of overdue water resource fees by each user and year;

- Analysis of the causes of overdue water resource fees.

c) Based on the report of overdue water resource fees from irrigation management and exploitation companies, the Department of Finance shall lead and coordinate with the Department of Agriculture and Rural Development to inspect and confirm the causes of the arrears, report to the Chairman of the People's Committee of the province or centrally governed city for consideration and decision. For central irrigation management and exploitation companies, the Ministry of Agriculture and Rural Development shall lead and coordinate with the Ministry of Finance to inspect and determine the level of support. For cases of intentional non-payment, irrigation management and exploitation companies must take all measures to recover the debt, including compulsory measures.

6.2 For losses due to external causes:

a) Losses determined to be due to external causes include: losses caused by natural disasters, enemy actions, storms, floods, fires, and pests.

b) For losses due to internal causes, irrigation management and exploitation companies must identify the responsibility of related collectives and individuals and demand compensation according to current laws. For remaining losses, irrigation management and exploitation companies must self-assess and confirm the causes of the losses, prepare a request for loss compensation, and report to the competent authority for consideration and decision.

c) Documents for requesting compensation for losses due to external causes:

- A report from the irrigation management and exploitation company;

- Financial statements of the irrigation management and exploitation company up to December 31, 2007;

- An assessment and analysis of the causes of losses by the irrigation management and exploitation company.

d) For central irrigation management and exploitation companies: Based on financial statements and assessments confirming the causes of losses by the irrigation management and exploitation companies, the Ministry of Agriculture and Rural Development shall coordinate with the Ministry of Finance to inspect and determine losses due to external causes and decide on the level of compensation.

For local irrigation management and exploitation companies: Based on financial statements and self-assessment records confirming the causes of losses, the Department of Finance shall lead and coordinate with the Department of Agriculture and Rural Development to inspect and determine the causes of losses by the irrigation management and exploitation companies, report to the People's Committee of the province or centrally governed city for determination of the level of compensation.

V. IMPLEMENTATION.

1. This Circular shall take effect fifteen days after its publication in the Official Gazette and shall be implemented from the date the Government Decree No. 154/2007/NĐ-CP dated October 15, 2007 comes into force.

2. During implementation, if there are any difficulties, please report them to the Ministry of Finance and the Ministry of Agriculture and Rural Development for study and appropriate amendments and supplements./.