JOINT CIRCULAR No. 31-TT-LB GUIDING THE IMPLEMENTATION OF TAX POLICIES FOR STATE-FARM ENTERPRISES

JOINT CIRCULAR

Guidelines for Implementing Tax Policies for State-Owned Farms

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The responsibilities of state-owned farms are increasingly significant in serving national economic development plans and accumulating capital for the State to industrialize the country.

Currently, state-owned farms also produce, process, and trade various goods similar to other state-owned enterprises, necessitating a unified tax regime to ensure accumulation for the State while promoting the managerial function through monetary control of economic activities and advancing economic accounting systems.

Based on the spirit of the current tax regulations stipulated in Decrees No. 421-TTg, 425-TTg dated December 18, 1954, and Circular No. 437-TTg dated December 18, 1954 issued by the Prime Minister, the Ministry of Finance and the State Farm Department provide specific guidelines for implementation concerning state-owned farms as follows:

I. PRINCIPLES AND REGULATIONS FOR SPECIFIC APPLICATION TO STATE-OWNED FARMS ENTERPRISE.

A. ENTERPRISE INCOME TAX:

1. Processed agricultural products from state-owned farms must pay enterprise income tax at a rate of 2% on sales revenue when sold, such as sliced cassava, dried sweet potatoes, cassava flour, sweet potato flour, dried bananas, sweets, etc. (cornmeal, rice, dried cassava and sweet potatoes retained for sale to employees under the State's food distribution system are exempt from enterprise income tax). Unprocessed agricultural products from state-owned farms do not need to pay enterprise income tax upon sale, for example: selling unprocessed corn, rice, fresh cassava, sweet potatoes, oranges, fresh bananas, etc.

2. For livestock products from state-owned farms, in principle, a 3% enterprise income tax must be paid on sales revenue. However, to address current difficulties faced by state-owned farms in raising pigs, chickens, sheep, etc., taxes on these animals have been temporarily suspended. In cases where internal transfers of cattle, pigs, sheep from working capital to fixed assets, or the transfer of breeding stock between farms according to the Ministry of Agriculture's plan, no enterprise income tax needs to be paid on this sales revenue.

3. State-owned farms that engage in land reclamation or forest product exploitation such as wood, firewood, and other forest products must pay enterprise income tax at a rate of 2% on sales revenue in addition to the proceeds from selling forest products. If state-owned farms process forest products themselves, such as sawn timber, floorboards, rafters, furniture, and charcoal, they only need to pay a single enterprise income tax of 2% on the sales revenue of these products.

4. State-owned farms with transportation means like trucks, ox carts, horse-drawn carriages for internal transport do not need to pay taxes if they are used solely within the farm. However, if they are rented out externally, a 3% tax must be paid on the rental fee revenue.

5. State-owned farms with internal machinery repair units that offer external repair services must pay a 5% tax on the service revenue.

6. For certain construction materials produced by state-owned farms such as lime, bricks, tiles, etc., the portion used for basic construction within the farm does not require payment of enterprise income tax, whereas the portion sold externally must pay enterprise income tax at a rate of 2%.

B. CONSUMER GOODS TAX:

Consumer goods tax is levied on specific items at predetermined rates listed in the tax schedule attached to the temporary regulation on consumer goods tax number 426-TTg dated December 18, 1954. The value of goods used as the basis for calculating tax, referred to as "taxable value," is determined by local financial authorities (for domestically produced technological products, the taxable value is the wholesale industrial selling price; for domestically produced agricultural and forestry products, the taxable value is the wholesale price including tax of state trading enterprises in the locality).

Attached herewith is a list of tax rates for some types of goods currently being produced by state-owned farms, among which five products still face difficulties and are temporarily exempt from consumer goods tax: lemongrass oil, exported coffee (domestic coffee sales still require consumer goods tax), canned milk, milk powder, chopped tea made from old leaves during pruning periods and directly processed.

C. PROPERTY TAX:

C. SLAUGHTER TAX:

While awaiting the issuance of supplementary slaughter tax regulations suitable for new circumstances, the Ministry of Finance and the State Farm Department reiterate the following key points based on current slaughter tax principles:

- Slaughter tax is imposed on four types of livestock for meat: water buffalo, cattle, pigs, and goats.

- Individuals who raise livestock for personal consumption, with permission from the local administrative committee, are exempt from slaughter tax on the meat kept for personal consumption, but must pay tax on any meat sold.

The slaughter tax rate is set at 10% of the animal's market value before slaughter. The market value is based on the weight of the slaughtered animal and the taxable value determined by the financial authority, which includes the wholesale price on the market including tax.

For state-owned farms, purchasing livestock for slaughter or slaughtering livestock raised by production teams, regardless of whether it is for internal consumption or sale, requires payment of slaughter tax. Special exemptions apply to labor unions organizing sideline livestock farming outside regular hours, where if livestock raised for more than three months is consumed, the slaughter tax is waived for the meat kept for personal consumption, but tax must be paid on any surplus sold.

1. II. PROCEDURES FOR PAYING TAXES

Regarding enterprise income tax, state-owned farms are responsible for declaring and paying taxes to the nearest financial authority (district finance office) where their headquarters are located. Enterprise income tax is collected twice a month.

The first collection is from the 15th to the 20th of each month, based on the revenue achieved in the first half of the month. The second collection is on the 5th of the following month, based on the total monthly revenue minus the amount already paid in the first collection. If monthly revenue cannot be accurately calculated due to lack of conditions, tax will be calculated based on the monthly business plan (first collection 50%, second collection 50%), and adjusted after actual revenue is determined, with any shortfall paid immediately and any excess carried forward to the next month.

2. Regarding goods tax: Goods tax must be paid immediately at the farm when the goods begin to be transported out, and each shipment should be taxed separately. Therefore, when selling goods, the farm must calculate the selling price including the goods tax, and then the farm will deduct that tax amount to pay to the local financial authority. The farm, as the production unit of goods, has the obligation to declare and pay taxes fully and promptly. After collecting the tax, the local tax authority issues a certificate of tax payment to accompany the goods during transportation.

3. Trade unions operating in farms with business and processing activities shall also apply the general tax regime.

III. DUTIES OF ENFORCEMENT AND ADMINISTRATION OF TAX POLICY BY FARMS AND LOCAL FINANCIAL AUTHORITIES: LOCAL AUTHORITY:

1. State-owned farms have the following responsibilities:

- Organize training and dissemination of tax policies down to production teams.

- Strictly comply with the declaration and payment system for taxes to the local financial authority.

- Fully enforce the discipline of delivering products to the State and actively assist financial authorities and other responsible agencies in purchasing agricultural products and managing markets.

- Financial accounting, planning, and processing departments must study and calculate to record the tax expenses payable to the State budget in financial plans and cost prices of sold goods.

- Farms must submit monthly, quarterly, and annual reports on production, consumption, profit and loss, and State budget payments to the financial authority, and regularly exchange and discuss with local financial officials based on socialist cooperative spirit to jointly fulfill the task of budget collection and implement State financial accounting regulations fully.

2. Local financial authorities have the following responsibilities:

- Assist farms in organizing the dissemination and training of tax policies and regulations.

- Supervise and urge farms to timely and fully collect and pay various types of taxes, profits, and depreciation to the State budget, and help farms resolve difficulties and obstacles in production and consumption so that farms can successfully complete their tasks.

- Dedicated financial officers must frequently closely monitor each farm, delve into accounting and finance to assist farms in implementing established systems, understand all economic activities of the farm, and participate in building financial plans and reviewing final accounts of the farm.