Circular No. 28/2001/TT-BTC guides the recording of revenue and expenditure from import tax and value-added tax on imported goods for water supply projects funded by ODA under the loan repayment mechanism from the State budget.

CIRCULAR

Guidelines for recording revenue and expenditure from the State budget for import tax and value-added tax on imported goods for water supply projects funded by ODA under the rescheduling mechanism of the State budget.

import value-added tax on imported goods for water supply projects.

funded by ODA under the rescheduling mechanism of the State budget.

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Pursuant to Article 12 of Decree No. 90/1998/NĐ-CP dated November 7, 1998, promulgating the Regulations on Management of Foreign Borrowing and Repayment issued by the Government.

Pursuant to the Prime Minister's opinion in Official Letter No. 78/CP-KTTH dated January 22, 2001, allowing for the recording of revenue and expenditure from the State budget for import tax and value-added tax (VAT) on imported goods for water supply projects funded by ODA under the rescheduling mechanism of the State budget.

The Ministry of Finance hereby provides guidance as follows:

I. GENERAL PROVISIONS:

1. Scope of application: This Circular provides guidelines for the recording of revenue and expenditure from the State budget for machinery, equipment, materials, and specialized transportation vehicles imported from January 1, 2001 onwards for water supply projects funded by ODA under the rescheduling mechanism of the State budget (hereinafter referred to as rescheduled water supply projects).

2. Annually, during the period of establishing the State budget estimate, the project owners of rescheduled water supply projects (referred to as project owners) must prepare the corresponding matching capital plan for the project, which includes the matching capital required to pay various types of taxes as guided by Joint Circular No. 06/1998/TTLT-BKH-BTC dated August 14, 1998 of the Ministry of Finance and the Ministry of Planning and Investment, serving as the basis for recording revenue and expenditure through the State budget.

3. The project owner must recognize the debt for the amount of import tax and VAT recorded through the State budget together with the loan and repay the State budget when the project commences operation.

II. RECORDING REVENUE AND EXPENDITURE DOCUMENTATION

The project owner must complete the documentation according to the provisions below and submit it to the Ministry of Finance (Department of Foreign Financial Affairs) as the basis for recording revenue and expenditure from the State budget for the taxes due. The documentation includes:

- Decision approving the feasibility study of the project by the competent authority (to be submitted only once along with the first request for recording revenue and expenditure).

- Request letter from the project owner to the Ministry of Finance (Department of Foreign Financial Affairs), detailing the quantity and value of machinery, equipment, materials, and specialized transportation vehicles imported in each batch and the corresponding taxes requested for recording revenue and expenditure; name of the entrusted importing unit (if applicable).

- Annual matching capital plan announced by the competent authority, including the loan matching capital plan for tax payment.

- Tax notification from the Customs Authority (original or certified true copy by the project owner).

III. PROCEDURE FOR RECORDING REVENUE AND EXPENDITURE AND RESPONSIBILITIES OF THE INVOLVED AUTHORITIES:

- Within the latest 30 days from receiving the tax notification from the Customs Authority, the project owner must prepare the documentation as stipulated in Section II above and submit it to the Ministry of Finance (Department of Foreign Financial Affairs) along with the request for recording revenue and expenditure.

- The procedure for implementing the recording of revenue and expenditure within the units of the Ministry of Finance is as follows:

+ Within three days from receiving all documentation, the Department of Foreign Financial Affairs will issue a notice approving the budget transfer from the central State budget to the Development Support Fund according to the amount of tax due and send the notice to the Department of State Budget and the project owner. In case additional documentation is needed, the Department of Foreign Financial Affairs must immediately notify the project owner to complete the documentation.

+ Based on the notice approving the budget issued by the Department of Foreign Financial Affairs, within five days, the Department of State Budget will issue an expenditure order transferring funds from the central State budget to the Development Support Fund, issue an income order for import tax and VAT, and simultaneously issue a mandate for the Development Support Fund to transfer funds to the project owner for rescheduling.

- Within the latest five days from receiving the revenue and expenditure documentation from the Ministry of Finance, the project owner must sign a promissory note with the Development Support Fund to recognize the rescheduled tax debt recorded.

The maximum loan term for rescheduled tax debt is equal to the main foreign loan term of the project. The repayment of the tax debt begins from the date the project starts operating. Project owners are not required to pay interest arising from the rescheduled tax debt but must pay service fees for the rescheduled loan at the same rate as the foreign loan service fee of the project. The Development Support Fund is responsible for recognizing the debt with the State budget, monitoring the recovery of the rescheduled tax and paying it into the State budget.

- Based on the revenue and expenditure documentation from the Ministry of Finance and the promissory note with the Development Support Fund for the recorded tax (certified true copy by the project owner), the Customs Authority handling the import procedures will clear the tax for the project owner on the import declaration form.

- The entrusted importing unit for the project has the responsibility to cooperate with the project owner to provide complete import documentation as the basis for recording revenue and expenditure and is liable for the legality of the provided documents.

- In case of unexpected situations during the year where the matching capital of the project recorded in the annual plan is insufficient compared to the tax due or if a new project arises that was not included in the annual plan, based on the valid documentation of the project owner, the Ministry of Finance will process the recording of the aforementioned tax and local People's Committees managing the projects need to work with the Ministry of Finance (Department of State Budget) and the Ministry of Planning and Investment to supplement the matching capital plan for the year.

IV. IMPLEMENTATION ORGANIZATION:

1. This Circular takes effect 15 days after its issuance. During implementation, if there are difficulties, agencies and units are advised to promptly report to the Ministry of Finance for research and direction for amendment and supplementation.

2. For outstanding taxes generated from imported goods before January 1, 2001, the project owner must arrange sufficient capital to pay the tax. Administrative fines for tax violations must be paid to the Customs Authority by the project owner and are not subject to recording revenue and expenditure; the project owner must bear the fine themselves and cannot include it in the project investment costs.

The General Department of Customs directs the Customs Bureaus at localities on the handling of import consignments for water supply projects funded by ODA loans rescheduled from the State budget after January 1, 2001, but which have not yet recorded tax revenues and expenditures. If the Project Owner has submitted a letter to the customs authority registering the progress of completing the procedures for recording tax revenues and expenditures, then it still permits the entrusted entity importing machinery, equipment, materials, and specialized transportation vehicles for the project to accept the goods to ensure the project's implementation schedule, without coercing the entrusted entity importing for the project.