Circular No. 39/2003/TT-BTC guiding the financial mechanism for public passenger transport enterprises operating bus services in urban areas.

CIRCULAR

OF THE MINISTRY OF FINANCE

Regarding the guidance on financial mechanisms for public passenger bus transport enterprises in urban areas

Based on current tax laws;

Pursuant to Resolution No. 13/2002/NQ-CP dated November 19, 2002 of the Government on measures to curb the increase and gradually reduce traffic accidents and traffic congestion;

Pursuant to Decree No. 56/CP dated 02/10/1996 of the Government on state-owned enterprises engaged in public services;

To encourage and create conditions for enterprises operating in the field of public passenger bus transport in urban areas, the Ministry of Finance provides guidance as follows:

 

I- GENERAL PROVISIONS:

1. The subject of this Circular is all enterprises from various economic sectors participating in public passenger bus transport in urban areas including:

- State-owned enterprises (SOEs), comprising:

+ SOEs engaged in public service passenger bus transport.

+ Parts of SOEs engaged in public service passenger bus transport.

+ SOEs engaged in business activities that include public passenger bus transport.

- Other types of enterprises participating in public passenger bus transport such as: Transport cooperatives, Joint ventures, Limited liability companies, Joint stock companies...

2. SOEs and SOEs engaged in public service passenger bus transport shall implement the provisions set forth in Circular No. 06 TC/TCDN dated December 24, 1997 of the Ministry of Finance guiding the financial management system for state-owned enterprises engaged in public services and the provisions of this Circular.

3. Public passenger bus transport enterprises that have other production and business organizations must separately record revenue, expenses, and business results, and fulfill their obligations to pay into the State budget according to regulations.

4. Public passenger bus transport enterprises are entitled to preferential policies regarding land rental payments, highway toll fees, and wharf fees according to current regulations and decisions of competent authorities.

II - SPECIFIC PROVISIONS

A- INVESTMENT, MANAGEMENT AND USE OF CAPITAL AND ASSETS:

1. State-owned enterprises assigned the task of providing public passenger bus transport services in urban areas are responsible for maintaining accounting books to accurately track all assets and capital currently held under the current accounting and statistical systems to fulfill the task of public passenger bus transport.

For SOEs with parts engaged in public service passenger bus transport, these parts must organize separate accounting.

2. State-owned enterprises and enterprises from other economic sectors investing their own assets to participate in public passenger bus transport operations in urban areas are entitled to investment incentives under the Law on Encouraging Domestic Investment (amended) No. 03/1998/QH10 and are supported with post-investment interest rates according to Circular No. 51/2001/TT-BTC dated June 28, 2001 of the Ministry of Finance guiding the implementation of Decision No. 58/2001/QĐ-TTg dated April 24, 2001 of the Prime Minister on post-investment interest rate support (if the enterprise borrows funds for investment).

B- FINANCIAL RESULTS AND HANDLING OF FINANCIAL RESULTS:

1. Revenue from public passenger bus transport services in urban areas:

1.1. For SOEs engaged in public services or parts of SOEs engaged in public services, revenue includes:

Revenue from selling bus tickets (including single ride tickets, route tickets, inter-route tickets).

State subsidies;

1.2. For enterprises from other economic sectors, revenue includes:

Revenue from selling bus tickets (single ride tickets, route tickets).

Value of contracts to purchase public service products.

Bus ticket prices prescribed by provincial or centrally-administered city People's Committees.

2. Costs of public passenger bus transport services:

Costs of public passenger bus transport services of public passenger bus transport enterprises are reasonable and legitimate expenses as stipulated in Circular No. 18/2002/TT-BTC dated February 20, 2002 of the Ministry of Finance guiding the implementation of Decree No. 26/2001/NĐ-CP dated June 4, 2001 of the Government and Decree No. 30/1998/NĐ-CP dated May 13, 1998 of the Government detailing the implementation of the Law on Corporate Income Tax.

To align with the reality of public passenger bus transport operations, certain costs are defined as follows:

a. Labor costs and allowances with wage nature:

Wages in state-owned enterprises are determined as follows:

Basic wages: Determined according to Decree No. 26/CP dated May 23, 1993 of the Government temporarily setting new wage regulations in enterprises; Decree No. 28/CP dated March 28, 1997 of the Government on reforming wages and income in state-owned enterprises; Decree No. 03/2003/NĐ-CP dated January 15, 2003 of the Government on adjusting wages, social allowances, and reforming the wage management mechanism and Circulars guiding the above Decrees of the Ministry of Labor, Invalids and Social Affairs.

Allowances include: adjustment coefficients for minimum wage increases, hazardous work allowances, mobility allowances, responsibility allowances, which are determined according to guidelines of the Ministry of Labor, Invalids and Social Affairs.

Provincial and municipal labor, invalids, and social affairs departments are responsible for guiding enterprises in implementation.

For enterprises from other economic sectors: they follow the regulations of the State applicable to each type of enterprise and apply wage regulations similar to those for SOEs when preparing cost budgets for public service products.

b. Depreciation of fixed assets: Fixed assets such as public passenger bus transport vehicles are depreciated based on the actual usage capacity of the buses (by bus shifts) but not exceeding the depreciation rate specified in Decision No. 166/1999/QĐ-BTC dated December 30, 1999 of the Minister of Finance.

c. Major repair costs of fixed assets:

For fixed assets such as public passenger bus transport vehicles, enterprises can pre-deduct major repair costs and tire costs according to standards issued by competent authorities into the product cost and retain the surplus of pre-deducted major repair costs for buses in the fiscal year for periodic major repairs.

d. Business management costs include costs for the management board, supervision of bus operations, and the management structure of the enterprise.

e. Other related expenses such as: expenses for purchasing tickets (bus tickets), expenses for purchasing civil liability insurance, passenger insurance, and other costs related to public passenger transport activities by bus in accordance with the regulations.

3. Financial result handling:

3.1. Public passenger transport enterprises by bus may use revenue from public welfare transportation services to offset the costs of public passenger transport services by bus, taxes, and other payments to the State budget as prescribed by law (excluding corporate income tax).

3.2. Public passenger transport services by bus in cities that are exempt from value-added tax.

3.3. Any surplus revenue exceeding expenses (if any) of public passenger transport enterprises by bus shall be handled as follows:

a. Pay corporate income tax according to the law.

b. Deduct legitimate expenses not yet deducted when determining taxable income as prescribed.

c. The remaining profit shall be handled as follows:

For state-owned enterprises engaged in public welfare: Establish funds in accordance with current regulations (Circular No. 06 TC/TCDN dated February 24, 1997 issued by the Ministry of Finance).

For enterprises belonging to other economic sectors: Distribute income according to current regulations of the State applicable to each type of enterprise.

C- ESTABLISHING BUDGETS FOR COSTS AND PAYMENT OF PUBLIC WELFARE PRODUCTS

1. Establishing budgets for costs to implement public passenger transport services by bus:

1.1. Based on technical and economic norms for the industry issued by the Ministry of Transport, the Department of Transport (or Department of Transport and Public Works) organizes research to develop appropriate norms to submit to the People's Committee of the province/city for issuance of technical and economic norms for bus operations within the province/city.

1.2. Based on the technical and economic norms for bus operations issued by the People's Committee of the province/city and based on reasonable expense items listed in Point 2, Part B, Section II of this Circular, the Department of Transport (or Department of Transport and Public Works) and the local Department of Finance and Prices establish cost budgets for implementing public passenger transport services annually or per route for each enterprise, to be submitted to the Chairman of the Provincial/Central City People's Committee for approval as the basis for subsidizing prices or signing contracts and settling accounts for costs in cases of ordering or tendering for public welfare transport services.

2. Payment of public welfare products:

2.1. Government subsidies:

For state-owned enterprises engaged in public welfare or parts of state-owned enterprises engaged in public welfare public passenger transport services by bus, if revenue from selling bus tickets is insufficient to cover the costs of public welfare operations, they will receive subsidies from the local state budget at the provincial/city level. The annual subsidy amount ensures coverage of reasonable expenses as stipulated in Point 2, Section B, Part II of this Circular and current government regulations.

The local state budget ensures provision of two bonus and welfare funds equivalent to two months' actual salary for workers in state-owned enterprises or parts of state-owned enterprises engaged in public welfare public passenger transport services by bus.

2.2. Purchase of public welfare products:

For state-owned enterprises and enterprises belonging to other economic sectors that are contracted by the government to purchase public welfare passenger transport products:

Orders to purchase public welfare products are made through decisions of the provincial/city People's Committee and may be delegated to the local Department of Transport (or Department of Transport and Public Works) to sign contracts with enterprises to perform public welfare activities. Contract signing takes place before the enterprise implements the public welfare activity.

In cases where multiple enterprises in a city register to participate in public passenger transport services by bus, tenders shall be organized in accordance with current national regulations on tender organization.

Based on the requirements of the purchaser of public welfare products, the volume of services provided by the enterprise, and the established cost budget, the contract value is the difference between revenue from ticket sales and the costs of providing public welfare services, resulting in profit for the enterprise performing the public welfare activity. The State does not cover losses in cases where the enterprise performs public passenger transport services under a contract with revenues insufficient to cover costs. If there is a profit, it shall be handled according to the provisions of Point 3.3, Section B, Part II of this Circular.

Enterprises performing public passenger transport services by bus have the responsibility to provide public welfare services according to the planned indicators set out in the order, to fulfill commitments regarding quantity, quality, and selling tickets at the price specified by the provincial/city People's Committee.

3. Sources of funding for subsidies and purchases of public welfare passenger transport products are guaranteed by the provincial/city state budget in accordance with the State Budget Law.

The distribution and payment of public welfare passenger transport products by bus are carried out by the local Department of Finance and Prices through the National Treasury system in accordance with the Ministry of Finance's guidelines on managing, distributing, and settling accounts for state budget expenditures through the National Treasury.

D. SETTLEMENT OF FINANCIAL ACCOUNTS AND AUDIT OF ACCOUNTING FOR PUBLIC PASSENGER TRANSPORT SERVICES BY BUS AT ENTERPRISES:

1. Preparation of financial statements:

Quarterly and annually, enterprises performing public passenger transport services by bus are responsible for preparing financial settlements for public welfare activities together with the enterprise's financial statements in accordance with current regulations. The enterprise director must bear responsibility before the State and the law for the accuracy and truthfulness of the financial statements.

Financial settlements for public welfare activities are sent to the Department of Transport (or Department of Transport and Public Works), the Department of Finance and Prices, and the Tax Departments of provinces/cities as prescribed.

The time for submission of financial settlements is in accordance with current regulations.

2. Audit of financial statements:

For state-owned enterprises: Annually, the Department of Finance and Prices must conduct a settlement review of the public service passenger transport operations of the enterprise together with the Department of Transport (or the Department of Public Works) to prepare a Record of Subsidies for Public Services Products for the enterprise in that year.

For enterprises belonging to other economic sectors, the local tax authority shall inspect the enterprise's compliance with its obligations to pay into the State Budget.

The enterprise has the responsibility to comply with financial systems, accounting regulations, revenue discipline, and the accuracy and honesty of financial reports as prescribed.

Violations of accounting systems, financial income and expenditure systems, revenue payment discipline, and other financial systems will be subject to administrative penalties and economic sanctions according to the provisions of the law.

III. IMPLEMENTATION

1. In addition to the specific regulations on public service passenger transport operations using buses set forth in this Circular, enterprises participating in public passenger transport services using buses in urban areas must also comply with other legal provisions applicable to each type of enterprise.

2. This Circular takes effect fifteen (15) days from the date of publication in the Official Gazette.

During implementation, if there are any difficulties, it is requested that the People's Committees of provinces and cities and the enterprises promptly report them to the Ministry of Finance for consideration and appropriate amendments.