Circular No. 32/1998/TT-BTC guiding the implementation of tax policies and state budget revenues for state-owned enterprises engaged in public services.

CIRCULAR

HGuidelines for implementing tax policies and state budget revenues

for state-owned enterprises engaged in public services

Based on the Tax Laws, Tax Ordinances, and other regulatory legal documents concerning state budget revenues currently in effect;

BASED ON DECREE NO. 56/CP OF OCTOBER 2, 1996 OF THE GOVERNMENT ON STATE ENTERPRISES ENGAGED IN PUBLIC SERVICES;

The Ministry of Finance provides guidelines for implementing tax policies and state budget revenues for state-owned enterprises engaged in public services as follows:

I. APPLICABLE OBJECTS

The subjects to which this Circular applies are state-owned enterprises meeting the following conditions:

Being determined by the Minister, Head of a ministry-level agency, Head of an agency under the Government, Chairman of the People's Committee of a province or centrally governed city based on the criteria stipulated in Article 1 and Article 2 of Decree No. 56-CP dated October 2, 1996 of the Government as state-owned enterprises engaged in public services.

Engaging in public services consistent with the business activities registered in the business license.

Implementing accounting record-keeping systems, using accounting vouchers in accordance with current regulations and separately accounting for public service activities from other business operations.

Implementing registration and payment of taxes and other state revenues in accordance with legal provisions.

II. TYPES OF TAXES AND STATE BUDGET REVENUES FOR
STATE-OWNED ENTERPRISES ENGAGED IN PUBLIC SERVICES

All state-owned enterprises engaged in public services must register, declare, and pay taxes and other state revenues to the tax authority in accordance with the guidelines set forth in this Circular as follows:

1. Business Income Tax:

All state-owned enterprises engaged in public services must declare and pay business income tax in accordance with the Business Income Tax Law and laws amending and supplementing certain articles of the Business Income Tax Law.

The examination of tax exemption and reduction for public service activities as provided for in Article 6 of Decree No. 56-CP dated October 2, 1996 shall be carried out as follows:

a) For newly established state-owned enterprises engaged in public services that meet the legal requirements, they may be examined for tax exemption and reduction according to the Domestic Investment Promotion Law, the Business Income Tax Law, and laws amending and supplementing certain articles of the Business Income Tax Law.

b) For state-owned enterprises currently engaged in public services, in addition to those public service activities temporarily exempted from business income tax as provided for in the Business Income Tax Law and laws amending and supplementing certain articles of the Business Income Tax Law, other public service activities that cannot cover production costs or service provision costs will be eligible for tax reduction corresponding to the loss amount, but not exceeding 50% of the annual business income tax payable.

To have grounds for tax reduction as guided above, after the end of the fiscal year, public service enterprises must prepare a tax reduction application file and submit it to the directly managing tax authority. The tax reduction application file includes:

An enterprise's tax reduction application form clearly stating the reasons for requesting tax reduction;

The enterprise's annual financial report approved by the competent authority;

The enterprise's annual tax settlement report;

The procedures, formalities, and authority for examining tax reduction are implemented in accordance with the guidance in Part D, Section III of Circular No. 97 TC/TCT dated December 30, 1995 issued by the Ministry of Finance.

2. Profit Tax:

State-owned enterprises engaged in public services that generate taxable profits must declare and pay profit tax in accordance with the Profit Tax Law and laws amending and supplementing certain articles of the Profit Tax Law.

The examination of profit tax reduction for state-owned enterprises engaged in public services as provided for in Point 2a, Article 5 of Decree No. 56-CP shall be carried out as follows:

a) For newly established state-owned enterprises engaged in public services that meet the legal requirements, they may be examined for tax exemption and reduction according to the Domestic Investment Promotion Law, the Profit Tax Law, and laws amending and supplementing certain articles of the Profit Tax Law.

b) For state-owned enterprises currently engaged in public services that have been approved to supplement capital corresponding to assigned public service tasks, if there is a profit, they may be examined for profit tax reduction equal to the approved supplementary capital, but the maximum tax reduction rate shall not exceed 50% of the annual profit tax payable.

Procedures and formalities for tax exemption and reduction:

To have grounds for tax reduction, the unit must submit a tax reduction application file to the tax authority with jurisdiction, including:

A tax reduction application form with confirmation from the directly managing tax authority regarding the unit's eligibility for tax reduction and the amount of tax reduction;

The decision approving supplementary capital from the competent state authority;

The enterprise's annual financial report and annual tax settlement report;

Within thirty days of receiving the file, the directly managing tax authority has the responsibility to review and examine the relevant data and circumstances related to the tax reduction examination, resolve cases within its jurisdiction; cases outside its jurisdiction must provide written comments and recommendations attached to the enterprise's tax reduction application file to be submitted to the higher-level tax authority for consideration and decision; all tax reduction examination files and documents are original copies, if they are copies, they must be certified true copies and stamped by the enterprise on each page of the documents included in the file. Authority for tax reduction examination:

Tax authorities at all levels are responsible for reviewing and deciding or recommending to the higher-level authority to decide on tax reduction for specific cases within their respective jurisdictions as follows:

The Director of the General Department of Taxation examines and decides on tax reduction for cases with a reduction amount up to 100 million dong.

The Director of the State Tax Administration examines and decides on tax reduction for cases with a reduction amount over 100 million dong up to 500 million dong.

The Minister of Finance examines and decides on tax reduction for cases with a reduction amount over 500 million dong.

In cases where, after tax reduction examination according to this Circular, the enterprise still lacks the approved supplementary capital, the state will consider providing supplementary capital to the enterprise to meet the approved supplementary capital amount.

3) Revenue collected according to prices, price ranges, or fees prescribed by the state without requiring production costs or service costs:

State-owned enterprises engaged in public services that have revenues based on prices, price ranges, or fees set by the State without requiring production costs or service costs shall, after deducting business management expenses, taxes, and funds deductible under current regulations, remit the entire remaining difference to the State budget. The tax authority directly managing such enterprises shall be responsible for urging, inspecting, and guiding units to fulfill their obligation to remit the State budget according to the law and the provisions of this Circular. To ensure timely mobilization of revenues into the State budget, the tax authority directly managing must conduct monthly inspections of actual revenue and expenses of the unit and temporarily collect the difference between revenue and expenses into the State budget, with the maximum temporary collection not exceeding 70% of the determined difference.

4) Types of taxes and other State budget revenues from state-owned enterprises engaged in public services shall be implemented in accordance with current laws.

III. IMPLEMENTATION

This Circular takes effect fifteen days from the date of signature. Previous guidelines regarding taxes and State budget revenues for state-owned enterprises engaged in public services that conflict with the provisions of this Circular are hereby abolished. In the course of implementation, if there are any difficulties, state-owned enterprises and tax authorities are requested to promptly report to the Ministry of Finance for research and appropriate guidance./.