Circular No. 32/2002/TT-BTC guiding the implementation of the Prime Minister’s Decision No. 172/2001/QD-TTg dated November 5, 2001 on the rescheduling, freezing, and remission of tax debts and State budget payments for enterprises and production and/or business establishments facing difficulties due to objective causes (Content Attached).

 CIRCULAR

Guidelines for Implementing Decision No. 172/2001/QD-TTg dated November 5, 2001 of the Prime Minister on the handling of deferred debt, frozen debt, and tax write-offs and other payments to the State Budget for enterprises and production and business establishments facing difficulties due to external factors

Pursuant to the provisions of the Tax Law, the Tax Ordinance, and the current state budget revenue collection regulations

Pursuant to Directive No. 12/2001/CT-TTg dated May 23, 2001 of the Prime Minister on the handling of results from the comprehensive asset inventory and the revaluation of state-owned enterprise assets at midnight on January 1, 2000

Pursuant to Decision No. 172/2001/QD-TTg dated November 5, 2001 of the Prime Minister on the handling of deferred debt, frozen debt, and tax write-offs and other payments to the State Budget for enterprises and production and business establishments facing difficulties due to external factors

The Ministry of Finance provides guidelines for implementing the handling of deferred debt, frozen debt, and tax write-offs and other payments to the State Budget for enterprises and production and business establishments facing difficulties due to external factors as follows:

A. OBJECTS AND SCOPE OF HANDLING

1. The objects eligible for handling of tax debts and other State Budget payments include: State-owned corporations, companies, factories, and workshops established and operating under the Law on State-Owned Enterprises, the Enterprise Law (previously the Company Law), and the Law on Foreign Investment in Vietnam (collectively referred to as enterprises); production and business establishments including organizations and individuals not falling within the aforementioned categories (excluding agricultural households engaged in agricultural production which are handled according to the land tax policy) that are currently engaged in production and business activities and owe taxes and other State Budget payments as specified in this Circular.

2. The tax debts and other State Budget payments subject to handling include: turnover tax, value-added tax, special consumption tax, export tax, import tax, real estate tax, income tax, corporate income tax, resource tax, agricultural land use tax; land use fees, land rental fees, returns from the use of state budget funds, basic depreciation, fees, and charges belonging to the state budget; fines calculated based on late payments to the state budget (as mentioned above).

B. HANDLING OF TAX DEBTS AND OTHER STATE BUDGET PAYMENTS

I. DEFERRING (DELAYING) PAYMENT OF TAXES AND OTHER STATE BUDGET PAYMENTS

1. Eligible objects for delayed payment:

a) Enterprises owing taxes and other State Budget payments who are unable to pay the State Budget on time due to the following objective reasons:

+ Changes in tax policies and other State Budget payments, such as: The state adjusts increased tax rates or state budget revenues directly affecting the business results of the enterprise leading to tax arrears. The maximum amount of deferred payment is equal to the increase generated by the first month or period of tax declaration under the new tax policy.

+ Relocation of business premises as required by competent authorities, causing the enterprise to cease or reduce production and business operations, increasing investment costs at the new location, resulting in tax arrears.

+ Due to restructuring production and business operations, changing business sectors, producing new products to replace old ones, but encountering initial difficulties and losses during the transition period leading to tax arrears.

+ Damage caused by natural disasters affecting production and business operations and resulting in tax arrears. The amount of deferred payment is the tax and other State Budget payments owed up to the time of the disaster that cannot be paid.

In cases of arrears due to the above reasons, the deferral period is determined for each specific case as follows:

+ Six months for enterprises owing taxes due to changes in tax policies and other State Budget payments; if the enterprise incurs losses due to policy changes and still cannot pay off the debt after six months, the deferral period may be extended by another six months.

+ Twelve months for enterprises relocating their business premises, suffering damage from natural disasters, or transitioning their production and business operations.

b) Enterprises paying taxes and other State Budget payments from state budget counterpart funds, but the state budget has not allocated or provided these funds, resulting in tax arrears. These enterprises are eligible for deferred payment until they receive state funding. This category includes:

- Enterprises producing, constructing, trading goods, and providing services using state budget funds that have not been provided, thus lacking funds to pay taxes and other State Budget payments.

- Enterprises exporting goods to repay foreign debts as designated by the Government, which should be settled by the state budget but have not been, thus lacking funds to pay taxes and other State Budget payments.

c) Enterprises still owing taxes and other State Budget payments from December 31, 1998 or earlier (excluding cases resolved through debt freezing or write-offs pursuant to the Prime Minister's Decisions and guidelines in this Circular) are eligible for deferred payment according to the guidelines in Section I of this Circular. They must submit a registration form detailing the payment schedule for the debts to the tax authority or customs office of the province or city, specifying the amount to be paid each quarter. The deadline for enterprises to fully settle these tax debts and other State Budget payments is December 31, 2002.

2. Procedures and Documentation

Enterprises eligible for deferred payment as stated in point 1 above must prepare documentation and submit it to the Tax Department (Customs Department for import and export tax items) including:

- A request for deferred payment of taxes and other State Budget payments, clearly stating the reasons, difficulties faced by the enterprise according to the cases mentioned above, the amount of taxes and other State Budget payments, and the requested deferred payment period.

- A copy of the tax declaration form or notice of tax payment issued by the relevant tax or customs authority related to the taxes and other State Budget payments being requested for deferred payment.

- In cases of relocation of business premises, a copy (stamped by the enterprise) of the decision by the competent authority regarding the relocation of the business premises must also be submitted.

- In cases of natural disasters, attach a document from the enterprise determining the value of damaged assets and a plan for handling such damage, confirmed by the competent authority or local financial agency regarding the value of the damaged assets (a copy stamped by the enterprise).

3. Procedures and Authority to Resolve

The Tax Department (Customs Department for overdue import and export taxes) shall receive applications for deferred tax payments from enterprises, be responsible for reviewing and checking the application files, determining the amount of tax due, the amount payable to the State Budget, and the period during which the enterprise may delay payment. For cases where the amount of delayed payment is up to 500 million VND and the maximum period is six months (according to form number 01/QĐ issued together with this Circular), the Tax Department, Customs Department shall issue a decision to defer the debt. If, after six months, the enterprise still faces difficulties, incurs losses, and is unable to pay the overdue tax, the Tax Department and Customs Department shall consider extending the deferral period for another six months.

In addition to the above cases, the Tax Department and Customs Department must submit the file along with the opinion of the Department to the General Tax Department and the General Customs Department for consideration and decision.

The General Tax Department and the General Customs Department shall consider and decide on cases of deferred tax payments exceeding 500 million VND.

II. DEFERRED TAX PAYMENTS AND AMOUNTS DUE TO THE STATE BUDGET

1. Subjects Eligible for Deferred Tax Payments and Amounts Due to the State Budget

Enterprises that owe taxes and amounts due to the State Budget but are unable to pay due to business losses and are facing bankruptcy or dissolution shall be considered for deferred tax payments and amounts due to the State Budget. The deferred period starts from the date of determination of the debt until the enterprise's dissolution or bankruptcy. Upon dissolution or bankruptcy, measures and procedures for recovering the debt shall be carried out according to the laws on dissolution and bankruptcy.

Cases of business losses leading to bankruptcy are enterprises specified in Article 3 of Decree No. 189/CP dated December 23, 1994, guiding the implementation of the Law on Bankruptcy of Enterprises; state-owned enterprises dissolved according to point 1, Section II, Circular No. 25 TC/TCDN dated May 15, 1997, guiding the procedures, formalities, and principles for financial treatment upon dissolution of state-owned enterprises. When an enterprise is declared bankrupt or dissolved, the outstanding taxes and amounts due to the State Budget that have been deferred will be resolved according to Section III of Circular No. 25 TC/TCDN (mentioned above).

2. Procedures and Documentation

Enterprises eligible for deferred tax payments and amounts due to the State Budget must prepare and submit an application file to the Tax Department. The file includes:

- A document from the enterprise requesting deferred tax payments and amounts due to the State Budget, explaining clearly the reasons for the losses, the difficulties faced by the enterprise that prevent it from covering the losses, leading to bankruptcy or dissolution.

- A report on production and business results (as per Appendix 1 issued together with this Circular).

- A tax settlement statement detailing the outstanding tax debts itemized by each tax and other revenue; for outstanding import and export taxes, confirmation from the direct customs authority managing tax collection regarding the remaining import and export taxes owed.

- Financial reports up to the year when the request for deferred tax payments is made, including cumulative figures.

3. Procedures and Authority to Resolve

- The Tax Department shall receive the application for deferred tax payments and amounts due to the State Budget from enterprises, be responsible for checking and determining the amount of tax and amounts due to the State Budget for deferral, and send a letter to the Ministry of Finance (forwarded to the General Tax Department) (as per Appendix 2 issued together with this Circular) requesting deferral of the tax and amounts due to the State Budget.

- The General Tax Department shall receive the enterprise's file and the Tax Department's request, determine the amount of tax and amounts due to the State Budget for deferral, and issue a decision to defer the debt for the enterprise (according to form number 02/QĐ issued together with this Circular). For deferred import and export taxes and taxes collected at the import stage, the General Tax Department must send a copy of the Decision to the relevant Customs Authority.

III. RESOLUTION OF CAPITAL SUPPORT FOR STATE ENTERPRISES

1. Eligible Recipients:

State-owned enterprises (including those that have been converted to joint-stock companies) with approved investment projects but lacking capital, who have used taxes and amounts due to the State Budget up to December 31, 1999, to implement the investment project, and who still cannot repay, if the completed investment project has been put into operation and the post-investment business results show increased profits or reduced losses and higher tax payments to the State Budget compared to before the investment, then the enterprise may be considered for capital support. Enterprises that have already submitted applications for capital support under Circular No. 65/2001/TT-BTC dated August 10, 2001, of the Ministry of Finance shall not be further processed according to Section III, Part B of this Circular.

The amount of capital support for each enterprise shall be the maximum amount of taxes and amounts due to the State Budget used for investment from 1999 and earlier, actually owed at the time of the enterprise's application for capital support, after balancing and mobilizing all other sources of investment capital of the enterprise.

For taxes and amounts due to the State Budget from January 1, 2000, onwards that the enterprise has used for investment, the enterprise must fully repay to the State Budget immediately and may face penalties depending on the level of violation.

2. Procedures and Documentation

- A document requesting capital support from the enterprise's outstanding national budget, clearly explaining:

* Total investment value according to the approved project;

* Value of basic construction investment, equipment procurement... as settled and handed over for use;

* Sources of investment capital: state budget capital; enterprise capital (development fund, other business capital); bank loans and other organizations and individuals; occupied tax and state budget funds (detailed by each amount due);

- An expanded production and business investment project approved by the competent authority.

- The final account for basic construction investment shall be approved in accordance with current regulations;

- The financial settlement, tax settlement for the year 1999, clearly identifying the amounts owed to the State budget that the enterprise has misappropriated for investment purposes;

- Confirmation from the Provincial Tax Bureau regarding the amount of tax and other amounts owed to the State budget up to December 31, 1999, and the outstanding balance as of the date of application for resolution;

- For state-owned enterprises, there must be a document from the superior management authority requesting the provision of investment capital support for the enterprise from tax revenues and other amounts owed to the State budget;

- For state-owned enterprises that have been corporatized, submit additionally the decision of the competent authority implementing the corporatization of the enterprise (a certified copy with the signature and stamp of the enterprise);

3. Procedures and Authority to Resolve

+ For central enterprises (including those that have been corporatized), submit the file and documents to the Ministry of Finance (Enterprise Financial Department) for review and submission to the Ministry of Finance for decision;

+ For local enterprises (including those that have been corporatized), submit the file and documents to the Provincial Department of Finance and Price. The Provincial Department of Finance and Price will compile the file proposing to record income and expenditure in the State budget concerning the overdue tax and other amounts owed to the State budget of local enterprises, and submit it to the People's Committee of the province or city for consideration. Provide comments in writing along with the enterprise's file sent to the Ministry of Finance (Enterprise Financial Department) for review and submission to the Ministry of Finance for decision;

+ The Ministry of Finance will review and consider issuing a decision on providing investment capital support to enterprises (in form number 03/QĐ issued together with this Circular) through recording income and expenditure up to the maximum amount of tax and other amounts owed to the State budget that the enterprise has used for investment, after mobilizing all sources of funds of the enterprise in previous years up to the end of 1999;

+ The Ministry of Finance will implement recording income and expenditure for central enterprises and enterprises with special consumption taxes; the recorded income, the Central Budget enjoys 100%;

+ The Provincial Department of Finance and Price will implement recording income and expenditure for local enterprises after obtaining the consent of the Ministry of Finance; the recorded income, the Local Budget enjoys 100%;

IV. WRITING OFF TAXES AND OTHER AMOUNTS OWED TO THE STATE BUDGET;

1. Write off taxes and other amounts owed to the State Budget for state-owned enterprises subject to transfer, sale, conversion to joint-stock companies, or merger into other state-owned enterprises;

1.1. Eligible entities for write-off:

a) State-owned enterprises subject to transfer or sale under Decree No. 103/1999/NĐ-CP dated September 10, 1999, of the Government;

State-owned enterprises subject to transfer or sale under Decree No. 103/1999/NĐ-CP dated September 10, 1999, of the Government have liabilities exceeding the value of their assets or the proceeds from the sale of the enterprise;

Specific entities are defined in Section I of Circular No. 47/2000/TT-BTC dated May 24, 2000, of the Ministry of Finance guiding financial matters related to the transfer or sale of state-owned enterprises. Enterprises eligible for tax write-off and write-off of other amounts owed to the State Budget in this case are independent state-owned enterprises and independent accounting affiliates within holding companies (excluding state-owned enterprises operating in consultancy, design, and inspection services);

b) State-owned enterprises converted to joint-stock companies;

State-owned enterprises converted to joint-stock companies still owe taxes and other amounts owed to the State budget, if financial and credit support measures have been applied but the enterprise still faces difficulties and cannot pay off its tax debts and other amounts owed to the State budget;

Specific entities are determined according to point 1, part I, of Circular No. 104/1998/TT-BTC dated July 18, 1998, of the Ministry of Finance guiding financial matters when converting state-owned enterprises into joint-stock companies under Decree No. 44/1998/NĐ-CP dated June 29, 1998, of the Government on converting state-owned enterprises into joint-stock companies;

c) State-owned enterprises allowed to be merged into other state-owned enterprises;

State-owned enterprises with poor business performance, losses, and arrears in taxes and other amounts owed to the State budget, unable to repay, are allowed to be merged into other state-owned enterprises. If the receiving enterprise does not have the ability to pay off the tax debts and other amounts owed to the State budget of the merged enterprise or has applied financial and credit support measures but the tax debts remain unresolved, the receiving enterprise shall prepare a report and submit it to the Ministry of Finance for consideration to write off the tax arrears and other amounts owed to the State budget. The maximum amount of tax and other amounts owed to the State budget to be written off equals the outstanding tax and other amounts owed to the State budget of the merged enterprise at the time of the merger decision, but shall not exceed the remaining loss of the merged enterprise at the time of the merger;

1.2. Procedures and documentation

Enterprises eligible for debt write-off must prepare a file and submit it to the Provincial Tax Bureau where the enterprise is headquartered. In cases where the merged enterprise no longer exists as a legal entity to prepare the file, the receiving enterprise shall prepare and request the file. The file includes:

A document requesting the handling of debt write-off specifying the amount requested, reasons for the request, accompanied by the following documents:

a) Decision of the competent authority on the implementation of corporatization, transfer, sale, or merger of the enterprise (a certified copy with the signature and stamp of the enterprise);

b) Tax settlement and confirmation from the tax authority regarding the cumulative tax arrears up to the date of transfer, sale, corporatization, or merger. For tax arrears and revenue from imported/exported goods, confirmation from the customs authority is required;

c) Financial statements of the enterprise up to the date of transfer, sale, corporatization, or merger;

d) Summary report on business operations (according to Appendix 1 issued together with this Circular);

1.3. Procedure and authority for resolution

The Tax Department receives the file from the enterprise, checks to determine the tax arrears and other amounts payable to the State Budget, issues a specific letter requesting the handling of the tax arrears and other amounts payable to the State Budget of the enterprise (as per Appendix No. 2 issued together with this Circular), and sends the entire file to the Ministry of Finance (General Department of Taxation). The General Department of Taxation examines to determine the amount of tax to be waived, seeks opinions from the Enterprise Finance Department, and submits to the Ministry of Finance for a decision to waive the debt (in accordance with Model No. 04/QĐ issued together with this Circular).

2. Waiving tax arrears and other amounts payable to the State Budget for State-owned enterprises engaged in production and business activities that incurred losses due to objective reasons and are unable to pay.

2.1. Subjects eligible for waiver:

State-owned enterprises engaged in production and business activities that incurred losses up to December 31, 2001, still owe taxes and other amounts payable to the State Budget from 1998 and earlier due to changes in tax policies, natural disasters causing damage, lack of capital for technological renewal, machinery, and equipment, difficulties in labor restructuring, if the enterprise does not fall under those required to be dissolved or declared bankrupt, and other cases eligible for waiver as stipulated in Point 1, Section IV above, after applying tax exemptions, reductions according to the law, financial support, credit assistance, and other measures but the enterprise still incurs losses and is unable to settle tax arrears and other amounts payable to the State Budget, then they will be considered for waiving tax arrears and other amounts payable to the State Budget. In this case, the maximum amount of tax arrears and other amounts payable to the State Budget to be waived shall be equal to the tax arrears and other amounts payable to the State Budget from 1998 and earlier up to the time of filing the handling report, but not exceeding the enterprise's loss up to the end of 2001.

2.2. Procedures and documents:

Enterprises requesting to waive tax arrears and other amounts payable to the State Budget must prepare a file to send to the Tax Department including:

- A letter from the enterprise clearly stating the reasons for losses, the tax arrears and other amounts payable to the State Budget from 1998 and earlier up to the time of the request for resolution.

- A report on the implementation of tax collection and tax arrears according to Appendix 1 issued together with this Circular.

- Financial settlement reports and tax settlement reports for the years 1998 and 2001.

2.3. Procedure and authority to resolve:

The Tax Department receives the file, checks the data on the file, and provides comments on the tax arrears and other amounts payable to the State Budget proposed for waiver by the enterprise (as per Appendix 2 issued together with this Circular), and sends the entire file to the Ministry of Finance (General Department of Taxation). The General Department of Taxation reviews the file to determine the amount to be waived, seeks opinions from the Enterprise Finance Department, and submits to the Ministry of Finance for a decision to waive the debt (in accordance with Model No. 04/QĐ issued together with this Circular).

3. Waiving tax arrears and penalties for enterprises engaged in export and import business.

3.1. Subjects eligible for waiver:

Enterprises engaged in export and import business still have outstanding tax arrears and penalties for export and import taxes that do not belong to the subjects and cases eligible for deferred payment, frozen debt, or waived debt as stipulated in other cases in this Circular, if due to changes in policy or unclear, incomplete guidance leading to different interpretations and applications of declarations and tax calculations; if there is sufficient basis to re-determine the amount payable lower than the amount notified for tax payment by the Customs Authority, then the incorrect tax and penalty amounts will be waived.

3.2. Procedures and documents:

- Enterprises engaged in import and export business eligible for waiver of tax and penalty amounts in the aforementioned case must submit a written explanation detailing the tax arrears and penalties, the reasons for tax and penalty calculation in their own case, accompanied by relevant processing or determination documents from competent authorities related to the determination of the amount of tax to be recovered and penalties.

- Decision on recovery of taxes or fines issued by the Customs Authority (photocopy stamped by the enterprise).

- Confirmation from the Customs Authority regarding the outstanding tax and penalty amounts.

The enterprise prepares and sends the above documents to the local Customs Office.

3.3. Procedure and authority to resolve:

The local Customs Office receives the application file for waiving tax and penalty amounts from enterprises, examines and checks the file; provides written comments on the cases and amounts of tax and penalties eligible for waiver, and sends the entire file to the General Customs Department for examination and written comments, which then forwards the entire file to the Ministry of Finance for examination and decision (in accordance with Model No. 04/QĐ issued together with this Circular).

4. Waiving tax arrears for households engaged in business that cannot recover debts.

4.1. Subjects eligible for waiver:

Households engaged in business that owe taxes and other amounts payable to the State Budget, where the individual named in the business has passed away and there is no one continuing the business within the household, or the household has moved elsewhere and the debtor cannot be identified.

4.2. Procedures and documents, procedure and authority to resolve:

- The district or county tax office bases on the files tracking the tax arrears of households, checks and identifies households that are no longer capable of repaying debts; through the Tax Advisory Council at the commune or ward to identify and report to the People's Committee of the commune or ward to confirm each specific case, compile and report to the district or county People's Committee, and send the report to the provincial or centrally-administered city Tax Department (in accordance with Model No. 3a issued together with this Circular).

- The local Tax Department is responsible for compiling and submitting to the provincial or centrally-administered city People's Committee (in accordance with Model No. 3b issued together with this Circular) for examination and decision. Based on the decision of the People's Committee, the Tax Department notifies the District Tax Office to waive the tax arrears of these households.

C. IMPLEMENTATION

1. Subjects that have been processed for debt deferral according to Directive No. 790/TTg dated October 26, 1996 of the Prime Minister and Circular No. 23/1998/TT-BTC dated February 20, 1998 of the Ministry of Finance, who still owe the state budget up to now, shall be specifically identified with the cause of the outstanding debts, and cases of overdue debts shall be handled according to the provisions of this Circular. Enterprises falling within the category of debt deferral in this case must follow the general procedures, while also submitting a photocopy of the decision on debt deferral for taxes and other amounts payable to the state budget as stipulated in Circular No. 23/1998/TT-BTC (mentioned above). The application must be the original, financial reports, tax settlement statements if there is no original, then it must be a copy stamped with an official copy stamp of the enterprise.

2. The provisions on handling deferred payment, debt deferral, tax cancellation, and other amounts payable to the state budget in this Circular shall not apply to the following cases:

a) Enterprises owing taxes and other amounts payable to the state budget due to subjective reasons or currently violating laws without a specific conclusion from the competent authority.

b) Enterprises belonging to the category being considered for handling tax debts and other amounts payable to the state budget under the mechanism for settling accounts as stipulated in Point 3.2, Section III, Part B of the Joint Circular No. 102/1998/TTLB/BTC-NHNN dated July 18, 1998 issued by the Ministry of Finance and the State Bank of Vietnam guiding the implementation of Decision No. 95/1998/QĐ-TTg dated May 18, 1998 of the Prime Minister on handling debts in phase II.

Based on the decision of the competent authority to handle investment capital support, cancel tax arrears and other amounts payable to the state budget for enterprises, enterprises shall record and adjust their financial settlement data and tax settlement data according to the prescribed regulations.

3. Tax authorities and customs authorities shall be responsible for verifying the subjects owing taxes and other amounts payable to the state budget, and propose to the Ministry of Finance, General Department of Customs, and People's Committees of provinces and cities to resolve according to the authority specified in this Circular.

When receiving applications from enterprises, tax authorities and customs authorities shall be responsible for reviewing and examining the applications, and issue a letter requesting the competent authority to handle the tax arrears of the enterprise within 15 working days from the date of receipt of the complete application (the request letter shall be prepared according to Form No. 02 attached to this Circular). In cases where additional documentation is required or the enterprise does not fall within the scope of handling, the receiving agency must notify the enterprise in writing within the time limit mentioned above.

The tax authority shall not impose late payment penalties on the deferred or deferred tax arrears from the date of the decision on deferred payment or deferred tax arrears by the competent authority. Upon expiration of the deferred payment or deferred tax period, the taxpayers shall be responsible for paying the full amount of taxes owed to the state budget. If the taxpayer fails to comply, the tax authority shall impose late payment penalties from the date of expiration of the deferred payment or deferred tax period.

Based on the above guidance, it is requested that ministries, sectors, and provincial and municipal people's committees instruct subordinate units to guide business establishments to review and classify tax arrears for handling according to the provisions and guidance in this Circular.

This Circular takes effect from the date of signature. During the implementation process, if there are difficulties, please report them to the Ministry of Finance for timely research and resolution./.