Circular No. 3006-TC/TCT regarding detailed guidance on certain points concerning revenue tax.

CIRCULAR

||| OF THE MINISTRY OF FINANCE NO. 40a-TC/NSNN DATED JUNE 30, 1997 GUIDING THE CONSTRUCTION OF THE 1998 STATE BUDGET ESTIMATE

Implementing Directive No. 416/TTg dated June 14, 1997 of the Prime Minister on the construction of plans for economic and social development and the State budget estimate for 1998; the Ministry of Finance guides the assessment of the implementation of the State budget in the first half of 1997 and the construction of the State budget estimate for 1998 as follows:

A- ORGANIZATION AND EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET IN 1997:

The situation of implementing the plan for economic and social development in the first six months of 1997 still maintained a growth rate: industrial production, agriculture, commodity circulation, exports achieved good results, inflation was contained, many aspects of society improved; from the beginning of the year, many Ministries and localities actively implemented the assigned state budget revenue and expenditure tasks, promptly implemented the Law on State Budget and guiding documents for its enforcement. Revenue in some areas achieved good results (revenue from the foreign-invested enterprise sector, income tax, traffic fees,...); management and control of expenditures made progress. However, actual difficulties and shortcomings have emerged: Some key products were produced and consumed slowly, smuggling and tax evasion were not effectively curbed leading to lower revenue in some areas compared to the National Assembly-approved budget estimate (revenue from the non-state-owned sector, agricultural land use tax, import-export tax; slow allocation and implementation of investment in construction and national target programs leading to lower spending in these areas), wasteful and inefficient spending remained widespread.

Ministries and localities base on the goals and tasks of economic and social development; the assigned State budget revenue and expenditure estimates, the results of the first six months, propose measures to guide and manage the last six months of 1997 to strive to complete the State budget revenue and expenditure tasks for 1997 approved by the National Assembly. At the same time, assess the implementation of the State budget throughout 1997 under their management to have a basis for constructing the 1998 State budget estimate. Specifically:

I- ON REVENUE:

1. For state-owned enterprises:

- Understand the business operations of enterprises.

- Classify enterprises to have specific policies: Enterprises that operate effectively and need to be maintained and developed should be supported with measures to improve; those needing restructuring, shareholding reform, liquidation, or bankruptcy should be classified accordingly.

- Regularly urge enterprises to pay taxes, strengthen accounting and settlement inspections to eliminate unreasonable costs from production costs and circulation fees, increase accumulation and tax payments. Strictly check the accrual of basic depreciation to ensure compliance with regulations. Closely monitor advance accruals and reserve funds, if there is no actual need, reduce corresponding expenses to accurately determine taxable profit and tax payable.

- Seriously implement tax management procedures (declaration, notification of collection, inspection), collect all newly generated receivables, and firmly prevent new arrears from arising.

- Issue orders to collect and impose penalties on hidden taxes and overdue payments that units delay in paying to the state budget.

2. For foreign-invested enterprises:

- Organize statistics for investment projects within the jurisdiction and classify them: ongoing construction projects, operational projects, projects that have exceeded tax exemption periods, land area, and usage period for each project to calculate and collect all tax revenues, land rent, water surface rent, sea surface rent according to regulations. Establish files to manage tax collection for each project, grasp relevant data on tax revenue and financial status of each project.

- Concentrate on inspecting and settling tax accounts, ensuring 100% of operating enterprises are settled for taxes. Pay attention to inspecting imported material costs, equipment exempted from tax, impose penalties and recover taxes if misused.

3. For non-state-owned economy:

- Summarize the implementation of business registration according to Directive No. 657/TTg dated September 13, 1996 of the Government. Link business registration with tax management; gradually bring the management of private commercial and service businesses into order; end unregistered or improperly registered business operations, non-payment or insufficient payment of taxes; strictly inspect businesses applying to cease operations; list and publicly announce all households at the People's Committee offices and tax stations for public opinion to identify taxable entities.

- Grasp market price fluctuations, actual business conditions of each entity, each product category at different times and seasons, conduct spot surveys and recalculate revenue and rental rates accurately to prevent revenue loss. For households taxed through declaration methods, strictly inspect compliance with accounting records, invoices, economic contracts during transactions; promptly detect and handle cases of inaccurate declarations such as concealing revenue, overstating expenses, losing invoices, selling invoices, incorrect invoice entries. Expand accounting systems for larger households and companies. For households taxed through quota methods, revenue determination must follow the procedures specified in Circular No. 240 TCT/NV6 dated February 21, 1995 of the General Department of Taxation; organize typical investigations by industry or business type or region to accurately predict taxable revenue; seek opinions from the People's Committee, Tax Advisory Councils at the commune level to ensure fair and objective revenue determination, while publicly announcing tax rates for entities in the area at the commune office.

- Fully understand the business operations of non-state-owned enterprises to collect all receivables accurately, completely, and promptly.

4. On export and import taxes

- Resolve the situation of overdue taxes according to Directive No. 575/TTg dated August 24, 1996 of the Prime Minister. Strengthen management measures to prevent revenue loss, especially for imported consumer goods. Enhance management and prevent tax evasion in foreign-invested enterprises, gifts, processed goods, temporary imports for re-export, and refundable tax cases.

- Organizing inspections on the collection of export and import taxes at border gates with large tax revenues.

5. Regarding revenues related to land and housing:

- For the collection of land use rights transfer fees and taxes: immediately collect outstanding land revenues and those occupied according to the conclusions of inspections and audits. The People's Committees at all levels need to direct the Tax Authority to coordinate with the Land Administration and related agencies to promptly organize collections for cases where land use permits have been issued, land leases, applications for registration and issuance of land use right certificates, construction permits, confirmation of changes in land use purposes, and transfers, in accordance with prescribed regulations.

- For agricultural land use tax: fully implement the collection for areas due to pay taxes in 1997, particularly in regions with perennial crops in Southeastern South Vietnam and the Central Highlands; the rice price for taxation should be close to market prices.

- For real estate tax: Complete the real estate tax assessment quickly and fully collect taxes for the area.

- Recommend competent authorities to simplify procedures and reasonably adjust prices to promote the sale of state-owned housing.

6. Regarding fees and charges:

- Fees and charges of communes and wards: Grasp all commune and ward fee and charge revenues, requiring full submission or reflection of these revenues into the State budget.

- Various fees and charges collected by entities and sectors: Through the inspection of usage receipts, firmly grasp the amount of revenue, requiring timely submission or reflection into the State budget.

- Transportation fees: Implement collections in accordance with Circular 29 TC/TCT dated June 9, 1997, of the Ministry of Finance, which provides guidance on amendments and supplements to Circular 117 TC/TCT dated December 24, 1994, of the Ministry of Finance regarding the collection of transportation fees through gasoline prices. Conduct inspections of the quantity of fuel stored in warehouses, sold, and inventoried at companies and branches subject to transportation fees, urging these units to timely remit transportation fees into the State Budget.

II. ON EXPENDITURE

Based on the budget plan assigned for the year, progress in implementing tasks, ensure expenditures are made according to prescribed regulations and tasks, practice thrift to prioritize important tasks. Evaluations must be based on the results of assigned tasks, analyze wasteful areas, identify causes, and develop measures for the second half of the year, serving as a basis for calculating the 1998 budget.

1. From now until the end of the year, no additional budgetary expenditures outside the approved budget will be processed except in urgent cases such as disaster prevention and flood control. Ministries, sectors, localities, and units must practice thrift, rearrange expenditure tasks to ensure funding for newly emerging essential needs, and immediately cut unnecessary conference and hospitality expenses. For demands that have been decided but not included in the initial annual budget, review and delay their implementation schedule, and allocate them in the 1998 budget. For provinces and centrally-administered cities capable of exceeding the 1997 State Domestic Product (SDP) revenue target, the increased revenue should be prioritized for supplementary funding for education and training, and science to implement Resolution No. 2 of the Central Committee in 1997, with the remainder allocated for infrastructure construction projects, without additional administrative expenditure supplementation. For provinces and centrally-administered cities likely to fall short of the 1997 SDP revenue target, localities need to proactively rearrange expenditures to align with available revenue sources while still ensuring funding for critical economic and social development tasks, including education and training, and science.

2. Regarding basic construction expenditures: Ministries, sectors, and localities must focus on implementing the investment plans for basic construction projects already assigned, serving as the basis for timely disbursement according to completed work volumes and proper procedures. Projects planned for construction in 1997 but lacking necessary investment procedures by July 30, 1997, as per Government Decree 42/CP, should be removed from the 1997 investment plan and considered for inclusion in the 1998 plan. Based on evaluations of first-half-year work volumes and the ability to complete the full year, determine the volume to be reallocated to the 1998 budget for each project.

3. For expenditures on constructing economic and social infrastructure projects, social welfare projects, housing fund development, agricultural and rural development investments, and forest regeneration funds from land use rights transfer revenues, land lease payments, proceeds from housing sales, lottery activities, agricultural land use taxes, and forest resource taxes; localities should base their spending on actual revenue conditions to ensure alignment with designated purposes. If revenue targets are not met, corresponding reductions in spending should be made, and spending should only occur when actual revenue is available to avoid unpayable work volumes.

4. For national programs: Allocate funds for national programs strictly according to the approved budget and progress. The program management agency should organize comprehensive evaluations of each program's effectiveness: objectives, implementation timeline, achievements in 1997, and propose specific recommendations for management mechanisms and program adjustments.

5. For regular expenditures: Base annual estimates on the initial budget allocation, task progress, and budget capacity to closely match actual circumstances. Each expenditure area should be analyzed specifically according to the National Budget Item List; analyze requirements for salaries, allowances, mandatory deductions, regular operational expenses, and non-recurring expenses like procurement, famine relief, disaster response, etc., to serve as a basis for planning the 1998 budget.

III. EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET LAW AND GUIDING DOCUMENTS:

Ministries, central agencies, local authorities at all levels, and units should base their assessments of the Law on State Budget and guiding documents issued by the Ministry and localities in the early months of 1997 on the implementation of the Law. Evaluate progress across aspects such as budget management decentralization, budget allocation, compliance with budget plans, state budget accounting, village-level budget management, compliance with revenue and expenditure policies, etc., and make recommendations to competent authorities for amending and supplementing guiding documents and specific policies related to state budget management and operation.

B. BUILDING THE 1998 STATE BUDGET:

The preparation of the state budget estimate must fully comply with the provisions set forth in Decree No. 87/CP dated December 19, 1996, Circular No. 09 TC/NSNN dated March 18, 1997, and Circular No. 14 TC/NSNN dated March 28, 1997. Based on the requirements stipulated in Directive No. 416/TTg dated June 14, 1997 of the Prime Minister and the actual situation, the Ministry of Finance guides the following issues:

I. REQUIREMENTS AND OBJECTIVES:

1998 is the third year of implementing the five-year plan from 1996 to 2000, and the second year of implementing the State Budget Law. The situation in 1997 and recent years shows that:

- The economy maintains a growth rate, but some sectors have shown signs of stagnation; encountering difficulties in product sales.

- Inflation has been controlled and is showing a downward trend.

- The need for investment development funds, regular expenditures for educational, health, cultural, social, and national defense and security affairs is increasing.

Given this situation, the work of building the 1998 State Budget must meet the following requirements and objectives:

1. Requirements:

- Continue to strengthen the country's financial potential, improve the health of the national financial system, and make a significant change in the implementation of the policy to restructure the State Budget.

- The state budget revenue estimate must be established in accordance with the law, comprehensively covering all sources of revenue, effectively preventing revenue loss, ensuring fairness in production and business activities for all enterprises; at the same time, encouraging the development of production and business activities to expand current and long-term revenue sources. Increase the proportion of state budget expenditure for investment development, education and training services, scientific and technological services, and environmental protection compared to 1997; implement the State's policy of working together with the whole society to develop educational, health, cultural, and social services. The rate of increase in regular expenditures must be lower than the rate of increase in investment development expenditures. The state budget estimate for 1998 must be detailed down to each budgetary unit and itemized according to the State Budget Item List.

- The establishment of the state budget estimate must be carried out in accordance with the provisions of the State Budget Law, Decree No. 87/CP dated December 19, 1996 of the Government, Circular No. 09 TC/NSNN dated March 18, 1997, and Circular No. 14 TC/NSNN dated March 28, 1997 of the Ministry of Finance regarding the following contents: general basis and requirements for preparing the budget estimate; budget estimate form; notification of budget estimate verification number; discussion on the budget estimate; time for submitting the budget estimate report; tasks, powers, and procedures for preparing, consolidating, and deciding on the budget estimate.

- Maintain the percentage ratio of revenue distribution among different levels of budgets and the amount supplemented from higher-level budgets to lower-level budgets as in 1997. Specifically, the amount supplemented from higher-level budgets to lower-level budgets will be increased by 6% compared to the amount allocated in 1997.

2. Objectives:

- On the basis of promoting production to ensure a growth rate of 9.0% to 9.2% GDP.

- Strive for total state budget revenue in 1998 to reach about 21% of GDP, of which tax and fee revenue should reach about 20% of GDP; proactively adjust the budget revenue structure to suit the actual economic and social development. Tax revenue from exports and imports must take into account the factor of implementing the process of joining AFTA and the trend of participating in international economic and financial organizations; build stable and solid domestic revenue sources. On the basis of developing and improving the efficiency of production and business operations, effectively utilizing and exploiting financial resources, revenue from natural resources, state assets, and strengthening efforts to prevent revenue loss.

- Allocate approximately 30% of taxes and fees of the state budget for investment development and debt repayment, prioritizing the allocation of funds for construction and expansion of key national projects, investments in education and training, science; 70% of tax and fee revenue for regular expenditures; ensure reasonable and necessary regular consumption expenditures, prioritizing education and training, scientific research, modern technology absorption, environmental protection, people's health protection, national defense, security, and resolving urgent social issues. Implementing the Central Resolution II, the state budget expenditure estimate for 1998 (including both regular and investment expenditures) must focus on education and training and expenditures for science, technology, and environmental services, aiming to allocate 15% of total budget expenditures to education and training and 2% to science, technology, and environmental services by the year 2000. Allocate expenditures for education and training, healthcare, and cultural services based on continued organization and restructuring to align with the functions and responsibilities of each unit and sector, taking into account the implementation of the policy of socializing resources for these services; gradually reduce and eventually eliminate subsidies for training and healthcare in state-owned enterprises, creating conditions for enterprises to truly become financially independent. Allocate administrative management expenditures reasonably and economically, limiting purchases and repairs in state management agencies.

II. FORECAST OF SOME ECONOMIC GROWTH INDICATORS FOR 1998 COMPARED TO 1997

- Gross Domestic Product (GDP) increases by 9%-9.2%;

- Total value of agricultural, forestry, and fishery production increases by 4.7%-4.8%;

- Value of industrial and construction production increases by 14%-14.5%;

- Value of service sectors increases by 11%-12%;

- Total export turnover increases by 28%-30%;

- Total import and export turnover increases by 18%-20%;

- Consumer price index and service prices increase by 7%-8%;

- Total social development investment increases by 26%-28%.

III. MAJOR POINTS TO BE CONSIDERED WHEN PREPARING THE 1998 STATE BUDGET ESTIMATE:

1. Regarding revenue:

1.1. For the state-owned economic sector:

a. Regarding business income tax:

Calculate according to the provisions of Circular No. 97 TC/TCT dated December 30, 1995 of the Ministry of Finance detailing the implementation of the Business Income Tax Law and the Law Amending and Supplementing Certain Provisions of the Business Income Tax Law. Fully calculate the business income of enterprises, paying attention to other income such as financial activities, selling materials, goods, and asset liquidation. In cases where enterprises sell goods and issue promotional lottery tickets, business income for tax purposes shall be calculated according to the guidance provided in Point 7 of Circular No. 3006 TC/TCT dated August 28, 1996 of the Ministry of Finance. Specifically forecast the portion of business income tax exemptions and reductions for businesses operating in mountainous areas according to Circular No. 24 TC/TCT dated May 10, 1996 of the Ministry of Finance (the exemption and reduction for 1998 must be based on a specific decision by the Ministry of Finance).

b. Regarding special consumption tax:

Calculate according to Circular No. 98 TC/TCT dated December 30, 1995 of the Ministry of Finance detailing the implementation of the Special Consumption Tax Law and the Law Amending and Supplementing Certain Provisions of the Special Consumption Tax Law.

c. Regarding Resource Tax: The basis for calculating resource tax is the volume of extraction, taxable price, and tax rate. Specifically, the taxable price, in principle, is the selling price per unit of the extracted resource at the place of extraction or sale.

d. Corporate income tax: Based on determining the aggregate cost factors of the enterprise in 1997, forecast the increase and decrease in cost factors in 1998 to calculate corporate income tax. Specifically as follows:

- Depreciation costs of fixed assets: Based on the original value of fixed assets in 1997, calculate the increase or decrease in the original value in 1998 to determine the depreciation rate of fixed assets according to Decision No. 1062 TC/QĐ/CSTC dated November 14, 1996 of the Ministry of Finance on the system of using and deducting depreciation of fixed assets. During the calculation process, pay special attention to cases where the depreciation period is significantly shortened; the depreciation deduction must ensure that the corporate income tax does not decrease compared to 1997; for fixed assets that have been fully depreciated but are still in use, they cannot be included in cost.

- Major repair costs of fixed assets: Calculate based on reasonable and legitimate occurrences. Specifically, for assets with unique characteristics, the pre-deduction of major repair costs can be based on the enterprise's budgeted costs, subject to approval by the Ministry of Finance. Costs with the nature of investment construction and expansion shall not be included in major repair costs of fixed assets.

- Raw material and fuel costs: Based on actual costs in 1997, raw material and fuel standards, and production volume increases, calculate raw material and fuel costs for 1998.

- Labor costs: The wage rate is applied according to Decree No. 28/CP dated March 28, 1997. Among which, the following points need to be noted:

+ When applying additional adjustment coefficients, ensure the principle that it does not reduce the tax payment ratio, especially not reducing profits realized compared to 1997.

Other expenses such as reception, ceremonial, meeting, transaction, foreign affairs, etc., directly related to business operations must be calculated according to the prescribed level and management regulations of the State.

c. Revenue from the use of state budget capital; including assets and capital contributions to joint ventures (including assets, materials, and the commercial value of land when contributing land use rights to joint ventures) shall be calculated for revenue from the use of capital according to the guidance provided in Circular 33 TC/TCT dated June 13, 1997, issued by the Ministry of Finance.

1.2. For the non-state-owned commercial and industrial sector: Review and identify business entities on the local territory in accordance with Directive 657/TTg of the Prime Minister. It is necessary to assess the degree of loss in turnover and business entities in 1997 to determine the turnover and business entities in 1998, gradually reducing the rate of loss. Specifically:

a) For joint-stock companies, limited liability companies, private enterprises, cooperatives, production groups: Calculate in detail for each enterprise, especially large enterprises. For non-state-owned enterprises established under the Law on Enterprises and the Law on Private Enterprises, the transfer of capital by investors must be taxed according to the guidance provided in Circular 96 TC/TCT dated December 30, 1995, issued by the Ministry of Finance.

b) For households subject to fixed-amount tax: Review households engaged in small-scale business activities subject to business license fees and bring households not yet subject to such fees under management for tax collection. Based on the number of business licenses and the tiers of business license fees, all households with fixed business locations should be included in calculating turnover and income taxes.

1.3. For registration fees: Pay attention to fully collecting registration fees for assets that have been registered for ownership but are contributed to joint ventures according to the guidance provided in Circular 93 TC/TCT dated December 21, 1995, issued by the Ministry of Finance, which supplements Circular 19 TC/TCT dated March 16, 1995.

1.4. For agricultural land use tax:

- Clearly calculate the agricultural land use tax for rice cultivation to serve as a basis for allocating investment funds for agriculture and rural development.

- For perennial crops that have exceeded the tax exemption period, they must be included in the calculation of agricultural land use tax.

- Regarding the taxable value: It is necessary to estimate the price of rice closely, ensuring it does not fall below 10% of the local market price for rice.

1.5. For real estate tax: Attention should be paid to enterprises transitioning from paying land tax to paying land rental fees.

1.6. For revenue from the transfer of land use rights:

- Based on the land use plan at the local level, anticipate the area of new land allocation to calculate revenue from the transfer of land use rights.

- In cases where localities have land use rights revenues existing from previous years that have not been reflected in the state budget, these revenues must be calculated and clearly stated in the state budget estimate for 1998 to ensure proactive planning for state budget expenditures.

1.7. For land transfer tax and rental income from land:

- Land transfer tax shall be calculated according to Circular 78 TC/TCT dated September 30, 1994, issued by the Ministry of Finance. Rent for land use shall be calculated according to the provisions in the document guiding Decree 85/CP dated December 17, 1996, issued by the Ministry of Finance; the rent for land use shall be calculated according to the provisions in Article 2 and Article 6 of the Framework for Land Rent Prices issued pursuant to Decision 1357 TC/QĐ/TCT dated December 30, 1995, issued by the Ministry of Finance.

1.8. For revenue from the sale of housing:

- Calculated according to Government Decree 61/CP dated July 5, 1994, on the sale and trading of housing, and Government Decree 21/CP dated April 16, 1996, amending and supplementing Government Decree 61/CP.

- Localities with outstanding revenues from housing sales from previous years that have not been submitted to the State Budget must be included in the 1998 revenue.

1.9. For personal income tax: Calculate according to the Ordinance amending certain provisions of the Ordinance on Personal Income Tax for high-income individuals. Particularly, it is necessary to review taxpayers in joint ventures, representative offices, lottery winners...

1.10. For revenue from lotteries: Based on the assessment of revenue collection in 1997, analyze the subjective and objective reasons, including the measures taken by the State to combat illegal lotteries, and based on the sales network, consumption capacity, adjustment of ticket prices, and reduction of issuance costs, calculate the revenue for 1998.

1.11. For revenue from public services of units that have not yet converted to operate under the financial mechanism of public enterprises: According to the State Budget Law, these revenues must be reflected in the state budget, therefore, units with revenue must compile their revenue and expenditure budgets comprehensively. The decision to retain funds for expenditure (then record revenue and expenditure) or to submit all revenue to the state budget and have the state budget allocate sufficient funds according to the approved budget must be approved by the competent authority. Units retaining part or all of the revenue for expenditure must also have their revenue and expenditure budgets approved by the competent authority.

1.12. For fees and charges: Calculate in detail for each type of fee and charge managed by central authorities and provincial, city, district, county, commune, and ward levels. To ensure that all sources of revenue are reflected in the state budget as required by the State Budget Law, units previously allowed to retain a certain percentage for revenue management must compile comprehensive records of retained revenue and expenditure into their unit's revenue and expenditure budget. The decision to retain funds for expenditure (then record revenue and expenditure) or to submit all revenue to the state budget and have the state budget allocate sufficient funds according to the approved budget must be approved by the competent authority. Units retaining part or all of the revenue for expenditure must also have their revenue and expenditure budgets approved by the competent authority.

1.13. For transportation fees through gasoline and diesel prices: Calculate according to the provisions in Circular 29 TC/TCT dated June 9, 1997, issued by the Ministry of Finance. Attention should be paid to areas with large volumes of gasoline and diesel imports.

1.14. For other state budget revenues: Clearly identify and report revenues as specified by the Government used for specific purposes such as fines for traffic violations, penalties and confiscation of smuggled goods,...

1.15. For units borrowing from the state budget in 1998 that are due for repayment (direct borrowing from the state budget, borrowing from loans obtained by the state budget for onward lending under projects and programs): They must proactively prepare the state budget submission for 1998 regarding principal and interest repayments according to the prescribed repayment schedule.

2. On Expenditure:

2.1. For investment expenditures:

- The allocation of centralized investment construction funds must ensure the principle of prioritizing capital for key national projects, economic and social infrastructure construction projects in mountainous areas, the Central Highlands, the Mekong Delta, and investment projects in education and training, science fields. Adequate funding must be provided for ongoing projects. End the situation of scattered and dispersed investment, especially for Group C projects. Reserve funds to settle the volume of completed construction projects in 1997 that have not yet been settled. Ensure adequate counterpart funds for programs and projects funded by foreign loans and aid; it must be ensured that programs and projects requiring counterpart funds will be considered and balanced in the budget estimate, while for loan repayment programs, project owners must proactively arrange sources in accordance with the content of signed agreements and domestic financial regulations to avoid affecting the implementation schedule of the projects.

- Allocate investment from the profits after tax distributed from the Vietnam-Soviet Joint Venture Oil Company according to the ratio prescribed by the Prime Minister for the year 1998.

- Continue to allocate investment for the construction of economic and social infrastructure projects, social welfare projects, housing development funds, agricultural and rural investment, forest regeneration funds from the State Development Fund from sources such as land transfer fees, land rental fees, lottery revenues, housing sale revenues, agricultural land use tax revenues, and forestry resource taxes as in 1997.

- Continue to allocate funds for implementing the reservoir lake project on the Da River from water resource tax revenues from the Hoa Binh hydropower plant, reinvestment in the Mong Cai economic zone, reinvestment in Con Dao district, and implementing IFAX projects as in 1997.

2.2. For state-owned enterprise capital support: In 1998, the state budget will allocate support capital for important and essential state-owned enterprises engaged in business operations that develop effectively, pay sufficient taxes to the state budget, make profits, and are currently short of capital, as well as enterprises producing export goods according to the Prime Minister's decision.

2.3. For state reserve expenditures: Based on the assigned state reserve tasks; relevant sectors and units must assess and re-determine the current reserve levels of their sectors and units as of December 31, 1997. On this basis, forecast the additional reserve levels for each type of goods, materials, and equipment according to the regulations to serve as the basis for building the 1998 state reserve expenditure budget estimates for sectors and units.

2.4. For subsidies for policy goods:

- Subsidies for policy goods transported to mountainous areas to serve ethnic minorities shall be calculated based on Circular No. 7464/KTTH dated December 30, 1995 of the Government, and related guidance documents from ministries and sectors regarding the target groups, goods types, transportation distances, and subsidy rates.

- Expenditures for seed subsidies, press subsidies, publishing house subsidies... shall be implemented according to the current system. Ministries and localities need to carefully calculate, clearly determine quantities, production costs, transportation expenses..., specific freight subsidies for each product, breed, newspaper, and publishing house according to the prescribed regulations.

2.5. For administrative and public service expenditures:

It is required to prepare budget expenditure estimates based on the current budget expenditure regulations and socio-economic indicators issued by authorized bodies; all requests for additional expenditure regulations and adjustments to socio-economic indicators must be carried out in accordance with regulations before the decision on the 1998 state budget, and all post-decision budget expenditure needs of ministries and localities must be arranged within the allocated budget to ensure adequacy. Budget expenditure estimates for administrative and public service sectors must be based on the tasks of the units and localities; at the same time, restructure the network of facilities, promote the socialization policy in these areas, and calculate and clearly determine the sources of assurance for each sector: state budget including program-project loans, revenues such as tuition fees, medical fees, aid, contributions from organizations and individuals,...

- Allocate educational and training expenditures based on continuing to reasonably reorganize the school network, taking into account the implementation of the socialization policy in this field, increasing the proportion of educational and training expenditures compared to 1997 at each level of budget to gradually implement Resolution II of the Central Committee.

- Allocate expenditures for scientific and technological affairs and environmental protection towards prioritizing basic research, ensuring adequate funding to implement national-level scientific and technological programs, increasing the proportion of expenditures in this area to gradually implement Resolution II of the Central Committee. To concentrate resources for important research projects, for research institutes under the business sector, restructuring is necessary; the preparation of the 1998 budget must be carried out according to Decision No. 782/TTg dated October 24, 1996 of the Prime Minister.

For provinces and cities allocating expenditures for education and training, scientific research, and environmental protection in the provincial budget must not be lower than the figures announced by the Ministry of Finance.

- Allocate expenditures for health, culture, information, broadcasting, and sports affairs of ministries, localities, and units must strictly review tasks and programs to ensure effective operation, prioritize funding for important tasks; tasks decided by the Prime Minister, tasks carried over from 1997, and tasks funded according to policies and regulations.

- Allocate administrative expenditures to ensure sufficient payment of salaries and deductions based on approved staffing levels. For regular business expenditures, allocate at a necessary level, striving for economy. Other expenditures such as procurement, repairs, and travel expenses should be allocated based on budget balancing capabilities; minimize the purchase of expensive assets that are not urgent; limit meetings, reviews, and summaries...

- The level of administrative and public service expenditures in the 1998 state budget estimate temporarily applies the level specified in Circular No. 38 TC/NSNN dated July 18, 1996 of the Ministry of Finance.

2.6. For national programs: Based on evaluating the effectiveness of each program up to the end of 1997, review the content, implementation period, and results (including tasks and funding) of each program. According to the Prime Minister's decision on the restructuring of national target programs, allocate the budget for implementing national target programs in 1998.

IV. IMPLEMENTATION ORGANIZATION:

- The year 1998 was the second year implementing the State Budget Law, the ratio of revenue distribution among budget levels and the amount supplemented from higher-level budgets to lower-level budgets remained stable as in 1997. Therefore, at all levels, the People's Committees need to guide, announce the inspection figures, organize discussions, and compile the 1998 State Budget estimate in accordance with the provisions of the State Budget Law and guiding documents for its implementation, Government Directive No. 416/TTg dated June 14, 1997, and the guidance provided in this Circular to ensure both quality and time requirements.

After assisting the provincial and municipal People's Committees in guiding and announcing the inspection figures for revenue and expenditure of the budget to provincial units and lower-level local authorities, the Department of Finance and Prices needs to coordinate with the Taxation Department and relevant agencies based on the inspection figures announced by the Ministry of Finance, the specific situation and tasks regarding economic and social development in the locality in 1998 to form the preliminary 1998 budget revenue and expenditure estimates of the locality to be submitted to the provincial and municipal People's Committees for comments and directives. The preliminary 1998 budget revenue and expenditure estimates with comments from the aforementioned provincial and municipal People's Committees serve as the basis for the Department of Finance and Prices to discuss the first round with the Ministry of Finance, with lower-level local authorities, and with provincial agencies.

- Central Ministries and Agencies organize guidance, announcement of inspection figures, organization of discussions, and compilation of the 1998 State Budget estimate to be sent to the Ministry of Finance within the specified time and format (with attached explanations) as stipulated in Circular No. 09 TC/NSNN dated March 18, 1997, and Circular No. 14 TC/NSNN dated March 28, 1997, of the Ministry of Finance.

After assisting the Ministries and Central Agencies in guiding and announcing the inspection figures for revenue and expenditure of the budget to subordinate units; the Financial Departments (or equivalent Departments) of the Ministries and Central Agencies base on the inspection figures announced by the Ministry of Finance, the tasks and specific activities of the Ministry in 1998, build the preliminary 1998 budget revenue and expenditure estimates of the Ministry to be submitted to the leadership of the Ministry for finalization to have a basis for discussion in the first round with the Ministry of Finance and discussion with subordinate units.

- The General Taxation Department, the General Investment Development Department, and the General Department of State Capital Management and Asset Management at Enterprises are responsible for providing detailed guidance on this Circular to subordinate units and organizing the work of compiling and reporting the 1998 budget revenue and expenditure estimates according to the assigned fields.

- The Ministry of Finance will organize meetings to discuss the 1998 budget revenue and expenditure estimates with Ministries, central agencies, provinces, centrally-administered municipalities, and large state-owned enterprises as follows:

First Round: Time period approximately from July 25 to August 10, 1997, for discussing and contributing opinions on the 1998 budget revenue and expenditure estimates of Ministries and localities based on the preliminary estimates as mentioned above.

Round II: Time period approximately from August 25 to September 10, 1997, working on the determination and unification of the budget allocation level for Ministries, Central Agencies, provinces, and municipalities (after the Ministries and Central Agencies have compiled the budget estimates from subordinate units; central provinces and municipalities have compiled the budget estimates from communes, districts, and subordinate units in accordance with the provisions of the State Budget Law).

The specific schedule will be announced later by the Ministry of Finance.

Pham Van Trong (Signed)