Joint Circular No. 27-LB explaining and supplementing Joint Circular No. 21-LB-NH-NT-TC dated December 12, 1962 on handling certain issues related to commercial lending activities of banks with the task of submitting state budget revenues and ensuring working capital for state trading units.

JOINT CIRCULAR

Explanation and Supplement to Joint Circular No. 21-LB-NH-NT-TC dated December 12, 1962 on the handling of certain issues related between commercial lending activities of the State Bank and the state budget payment obligations and business capital guarantee for state trading units

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On December 12, 1962, the Joint Ministry of the State Bank of Vietnam - Finance - Commerce issued Joint Circular No. 21-LB-NH-NT-TC stipulating principles for handling certain issues related between commercial lending activities of the State Bank and the state budget payment obligations and the guarantee of business capital for state trading units.

After a period of implementation in localities where the grassroots units of the three sectors have closely coordinated and strictly implemented under the leadership of the administrative committees at all levels, this Joint Circular has had the effect of gradually bringing the management of trading operations and financial affairs of the commerce sector into order. The State Bank's commercial lending activities, the provision and accumulation collection work at the trading stage of finance have initially demonstrated their effectiveness in strengthening supervision and promoting trading activities, creating favorable conditions for the commerce sector to fulfill the state plan for 1963.

However, up to now, some provisions in Joint Circular No. 21 have not been fully implemented in some localities such as:

- The issue of fee, tax, and interest deduction: Most commerce units have not implemented tax and interest payments based on actual business results but still pay according to plans. At the end of the month, final accounts are delayed, failing to timely adjust payments according to actual figures, leading to situations where some places overpay while others underpay taxes and interest to the state budget. Some units have not implemented multiple deductions of tax and interest within a month; after each deduction, the ratio is transferred from special loans to the settlement account. Some commerce units do not immediately deduct and pay taxes and interest to the state budget, instead using them as business capital.

- Regarding the submission of processing price differences: Generally, it is late, with some places only submitting after completing the quarterly settlement.

- Regarding the submission and offsetting of price increase and decrease differences: It is not done in a timely manner.

On the other hand, in 1963, efforts to improve business management and accounting in the commerce sector were initially implemented, resulting in some issues related to the work of the three sectors that were not covered in Joint Circular No. 21, such as:

- Handling cases of price increases and decreases.

- Regional price differences and discrepancies between directed purchase prices and actual purchase prices;

- Capital provision and recovery of stagnant goods capital;

- Handling surplus and shortage assets and long-standing debts;

- Interest income from reduced processing prices and savings in processing materials.

Therefore, the Joint Ministries believe it necessary to provide further explanations for points already specified in Joint Circular No. 21 and supplement new points arising in 1963-1964 that were not covered in Circular No. 21 so that localities and sectors can uniformly implement them.

A. ISSUE OF DEDUCTING FEES, TAXES, AND INTEREST FROM SALES, TAXES, AND INTEREST FROM FOOD AND DRINK SERVICES, AND OTHER BUSINESS OPERATIONS TAXES AND INTEREST

(such as production and livestock farming...)

First, it is necessary to clarify and reiterate the principle of submitting to the state budget is based on actual results of business and production activities of state trading enterprises. Such a method of submission is the most appropriate, not only ensuring timely submission to the state budget in line with the actual business results of commerce units, avoiding underpayment or overpayment, but also having a positive impact on strengthening supervision through money, promoting commerce units to enhance economic accounting skills, accurately and promptly record accounting data consistent with monthly, quarterly, and annual implementation situations.

In many localities across the three sectors of Finance - State Bank - Commerce, there are still many officials who do not clearly understand this principle, thus considering planned submissions as a matter of course and spending much time calculating and disputing planned figures while neglecting efforts to establish timely and accurate balance sheets and settlements as a basis for actual submissions, allowing timely and accurate management of trading operations.

The Joint Ministries determine that submitting profits according to plans is merely a measure to ensure timely submission to the state budget while waiting for the end-of-month actual submission. During the month, submission should continue according to plans, and commerce units must strive to complete monthly and quarterly settlements within the prescribed deadlines, ensuring the accuracy of accounting data to base actual submissions. The finance and banking sectors must promote and create all conditions to help commerce units complete timely and accurate settlements, check accounting data, analyze economic situations, and adjust state budget submissions according to actual figures in a timely manner.

- Financial agencies must promptly refund losses to commerce units if they find that the unit has overpaid or incurred actual losses. If a commerce unit's submission is still insufficient due to insufficient deductions by the bank, the bank shall make additional deductions to cover the shortfall for tax and interest payments to the state budget. If the bank has made sufficient deductions but the commerce unit does not submit the full amount to the state budget and uses it elsewhere, the commerce unit must deduct fees from its settlement account to pay taxes and interest to the state budget. If the settlement account is depleted, the finance agency will request the bank to deduct the remaining profit and tax shortfall from the consolidated interest for submission to the state budget in the next deduction period.

- Banking agencies must promote prompt settlement of sales proceeds between purchasing and selling units. Specifically:

Upon receiving the invoice from the seller's bank, the buyer's bank shall lend to the purchasing entity according to the debt claim to pay the selling entity, even if the goods are still on the way and have not yet arrived at the warehouse, provided that the documents comply with the terms stipulated in the economic purchase-sale contract and the payment regulations issued by the State. The purchasing entity must remit full taxes and profits to the State budget upon receipt of funds from the selling entity.

In case the bank refuses to provide a loan, it must promptly explain to the domestic trade entity and the local financial authority the reasons for refusal. If the three entities cannot reach an agreement based on the bank's explanations, they must report the issue to the Ministry of Domestic Trade, the Central Bank, and the Ministry of Finance for resolution.

I. COLLECTION AND REMITTANCE ACCORDING TO PLAN

Financial plans of the domestic trade sector must ensure that the revenue collected and remitted to the State budget has a relatively accurate basis. Both the financial plan and the consolidation ratio (fees, taxes, interest) must be divided into quarterly plans and monthly plans. After being reviewed by the Departments of Commerce or the Ministry of Domestic Trade and having received comments from the banking and finance sectors, each unit must calculate the fees, taxes, and interest according to the plan by multiplying the ratio with the sales proceeds already included in the special account of the bank every month and quarter. If necessary adjustments to the consolidation ratio are required, the adjusted ratio must be applied.

1. CALCULATION OF FEES, TAXES, AND INTEREST RATIO ON SALES

a) The fees and taxes here refer to those used to calculate profit and loss. Therefore, the content of the fees and taxes is as follows:

Fee for calculating profit and loss = Opening inventory fee allocation + Fees incurred during the period - Closing inventory fee allocation

b) Corporate tax is calculated at 2.5% on wholesale sales outside the domestic trade system and 2.5% on retail sales (excluding sales already taxed at the slaughterhouse and state-owned goods such as cloth, matches, tobacco, sugar, etc.)

Currently, county and town retail enterprises are collecting corporate tax on behalf of cooperatives and small traders' cooperatives. Therefore, when secondary companies deliver goods to county and town retail enterprises, they must include all corporate tax payable by the retail enterprises, tax collected on behalf of the cooperatives and small traders' cooperatives in the discount so that the retail enterprises have sufficient tax to remit to the County Finance Department.

- Previously, slaughterhouse tax was accounted for in the tax phase to calculate the consolidation ratio. Now, it is included in the market price of meat, and commercial units must immediately remit this tax after slaughtering. Banks will lend according to the market price of meat including slaughterhouse tax. Therefore, the current tax ratio does not include slaughterhouse tax.

- Goods tax for products subject to goods tax produced by dependent enterprises of the commerce sector is accounted for in the directed purchase price. Banks will lend according to the directed purchase price (including goods tax). After receiving the loan, domestic trade enterprises must immediately remit the goods tax to the State budget.

c) Interest here refers to sales interest. Therefore, the interest ratio that the bank allows to be deducted is only sales interest. Other types of interest such as production processing interest, livestock breeding interest, catering service interest, other business interest, non-business interest, and regional price difference interest will be accounted for and remitted appropriately depending on the specific nature of each type. These interests will be explained in detail in subsequent sections.

2. Sales Volume for Calculating the Ratio of Fees, Taxes, and Interest Plan

- The sales volume of primary domestic trade level is the amount of sales to secondary level, sales to agencies, enterprises, construction sites, and exports, etc.

Sales volume to secondary level is calculated using the following formula:

- The sales volume of secondary level wholesale companies is the amount of sales to retail enterprises, sales to agencies, construction sites, enterprises, secondary level wholesale companies in other provinces, and exports, etc.

Sales volume to retail enterprises is calculated using the following formula:

Sales volume to retail enterprises = Total value sold at retail price to retail enterprises minus the discount of the retail enterprise itself plus commission and turnover tax for cooperative trading societies and small traders' cooperatives

- The sales volume of retail enterprises is the amount of direct sales to the public, sales to cooperative trading societies, and small traders' cooperatives.

Sales volume to cooperative trading societies and small traders' cooperatives is calculated using the following formula:

Sales volume to cooperative trading societies and small traders' cooperatives = Total value sold to cooperative trading societies and small traders' cooperatives at retail price minus commission and tax for cooperative trading societies and small traders' cooperatives

The above formulas are for calculating sales volume to cooperative trading societies and small traders' cooperatives. However, when calculating actual revenue, retail enterprises only deduct commissions for cooperative trading societies and small traders' cooperatives, while retaining the turnover tax of cooperative trading societies and small traders' cooperatives to remit to the State budget. The calculation formula is as follows:

Total sales revenue to cooperative trading societies and small traders' cooperatives = Total value sold to cooperative trading societies and small traders' cooperatives at retail price minus commission retained for cooperative trading societies and small traders' cooperatives

For small traders' cooperatives that self-report turnover tax, both commission and tax can be deducted (commission only includes circulation costs and fixed profit margin of small traders' cooperatives).

3. Sales Volume for Deducting Periodic Ratios of Fees, Taxes, and Interest

The sales volume mentioned in Article 2 is used to calculate the planned ratio of fees, taxes, and interest. The sales volume used to deduct periodic fees, taxes, and interest is the sales revenue already collected and deposited into the special account of the bank, plus the sales proceeds that domestic trade enterprises are allowed to defer.

4. Sales Volume for Deducting Actual Ratios of Fees, Taxes, and Interest After Settlement

As stipulated by the Joint Ministries, revenue collection must be based on actual business operations. However, since monthly settlements have not been finalized, periodic deductions for taxes and profits based on planned fee and profit tax rates multiplied by actual sales figures submitted to the Bank and the amount allowed for internal trade units to retain for operational expenses shall be made.

At the end of the month, when the internal trade enterprise has balanced its accounts and prepared detailed statements of losses and profits, it must base its determination of tax and profit revenues to be submitted to the budget on these actual records.

5. Method of Tax and Profit Payment.

The Joint Ministries prescribe the following method for deductions:

Periodically, from one to five days, internal trade units must submit a request for deduction of gross profit margins (fees, profit taxes) along with a tax and profit payment form to the Bank. Based on the request for deduction of gross profit margins, the Bank will deduct fees and profit taxes from the special account to the current account of the internal trade unit. Simultaneously, based on the tax and profit payment form (the amounts of profit and tax must match those approved by the Bank periodically) submitted by the internal trade unit, the Bank will immediately deduct from the current account to pay into the budget.

Each time an internal trade unit requests a deduction of fees and profit taxes, it must also submit the tax and profit payment form for that period to the Bank and Finance Department. If there is no accompanying tax and profit payment form, the Bank will not allow the deduction. Additionally, the Bank must report to the Finance Department to urge the internal trade unit to submit all required documentation to the Bank according to the prescribed regulations.

At the end of the month, internal trade units must reconcile their planned profit and tax deductions with actual figures (actual sales, actual fee and tax rates, actual profits). After reconciliation, if the Bank has not deducted enough, the internal trade unit must request additional deductions to cover the shortfall in taxes and profits. If the planned tax and profit payments exceed actual figures, the internal trade unit must request the Finance Department to refund the excess.

Banks must ensure that internal trade units are allowed to deduct the correct and full planned fee and profit tax rates multiplied by the sales figures submitted to the special account, including sales figures for which the internal trade unit is permitted to retain for operational expenses. At the end of the month, upon settlement, the bank must adjust according to actual fees and profit taxes.

During the course of commercial operations, banks must promote prompt payment settlements to quickly collect sales proceeds for the selling unit to enable timely submission of taxes and profits to the budget, repayment of bank loans, and ensure operational costs for enterprises.

Currently, internal trade units face many difficulties in collecting payment for goods, necessitating further study and resolution. However, disputes over debt collection between banks and internal trade units still exist, leading the Joint Ministries to stipulate as follows:

- Resolving issues of tax and profit payment and bank loan repayment involves promoting rapid payment settlements. Under current conditions, if sales proceeds are insufficient to cover tax and profit payments and bank loan repayments, the fees and profit taxes should be calculated based on the collected amount, with the remaining balance treated as a bank loan. Overdue debts cannot be deducted from the planned fee and profit tax rate.

For example, from day 1 to day 5, if an internal trade unit collects 100,000 dong from sales and deposits it into the special account, the unit can deduct 20,000 dong for fees and profit taxes (planned rate of 20%). The remaining 80,000 dong is used to repay the bank loan. Of the 20,000 dong in fees, 7% of the sales amount (7,000 dong) can be retained in the current account for operational expenses, while the remainder (13,000 dong) is transferred to the budget after the bank approves the deduction.

Financial Departments at provincial levels must monitor and inspect the accuracy of tax and profit deductions according to prescribed rates and procedures. Upon final settlement, they must promptly adjust the internal trade units' accounts according to actual figures, compensate for losses in a timely manner to avoid affecting business capital, and cease implementing previous advance tax calculation methods.

6. Method of Tax and Profit Payment for Other Business Activities and Non-Business Profits

In addition to sales activities, internal trade includes services such as catering, industrial production, livestock farming, transportation, warehousing, etc. These activities may either be fully economically accounted for or remain dependent on sales activities. However, the Ministry of Internal Trade has stipulated that other business activities must be separately accounted for using specific accounts to reflect sales indicators, cost prices, expenses, taxes, profits, etc.

Based on the nature and level of economic accounting of each type of business and each operating unit, the Bank provides loans and the Finance Department allocates funds, collects profits, taxes, and depreciation.

Below are specific provisions for each type of business activity:

1. Method of Tax and Profit Payment for Catering Enterprises Fully Economically Accounted For

The funding and lending policies for fully economically accounted-for catering enterprises follow the current industrial funding and lending policies. When enterprises collect sales proceeds, they deposit them into the current account for production expenses, paying business profits and taxes to the budget and repaying bank loans.

Profits and taxes are paid according to a monthly plan, with adjustments made based on actual figures upon final settlement.

2. Method of Tax and Profit Payment for Dependent Production, Livestock Farming, and Other Business Activities:

a) Taxes and Profits from Dependent Production:

- For fully economically accounted-for dependent production enterprises, funding and lending policies follow current industrial policies. When enterprises sell products, the Bank provides working capital loans covering production costs and taxes, if applicable. Upon receipt of sales proceeds, the Bank recovers the working capital loans. The remaining amount is deposited into the current account for payment of production profits and business taxes to the budget, with monthly plans adjusted based on actual figures upon final settlement.

- For dependent production enterprises that have not yet fully accounted for economic activities:

The capital allocation and lending shall be applied according to the commercial capital allocation and lending regime (the State allocates 30%, and the Bank lends 70%). Products completed and warehoused for commercial trade shall be lent by the Bank at the warehouse price directive. Borrowing and debt repayment of the dependent production part from the Bank shall be studied and regulated by the Ministry of Commerce and the State Bank later.

The profit of dependent production enterprises (i.e., the difference between actual cost and planned cost) shall be submitted according to the plan every two periods each month and will be adjusted based on actual conditions.

The production difference (i.e., the difference between planned cost and warehouse price directive including tax) shall be submitted to the budget after each product has been warehoused and lent by the Bank.

b) Tax and interest on livestock breeding:

- For long-term livestock reserves that have fully accounted for economic activities, the State directly allocates 70% and transfers 30% through the Bank for lending. Interest from this stage comes from surplus balance and increased allocation... Annually, livestock units base their sales plan and planned interest and tax ratio to calculate the budget submission plan. The annual plan is divided into quarters and months; if there is a loss, a loss plan is established, also divided into quarters and months. Livestock units submit to the budget according to the approved monthly plan, with the first period from 1 to 15 submitting 40%, and the second period from 15 to 30 submitting the remaining 60%. If the livestock unit has a planned loss, then the Finance Departments directly compensate the monthly plan. At the end of the month when the final settlement is completed, it will be adjusted based on actual conditions.

For meat reserve livestock breeding,if there is a dependent breeding part, it should be accounted for in commercial trade and not separately deducted.

- For long-term livestock breeding that has not yet fully accounted for economic activities , the capital allocation and lending shall be applied according to the commercial capital allocation and lending regime. The submission of interest and tax shall be applied according to commercial trade, meaning the proceeds from sales still need to be submitted to the special account of the bank. When calculating the planned ratio of fees, taxes, and interest, the fees, taxes, and interest from sales must be added to the planned fees, taxes, and interest to be deducted and submitted to the budget.

c) Tax and interest on business operations such as warehousing, transportation, and other business operations:

For these types of business operations, if any business activity involves borrowing from the Bank, the income from that activity will be submitted to the Bank's special lending account; if any activity does not borrow from the Bank, the income from that activity will be submitted to the payment account for expenses.

The deduction and submission of tax and interest for these business operations are stipulated as follows:

- Commercial units that also engage in transportation, warehousing, etc., and borrow from the Bank, the revenue of each period must be submitted to the Bank's special account. When planning the ratio of fees, taxes, and interest for commercial trade, the fees, taxes, and interest from warehousing and transportation business operations must be added to the sales proceeds already submitted to the Bank. Each week or period, the internal trade unit must deduct fees, taxes, and interest from the Bank's special account and simultaneously submit taxes and interest to the budget as stipulated in the section on submitting interest from commercial trade.

- Commercial units that also engage in transportation, warehousing, etc., but do not borrow from the Bank, do not submit revenue to the Bank's special account but instead submit to the payment account for expenses and pay taxes and interest to the budget. Taxes and interest from transportation, warehousing, etc., are submitted twice a month according to the plan. At the end of the month, after settlement, they must be submitted based on actual conditions.

d) Other revenues outside of business operations:

In commercial trade, besides revenue from sales, revenue from other business operations also includes other revenues outside of business operations such as money from selling packaging materials, scrap, by-products, recovery of residual fixed assets, fines for breach of contract, excess funds, etc., all of which are submitted to the payment account and the internal trade unit must submit to the budget monthly.

II. ADJUSTMENT OF SUBMISSIONS BASED ON ACTUAL CONDITIONS

1. Adjustment of sales volume based on actual conditions:

The sales volume extracted periodically each month is the amount of sales proceeds actually submitted to the Bank's special account plus the sales volume that the internal trade unit is allowed to spend.

However, when comparing the sales volume in the settlement and the sales volume taken from the Bank's special account in the month, there may be discrepancies, sometimes the sales volume in the settlement is more or less than the sales volume in the Bank's special account, and vice versa. This situation arises because the sales volume in the settlement includes a portion of sales that have been sold but have not yet received payment, while the sales volume in the Bank's special account mainly consists of sales made in the month that have been paid for, plus sales from the previous month that were paid for in the current month.

To address the issue of accurate submission based on actual conditions, the relevant ministries have stipulated as follows:

- When there is a settlement, the internal trade unit must use the sales volume in the settlement to calculate taxes and interest to be submitted to the budget. The relevant ministries note that the monthly settlement is usually completed after 10 to 15 days, during which time the sales proceeds from the previous month are collected at the beginning of the next month and the periodic payments have already been submitted to the budget. Therefore, determining the sales volume in the month is only to serve as a basis for adjusting the actual ratio of fees, taxes, and interest.

- The formula for calculating the sales volume in the month is as follows:

Sales volume in the month (according to settlement) = Actual sales revenue submitted to the Bank - Remaining sales volume from the previous month + Sales volume carried over to the next month

2. Adjustment of fees, taxes, and interest based on actual conditions

The fees, taxes, and interest used to calculate periodically each month are planned ratios. After completing the monthly settlement, internal trade units must use the actual fees, taxes, and interest to make adjustments.

Based on the planned consolidated ratio (including fees, taxes, and interest), the Bank allows the internal trade unit to transfer from the special account to the payment account for circulation expenses and submission of tax and interest to the budget. Now, with the actual ratio of fees, taxes, and interest, the internal trade unit must report to Finance and the Bank to adjust based on actual conditions.

Here, the inter-Ministry clarifies the relationship between domestic trade units and the Bank regarding the consolidation ratio and the relationship between domestic trade units and the budget concerning tax payment and profit:

The relationship between the Bank and domestic trade units in deducting interest tax fees

- When finalizing accounts, if there is an actual interest tax fee ratio, and if the Bank has not deducted enough, the Bank must make additional deductions so that the domestic trade unit has funds to cover tax and interest payments to the budget. If the Bank has already made excess deductions, the domestic trade unit must transfer from its deposit account to repay the Bank for the over-deducted amount.

The relationship between Finance and Domestic Trade in deducting tax and interest payments

Based on the finalized accounts, Finance will reconcile the taxes and interests paid according to the plan with the actual profits and taxes. If the payments are insufficient, the commercial unit must transfer from its deposit account to cover the shortfall to the budget. If the payments exceed the actual amounts, Finance will immediately refund the excess. In cases where the Bank has made sufficient deductions but the commercial unit fails to pay the full tax and interest to the budget and instead uses it for other purposes, subsequent deductions will be reduced by the portion owed by the domestic trade unit until all profits and taxes are fully paid to the budget. Simultaneously, financial agencies will review and record this in the commercial unit's files as a basis for reviewing the enterprise fund allocation at year-end.

3. The issue of refunds:

For amounts that domestic trade units have overpaid into the budget and need to be refunded, within five days of receiving the monthly or quarterly settlement, the Provincial Financial Departments must refund to the secondary wholesale units and county retail enterprises and purchasing cooperatives the portion they have paid into the local budget. As for the portion paid into the central budget by these units and primary units under the central budget, the Ministry of Finance authorizes the Provincial Financial Departments to refund by deducting from the planned interest payments due the following month. If there is still a shortage, it can be covered by the interest from other domestic trade units. This covering amount must be repaid to the Bank. The latest completion time for refunds is one month after receiving the unit's settlement. The Provincial Financial Departments must report these refunds to the Ministry of Finance.

4. The issue of compensating losses within the plan:

Losses within the plan are compensated monthly by the authorized financial agency through the deduction from the planned interest payments of other profitable domestic trade units. The Provincial Financial Departments must report these compensation amounts to the Ministry of Finance.

5. The issue of compensating losses outside the plan and exceeding the plan

- Compensating losses due to objective reasons. For secondary wholesale units and county retail enterprises and purchasing cooperatives, the local financial agency will compensate losses or allow deductions from the next period's planned payments belonging to the local budget. For secondary wholesale units and county retail enterprises and purchasing cooperatives under the central budget, and primary units under the central budget, the Ministry of Finance authorizes the Provincial Financial Departments to examine and decide on additional loss compensation.

To implement loss compensation, the Provincial Financial Departments may allow deductions from the planned interest payments due the following month. The Provincial Financial Departments must carefully review the situation before deciding and provide detailed reports to the Ministry of Finance.

- Compensating losses due to subjective reasons: For secondary units and retail enterprises under the local budget, loss compensation due to subjective reasons will be decided by the local administrative committee. For the central budget portion of the aforementioned units and primary units, it must be examined and decided by the Ministry of Finance.

In cases requiring immediate loss compensation to avoid hindering business operations, the financial agency can urgently report to the Ministry of Finance via telegraph, while simultaneously sending detailed reports or dispatching staff to report.

6. The issue of using quota debt:

Frequent monthly deductions of interest and tax payments to the budget will reduce the quota debt for interest and tax in the planned working capital of domestic trade units.

Example: A domestic trade unit must pay 1,200,000 dong in interest and tax to the budget each month. Previously, payments were due every 15 days, now every 6 days. The quota debt will change as follows:

- If payments are made twice a month, the quota debt is:

300,000 dong = X days

- If payments are made six times a month, the quota debt is:

120,000 dong = X days

Financial agencies must reassess the calculation of quota debt for domestic trade units, avoiding both excessive and insufficient calculations.

B. ISSUES OF PAYING THE BUDGET FOR DIFFERENCES IN COMMISSIONED GOODS, REGIONAL PRICE DIFFERENCES, SALES DIFFERENCES, AND RESOLVING SURPLUS ASSETS AND HARD-TO-COLLECT DEBTS

I. DIFFERENCES IN COMMISSIONED GOODS

(account ...)

Circular No. 21-LB has stipulated the principles and contents of paying the difference in commissioned goods, now the inter-Ministry explains further:

1. For commissioned units that have fully economic accounting:

a) Capital allocation and loans to commissioned units with full economic accounting are separately determined, and temporarily, the State provides 50%, while the Bank provides 50% through credit funds.

b) After inspection and acceptance, commissioned units with full economic accounting can directly transfer goods to primary domestic trade warehouses, or temporarily pass through collection warehouses for a short period. In cases where goods are transferred but payment has not been received, the Bank will lend the commissioned unit the planned cost including taxes (if applicable), simultaneously lending the primary domestic trade wholesaler the directed purchase price to settle with the commissioned unit. Upon receipt of sales proceeds, the Bank will recover the loan for settlement, and the remaining amount will be deposited into the settlement account for the commissioned unit to pay the difference in commissioned goods and interest to the budget.

c) In the case where goods are temporarily stored in the processing unit's warehouse, the unit is only allowed to set a minimum reserve quota, and when processed goods enter the warehouse, the Bank will lend according to the planned cost including commodity tax (if applicable). When selling goods to first-tier wholesale units, the lending by the Bank, as well as the payment of processing interest and processing differential to the budget, shall be similar to the case where processed goods are directly transferred to the first-tier domestic trade warehouse.

d) Under current conditions, it is not possible to calculate actual costs monthly, leading to many difficulties in tax payments. Some processing units have yet to pay processing interest and differentials to the budget.

The Joint Ministries stipulate:

Processing Interest is the difference between planned cost and actual cost.

Processing units must adjust their planned costs based on actual circumstances to closely reflect reality, thereby minimizing differences between planned and actual costs. Pending such adjustments, processing units must base their planned interest rates on actual interest rates from previous years, calculated as a percentage of planned costs, to deduct and pay into the budget monthly. The planned processing interest rate for processing units with economic accounting must be agreed upon by the three sectors: Finance, Banking, and Domestic Trade. Upon final settlement, the actual interest amount must be adjusted. If taxes are fully paid, any excess must be refunded by Finance.

Processing Differential is the difference between planned cost and the selling price of the processing unit (i.e., the directed warehouse entry price of the first-tier wholesale unit). Each time goods are delivered to buyers, the processing unit must calculate the planned processing differential to be paid into the budget based on the quantity of goods delivered and the processing price differential of the product or group of products.

Processing interest amounts must be paid to the budget quarterly. Processing differential amounts must be paid immediately into the budget each time goods are sold and payment received, as calculated.

After receiving the official settlement or account reconciliation for the month or quarter, adjustments will be made. If insufficient payments have been made, the Bank will continue to deduct from the settlement account to make up the difference. If overpayments have been made, local finance departments must promptly refund them. The refund procedures are the same as those for refunding excess interest payments.

2. For dependent processing units:

a) Raw materials already included in the inventory quota for domestic trade should not be provided with separate capital or loans.

b) During the processing period, the Bank will lend the domestic trade unit capital to purchase raw materials for cooperative society processing, while processing costs for the cooperative society will be directly loaned by the Bank.

c) When goods are entered into the domestic trade warehouse, the Bank will lend according to the warehouse entry price (including commodity tax if applicable, excluding the loan for raw materials). The remaining amount will be deposited into the settlement account for paying processing interest and differentials, calculated and paid as specified in Part 1 for processing units with full economic accounting.

3. Generally, for processing units with or without economic accounting wishing to borrow from the Bank, they must provide necessary documents for the Bank's review. For units with economic accounting, they must provide delivery receipts to buyers to obtain settlement loans, and first-tier wholesale units must provide sales receipts from processing units for the Bank to approve settlement loans.

For domestic trade units that also process dependently, they must attach a list detailing the quantity of processed goods entered into the warehouse along with the warehouse entry receipt to obtain loans at the directed warehouse entry price. Domestic trade units must process consumable goods and must not process surplus goods. If the Bank discovers that a processing unit is processing surplus goods during lending, the Bank will not approve loans for entering such goods into the warehouse and will deduct the value of raw materials in surplus processed goods from the settlement account. If the settlement account lacks funds, the debt will become overdue. Determination of surplus goods must be concluded uniformly by the three sectors.

Currently, the State has a policy to reduce processing prices, which means adjusting raw material quotas, processing material quotas, and processing cost quotas downward. This will save raw materials and processing materials per unit of product, reduce processing costs per unit of product, and increase processing differentials. Localities and commerce sectors need to urgently implement the government's policy to reduce processing prices and calculate additional processing differentials to be paid to the budget accordingly.

II. PRICE INCREASE AND DECREASE DIFFERENTIALS

The State has decided to increase or decrease prices for certain technological and food products. Each time there is a price adjustment, the Ministry of Domestic Trade provides guidance. However, price increases or decreases affect buyers, sellers, bank loans, budget revenues and expenditures... Therefore, domestic trade units must adjust their financial and accounting practices uniformly from the first tier down to retail enterprises whenever there is a price adjustment decision.

Nevertheless, the implementation of price adjustments varies among localities and domestic trade units, and some joint ministry regulations on this issue have not been fully implemented. Provincial banking and finance agencies have not actively supervised and assisted commercial units in implementing these adjustments.

Adjusting price increases and decreases as mentioned above is very complex. Therefore, the Joint Ministries believe it is necessary to establish specific regulations for domestic trade units, banks, and finance departments to implement uniformly.

1. The following cases of price increases and decreases are defined:

a) Increasing retail prices but not increasing purchase prices for industrial production enterprises and foreign trade.

b) Decreasing retail prices but not increasing purchase prices for industrial production enterprises and foreign trade.

c) Increasing purchase prices but not increasing retail prices.

d) Increasing both purchase and retail prices.

2. General principles for handling price increase and decrease types of goods

Currently, state revenue collection is being carried out at level I, but the revenue from the Domestic Trade sector has not yet been transferred to the production stage and is temporarily kept at the wholesale trade level I. Therefore, the Joint Ministries decide:

a) Each time the State decides to increase or decrease prices, the increased revenue (profit) and decreased revenue due to reduced prices (loss) will be allocated to the level I company.

b) Level II companies purchasing goods from level I wholesale companies shall take the new retail price minus the level II discount rate (the discount rate does not change).

Example: Before the decision to increase or decrease prices:

Level I sells a bicycle to level II at a retail price of 400đ minus 10% which is 40đ = the purchase price of level II from level I is 360đ.

Calculation formula:

When there is a decision to increase prices:

The State decides to increase the retail selling price of a bicycle to 750đ

675đ = 750đ - 75đ (rate 10%)

c) The level II discount rate remains unchanged, therefore the absolute amount of the discount changes:

- If the State decides to increase the retail selling price, the absolute discount will increase:

Old discount: = 40đ

New discount: = 75đ

- If the State decides to reduce the retail selling price, the absolute discount amount will decrease:

Old discount for 1 meter of yarn: = 8đ

New discount for 1 meter of yarn: = 5đ

To ensure that domestic trade units have sufficient circulation costs to continue operating, guarantee tax payment to the State, and ensure actual profit and loss, the Joint Ministries stipulate that each time the price increases or decreases, the following rates for circulation fees, taxes, and profits within the discount will apply:

Below, the Joint Ministries provide detailed guidance for each case of price increase or decrease for domestic trade units, banks, and finance departments to implement:

a) Increase retail price but not increase purchase price for industrial enterprises and foreign trade

At level I: Increase retail price but not increase purchase price then:

- The rate and absolute discount amount both increase.

- Within the discount, the level II discount rate remains unchanged. The discount of the level II company itself maintains the same absolute fee, but the rate fee decreases (the absolute fee remains the same, the profit rate relative to the higher turnover decreases). The profit of level I increases both absolutely and relatively.

- The inventory capital quota does not increase, but the unexecuted discount of level I will increase.

At level II: Increase retail price while also increasing purchase price from level I. Therefore:

- The discount rate does not change, but within the discount:

The absolute circulation cost remains unchanged.

The rate fee decreases

Tax remains at 2.5% of the new turnover, so the absolute tax amount increases.

The absolute profit and profit rate increase.

- The inventory capital quota increases, but the unexecuted discount rate does not increase.

b) Decrease retail price but not decrease purchase price for industrial enterprises and foreign trade

At level I: Decrease retail price but not decrease purchase price for industrial enterprises and foreign trade, then:

- The rate and absolute discount amount both decrease.

- Within the discount, the level II discount rate remains unchanged.

The discount of the level I company itself: the absolute fee remains unchanged, so the rate fee increases relative to the new turnover. The absolute profit and profit rate both decrease.

- The inventory capital quota does not increase, but the unexecuted discount decreases both absolutely and relatively.

At level II: Decrease retail price but also decrease purchase price. Therefore:

- The discount rate remains unchanged, but the absolute discount amount decreases.

- Within the discount:

The absolute circulation cost remains unchanged, but the rate fee increases (the absolute fee remains unchanged, the profit rate relative to the lower turnover increases).

The tax rate remains at 2.5%, so the absolute amount decreases.

The absolute profit and profit rate both decrease. If the State decides to reduce the retail price below the purchase price, it results in a loss.

- The inventory capital quota of level II will decrease. The unexecuted discount decreases both absolutely and relatively.

c) Increase purchase price but not increase retail price

At level I: Increase purchase price but not increase retail price then:

- The discount rate decreases

- Within the discount, the level II discount rate does not change. The level I discount is:

- The absolute fee and rate remain unchanged.

- The absolute profit and profit rate both decrease.

- The inventory capital quota increases. The unexecuted discount decreases both relatively and absolutely.

At level II: Retail price and purchase price of level I do not change. Therefore, the discount (fee, tax, profit) remains unchanged.

d) Increase purchase price and simultaneously increase retail price:

At level I: Increase purchase price and simultaneously increase retail price then:

- The absolute discount amount remains unchanged, but the discount rate decreases.

- Within the discount, the level II discount remains unchanged.

Within the discount of the level I company:

+ The absolute fee remains unchanged, but the rate fee decreases;

+ The absolute profit remains unchanged, but the profit rate decreases.

- The inventory capital quota increases. The unexecuted discount remains unchanged absolutely, but decreases relatively.

At level II: Increase purchase price and simultaneously increase retail price then:

- The discount rate remains unchanged, but the absolute discount amount increases.

- Within the discount:

+ The absolute fee remains unchanged, but the rate fee decreases.

+ The business tax remains at 2.5% of the new turnover, so the absolute tax amount increases.

+ The profit rate and absolute profit both increase.

- The inventory reserve quota increases, the unexecuted discount rate does not increase, but the absolute discount amount increases.

3. Implementation measures each time there is a decision to increase or decrease prices at domestic trade, bank, and finance units.

Each time the State makes a decision to increase or decrease prices, domestic trade units at all levels must recalculate the tax and profit amounts for goods whose prices have increased or decreased, adjust the discount rate for the entire unit to request the Bank to allocate according to the new rate. Specifically, level II units do not need to adjust the overall discount rate because whether prices increase or decrease, the discount rate remains unchanged, but they must adjust the fee and profit rates to accurately pay the budget according to reality.

For the quantity of inventory goods on the date of price increase or decrease, they must be inventoried at the new retail price and cost price. After inventorying, if the value of the remaining inventory increases, the difference in that increase must be submitted to the state budget, while the State will provide the Ministry of Domestic Trade with 100% of that increase to ensure sufficient capital for continued business operations. For types of inventory goods subject to a reduction in retail prices, two categories must be distinguished:

If the retail price is reduced but only results in a loss of profit, the inventory of goods does not need to reduce its cost but only the unexecuted discount.

If the retail price is reduced to the point of losing the cost price, the inventory of goods must be revalued; the difference in reduction, which represents a loss, requires the trading unit to request a reduction of 30% of the self-owned capital provided by the state and to deduct 70% of the reduction difference from the profit paid to the state budget to repay the bank.

III. PRICE DIFFERENTIALS BETWEEN REGIONS

(Account...)

Revenue from regional price differentials is essentially profit but is recorded in the account of price differentials to be submitted to the state budget. Therefore, this amount is not included in the gross margin ratio, but when revenue from sales is received by the domestic trade unit, it is fully deposited into a special account. If the domestic trade unit wishes to withdraw and submit the regional price differential revenue, it must statistically determine this amount so that the bank has a basis to withdraw from the special account and deposit into the state budget according to a monthly schedule specified by the Department of Finance and the domestic trade unit. Thus, when the regional price differential account must repay the bank the portion of the gross margin ratio calculated based on the revenue from sales.

IV. DIFFERENCES IN GOODS SOLD FOR STAFF AND WORKERS' SUPPLY

(Subsection...)

Previously, this difference in goods sold for staff and workers' supply was offset within the account of price increases and decreases, but in reality, it should be deducted from the profit payment. Therefore, it is now stipulated that the difference in goods sold for staff and workers' supply must be recorded separately and transferred to the profit payment (i.e., transferred to other capital reserves).

V. ISSUES OF SURPLUS AND DEFICIT ASSETS AWAITS SETTLEMENT (Accounts 108 and 106). ISSUES OF PERSISTENT BAD DEBTS OF THE DOMESTIC TRADE SECTOR

Currently, there are many surplus and deficit assets awaiting settlement, and persistent bad debts of domestic trade units that still exist. Many items have arisen over a long time but have yet to be resolved. Each year, the number of surplus and deficit assets, as well as bad debts, continues to increase, causing difficulties in business operations and financial conditions for domestic trade units, affecting the activities of the domestic trade sector.

To resolve these types of surplus and deficit assets and bad debts, the relevant ministries have established specific provisions as follows:

- Localities must establish Asset Loss Handling Committees. The composition must include representatives from the Banking, Finance, and Domestic Trade sectors under the direction of the Provincial People's Committee.

Domestic trade units must present detailed situations and causes for each case of surplus and deficit assets; regarding persistent bad debts, they must present each incident for the local Asset Loss Handling Committee to review.

While awaiting the issuance of a comprehensive system for handling asset losses, the relevant ministries temporarily stipulate the handling procedures for loss cases:

Resolving surplus and deficit assets must not involve subtracting the total surplus from the total deficit to find the net increase or decrease and then propose it for the Committee's resolution.

The measures for resolution will apply the following principles:

- For asset deficits caused by subjective reasons, individual and collective responsibility must be traced, compensation must be required, and recorded in the receivable account (account 101) for gradual recovery.

- For asset deficits caused by objective reasons, the local Asset Loss Handling Committee must approve them and record them as losses (subsection 190,2).

- For surplus assets due to objective conditions such as physical or chemical conditions, or if no one acknowledges them after the local Asset Loss Handling Committee reviews, the difference in surplus must be recorded as profit and submitted to the state budget (subsection 190,2). This surplus asset difference allows the trading unit to consider it as part of the inventory goods for storage, enabling the bank to provide guarantees for loans and submission to the state budget.

- For surplus and deficit assets due to accounting errors or unreasonable entries that continue to be recorded in the books, they must now be reviewed and adjusted, and reported to the Asset Loss Handling Committees at all levels.

In resolving surplus and deficit assets, if there is no agreement within the local committee, it must report to the central committee for approval before recording in profits or losses.

- For persistent bad debts, including advance payments for purchasing agricultural products and food, advances to staff and workers, receivables, and payables, each case must be reconciled and combined with the three collections campaign under the leadership of local authorities to recover.

- For personal advance payments and loans, they must be resolved firmly and decisively to recover.

Cases where recovery is impossible, such as debtors who have died, disappeared, or lost the ability to repay, must be confirmed and approved by local authorities before being recorded as losses.

VI. REGARDING CAPITAL PROVISION AND RECOVERY OF STOCKPILE GOODS

Currently, there are still many stockpiled goods in the domestic trade sector, causing difficulties in business operations and financial management for the domestic trade sector.

The amount of goods backlog in the domestic trade sector in 1963 was funded by the State at 100%. In 1964, the Ministry of Domestic Trade and its affiliated units planned to sell off the backlog of goods until December 31, 1964. For the remaining backlog of goods as of December 31, 1964, which was also funded by the State at 100%, the Ministry of Domestic Trade must have plans to sell these goods to bring them into normal circulation reserves for the 1965 plan, accelerate sales, and on this basis establish plans to submit interest and the released backlog capital to the central budget at 100%. The Ministry of Domestic Trade must compile the total capital that the State has provided for the entire domestic trade sector, distinguishing between the capital provided for normal circulation reserves and the 100% backlog capital provided; the Ministry of Domestic Trade must maintain records of the backlog goods and capital, and upon resolution, immediately return the funds to the central budget. Regarding the decision to cancel goods or reduce prices of backlog goods, Directive No. 105-TTg dated October 22, 1963 has stipulated the authority to resolve such matters for central and local councils.

The Joint Board notes that: The Councils at the district, city, provincial level have the authority to decide to cancel up to 20,000 dong and reduce prices up to 10,000 dong at one facility, meaning that at one economic accounting unit within the domestic trade sector, the Council can only resolve the entire backlog of goods once with the aforementioned cancellation and price reduction values.

The Central Council has the authority to decide to cancel up to 100,000 dong and reduce prices up to 50,000 dong at one facility, meaning that at one economic accounting unit within the domestic trade sector, the Council can only resolve the entire backlog of goods once with the aforementioned cancellation and price reduction values.

Monthly, domestic trade units and finance departments must report once to the Ministry of Domestic Trade and the Ministry of Finance on the situation regarding the resolution of backlog goods and the submission to the central budget.

The Joint Board requests that the Provincial People's Committees, City Committees, District Committees, Branches of the State Bank, Financial Departments, and Commerce Departments carefully study this Circular, convene inter-departmental meetings to disseminate it thoroughly down to the grassroots level to ensure good implementation, promptly resolve longstanding issues to promote better commercial activities, strengthen accumulation for the State, and ensure more stringent and regular monetary control over commercial operations.

This Circular applies only to the domestic trade sector; other sectors must seek opinions from their respective supervisory ministries, the Ministry of Finance, and the State Bank, reach agreements, and provide guidance for implementation.