Circular No. 34/2006/TT-BTC guiding the implementation of Decision No. 13/2006/QĐ-TTg dated January 16, 2006 of the Prime Minister on certain preferential financial and budget mechanisms for Da Nang City

CIRCULAR

Guidelines for implementing Decision No. 13/2006/QĐ-TTg dated January 16, 2006

of the Prime Minister on certain financial mechanisms and preferential policies for Da Nang City

Law on incentives for Da Nang City

__________________

Pursuant to Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government detailing and guiding the implementation of the Law on State Budget;

Pursuant to Decree No. 77/2003/NĐ-CP dated July 1, 2003 of the Government stipulating the functions, tasks, powers, and organizational structure of the Ministry of Finance;

Pursuant to Decision No. 13/2006/QĐ-TTg dated January 16, 2006 of the Prime Minister on certain financial mechanisms and preferential policies for Da Nang City;

The Ministry of Finance hereby guides the implementation of certain financial mechanisms and preferential policies for Da Nang City as follows:

A. GENERAL PROVISIONS:

1. These Circulars guide the implementation of provisions regarding preferential financial mechanisms for Da Nang City, including mechanisms for budget management and mechanisms for mobilizing financial resources for the city's development investment.

2. In addition to the preferential financial mechanisms stipulated in Decision No. 13/2006/QĐ-TTg dated January 16, 2006 of the Prime Minister and guided in these Circulars, the city shall implement general regulations on financial management stipulated in the State Budget Law, Decree No. 60/2003/NĐ-CP dated June 6, 2003 of the Government, Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance, and other legal documents on financial management.

B. SPECIFIC PROVISIONS:

I. ON THE BUDGET MECHANISM:

1. On the allocation of capital for investment through central ministries and agencies and support capital from the central budget for key projects in the city:

1.1. During the period from 2006 to 2010, each year based on the city’s budget allocation capacity and the central budget balance capacity, the central budget will allocate and provide support capital from the central budget to implement important projects that are significant to Da Nang City and the Central Coastal Economic Zone according to the list of works specified in Point a, Clause 1, Article 1 of Decision No. 13/2006/QĐ-TTg dated January 16, 2006 of the Prime Minister.

1.2. Principles of allocation and support capital: For investment projects under the city's management, the central budget will provide targeted support funds to the city's budget to implement them. For projects within the city managed by central ministries and agencies, the central budget will allocate capital through those ministries and agencies to implement them. Implementation methods are as follows:

1.2.1. For investment projects under the city's management: Each year, before July 25 of the previous year, the Department of Finance will coordinate with the Department of Planning and Investment and relevant departments to advise the People's Committee of the city: based on the total project capital approved by the competent authority and divided annually for implementation; progress in implementing the project and the capital needs for the project in the planning year, clearly identifying the city's budget allocation, the central budget support, and other financial sources according to the prescribed system, to be sent to the Ministry of Finance and the Ministry of Planning and Investment for consolidation and reporting to the Government to submit to the National Assembly for deciding the amount of targeted supplementary funding from the central budget to the city's budget for each project in the annual budget estimate.

1.2.2. For investment projects within the city managed by central ministries and agencies: Each year, based on the total project capital approved by the competent authority and the progress in implementing the project, related ministries and agencies will prepare the investment capital demand budget and send it to the Ministry of Planning and Investment and the Ministry of Finance before July 25 of the previous year for consolidation and reporting to the Government to submit to the National Assembly for decision in accordance with the State Budget Law.

2. On rewards and targeted support from the excess revenue of the central budget generated on the city's territory:

2.1. On rewards for excess revenue of the central budget:

Each year, in cases where there is an increase in revenue allocated to the central budget compared to the budget assigned by the Prime Minister from shared revenues between the central budget and the city's budget on the city's territory as stipulated by the State Budget Law, the city's budget will be rewarded 30% of the increased revenue, but not exceeding the increase compared to the actual implementation of the previous year. The method of determining the reward level, principles of using the reward money, and accounting methods for the reward money are implemented according to the provisions in Section 17, Part IV of Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

2.2. Each year, in cases where there is an increase in revenue allocated to the central budget at 100% compared to the budget assigned by the Prime Minister (excluding: VAT on imported goods; revenues not managed by the city, not generated on the city's territory, only recorded and paid at the city level; revenues and expenditures recorded according to the law, revenues retained by units under the budget according to the law), based on the state budget balance capacity and the city's need for support, the Ministry of Finance will coordinate with the Ministry of Planning and Investment to report to the Government to submit to the Standing Committee of the National Assembly for comments, prioritizing targeted support for the city's budget according to the State Budget Law.

The rewards for excess revenue of the state budget and the annual targeted support mentioned above shall be used in accordance with the provisions in Point c, Clause 1, Article 1 of Decision No. 13/2006/QĐ-TTg dated January 16, 2006 of the Prime Minister on certain financial mechanisms and preferential policies for Da Nang City.

II. ON MOBILIZING FINANCIAL RESOURCES FOR DEVELOPMENT INVESTMENT:

1. Da Nang City is organized to raise domestic investment capital through the issuance of local government bonds in accordance with Decree No. 141/2003/NĐ-CP dated November 20, 2003 of the Government; urban construction bonds and other forms of fundraising as prescribed by law; the city's budget is responsible for paying principal, interest, and related costs as prescribed.

When there is a need to raise capital for investment, the People's Committee of the City shall prepare a plan to submit to the Municipal People's Council for decision in accordance with Point 1.3.4, Section 1.3, Part II, Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance.

2. The city of Da Nang may borrow funds from abroad to implement important infrastructure projects within the municipal budget expenditure responsibilities according to the principle that the People's Committee of the City shall develop a plan, seek borrowing sources, obtain opinions from the Ministry of Finance, the Ministry of Planning and Investment, and the State Bank of Vietnam before submitting to the Prime Minister for consideration and decision under the mechanism whereby the Government borrows and then lends back to the city to implement projects and works at the request of the People's Committee of the City. The city shall be responsible for allocating from its municipal budget to repay principal, interest, and fees in accordance with the loan contracts signed in compliance with the law.

The total amount of debt raised through the forms prescribed in Points 1 and 2, Part II, Section B of this Circular shall not exceed 30% of the total basic construction investment capital of the municipal budget as decided annually by the Municipal People's Council (excluding funds raised for investment in projects in accordance with the law, and funds invested in projects from supplementary targeted but unstable sources from the central government budget to the municipal budget if any).

3. The city of Da Nang may implement a mechanism to partially subsidize interest rates for organizations when they borrow funds to invest in important projects with the potential to recover capital (industrial zone development, environmental services, public sanitation, drainage, etc.) in accordance with the provisions of the law. The specific level of subsidy and duration of interest rate support for each organization and each project within the scope and capacity of the municipal budget shall be determined by the Department of Finance, the Department of Planning and Investment, and relevant departments to assist the People's Committee of Da Nang City in determining the annual budget allocation for this subsidy to be included in the municipal budget draft submitted to the Municipal People's Council for decision in accordance with the State Budget Law.

4. Annually, based on the budget estimate for official development assistance (ODA) funding and the commitments made with donors, priority shall be given to allocating ODA funds to the city of Da Nang for projects without the ability to recover capital to invest in important infrastructure projects within the municipal budget's investment responsibilities; the domestic counterpart funding for these projects shall be guaranteed by the municipal budget. The management and implementation procedures shall follow the current state regulations on managing official development assistance (ODA) funding.

5. Regarding the mobilization and effective utilization of land use revenue for economic and social development in the city of Da Nang:

To effectively utilize the land fund managed by the city, based on the city's land use plan approved by the competent authority, and the capital mobilization and infrastructure investment tasks decided by the People's Committee of the City, the People's Committee of the City may allocate municipal budget funds and from mobilized sources (local government bonds, other mobilized sources in accordance with the law) for infrastructure construction projects within the municipal budget's investment responsibilities, relocating production and business establishments within the city to suburban areas or industrial zones to create land funds; on this basis, auctioning the right to use land and public assets according to the prescribed regime, generating funds for development investment and repaying the advance funds allocated from the municipal budget and other mobilized sources. Implementation procedures are as follows:

- Based on the city's land use planning; projects within the municipal budget's investment responsibilities that have been approved by the competent authority. The People's Committee of the City decides to allocate municipal budget funds and from mobilized sources for the project. The amount of advance funding for investment projects is based on the volume and progress of implementation, up to the maximum level approved by the competent authority.

- Management and distribution shall be carried out in accordance with the state's regime for managing state budget funds.

- The proceeds from the auction of land use rights shall be used to repay the funds advanced from the municipal budget and from mobilized sources, with the remainder being fully deposited into the municipal budget (land use revenue) for investment in infrastructure within the municipal budget's investment responsibilities as stipulated.

6. The People's Committee of the City has the responsibility to organize the accounting and settlement of budget revenues and expenditures for the tasks prescribed in Part II of this Circular in accordance with the prescribed regime.

C- IMPLEMENTATION:

This Circular shall take effect fifteen days after its publication in the Official Gazette. Based on the provisions of this Circular, the People's Committee of Da Nang City shall direct the Department of Finance to coordinate with relevant agencies to organize implementation; during the implementation process, if there are difficulties, they should report to the Ministry of Finance for consideration and resolution./.