Circular No. 40/A-TC-NSNN guiding the preparation of the State Budget for 1998

CIRCULAR

Guidelines for preparing the State Budget for 1998

Implementing Directive No. 416/TTg dated June 14, 1997 of the Prime Minister on developing the economic and social development plan and the State Budget for 1998, the Ministry of Finance guides the assessment of the implementation of the State Budget in 1997 and the preparation of the State Budget for 1998 as follows:

A- ORGANIZATION AND EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET IN 1997:

The situation of implementing the economic and social development plan in the first six months of 1997 still maintained a growth rate: industrial production, agriculture, commodity circulation, exports achieved satisfactory results, inflation was contained, many aspects of society improved; from the beginning of the year, many ministries and localities actively implemented the assigned state budget revenue and expenditure tasks, promptly implemented the Law on State Budget and guiding documents for its implementation. Revenue in some sectors achieved satisfactory results (revenue from foreign-invested enterprises, income tax, transportation fees, etc.); management and control of expenditures made progress. However, actual difficulties and shortcomings emerged: Some key products were produced and consumed slowly, smuggling and tax evasion were not effectively curbed leading to lower revenue in some areas compared to the National Assembly's approved budget (revenue from non-state-owned sectors, agricultural land use tax, import-export tax; slow allocation and implementation of investment and national target programs leading to lower budget spending in these areas); wasteful and inefficient spending remained widespread.

Ministries and localities base their targets and tasks for economic and social development; the state budget revenue and expenditure plans already assigned, the results of the first six months, propose measures to guide and manage the last six months of 1997 to strive to complete the state budget revenue and expenditure tasks for 1997 as approved by the National Assembly. At the same time, evaluate the implementation of the state budget throughout 1997 under their management to have a basis for building the state budget for 1998. Specifically:

I- ON REVENUE:

1. For state-owned enterprises:

- Understand the business operations of enterprises.

- Classify enterprises to have specific policies: Enterprises that operate efficiently and need to be maintained and developed should be supported to improve; those that need restructuring, shareholding, or liquidation should be handled accordingly.

- Regularly urge enterprises to pay taxes, strengthen accounting and settlement inspections to eliminate unreasonable costs from production costs and circulation fees, increase savings for the state budget. Strictly check the accrual of basic depreciation to ensure compliance with regulations. Closely monitor advance accruals and reserve funds, if there is no actual need, reduce corresponding expenses to accurately determine taxable profit and income tax payable to the state budget.

- Seriously implement tax management procedures (declaration, notification of collection, inspection), collect all newly generated receivables, and firmly prevent new arrears from arising.

- Issue orders to collect and impose penalties on hidden taxes and overdue payments that units delay in paying to the state budget.

2. For foreign-invested enterprises:

- Organize statistics on investment projects within the jurisdiction and classify them: ongoing construction projects, operational projects, projects whose tax exemptions have expired, land area, and usage period of each project to calculate and collect all tax revenues and lease payments for land, water, and sea surfaces according to regulations. Establish files to manage tax collection for each project, closely monitor tax-related data and financial status of each project.

- Focus on auditing tax settlements, ensuring 100% of operating enterprises are audited. Pay attention to checking imported materials and equipment exempted from taxes, impose fines and recover taxes if they are misused.

3. For non-state-owned economy:

- Summarize the implementation of business registration according to Directive No. 657/TTg dated September 13, 1996 of the Government. Link business registration with tax collection management; gradually bring the management of non-state-owned commercial and service enterprises into order; end unregistered or improperly registered businesses; businesses not paying taxes or paying insufficient taxes; strictly inspect businesses applying to cease operations; compile lists and publicly announce all households at the People's Committee offices and tax teams for public opinion to identify taxable entities.

- Closely monitor market price fluctuations and actual business conditions of each entity and product category at different times and seasons, organize spot surveys and recalculate revenue and tax rates to accurately reflect reality and prevent revenue loss. For households taxed through declaration methods, strictly inspect adherence to accounting records, invoices, and economic contracts; promptly detect and handle cases of inaccurate declarations such as hiding revenue, overstating expenses, losing invoices, selling invoices, and incorrect invoice entries. Expand the accounting system for large households and companies. For households taxed through quota methods, revenue determination must follow the procedures specified in Circular No. 240 TCT/NV6 dated February 21, 1995 of the General Department of Taxation; conduct typical investigations by industry or region to estimate tax revenue realistically; seek opinions from the People's Committee and the Tax Advisory Council to ensure fair and objective revenue determination and publicize tax rates for entities in the locality at the People's Committee office.

- Fully understand the business operations of non-state-owned enterprises to collect all receivables accurately, completely, and promptly.

4. On export and import taxes

- Resolving definitively the situation of overdue tax debts in accordance with Directive 575/TTg dated August 24, 1996 of the Prime Minister. Strengthening management measures to prevent revenue loss, particularly for imported consumer goods. Enhancing management to prevent tax evasion for goods from foreign-invested enterprises, gifts, consigned goods, temporarily imported goods for re-export, and cases of tax refunds.

- Organizing inspections on the collection of export and import taxes at border gates with large tax revenues.

5. Regarding revenues related to land and housing:

- For the transfer of land use rights and land transfer tax: Collect immediately any outstanding land revenues according to the conclusions of audits and inspections. Local People's Committees need to direct tax authorities to cooperate with land administration agencies and relevant agencies to promptly collect taxes for cases where land use permits have been granted or leased, applications for land use right certificates, construction permits, confirmation of changes in land use purposes, and transfers to ensure compliance with prescribed regulations.

- For agricultural land use tax: Fully collect taxes for areas that have reached their tax payment deadlines for 1997, especially in regions with perennial crops in Southeastern Vietnam and the Central Highlands; the rice price for taxation should be close to market prices.

- For real estate tax: Complete the real estate tax assessment quickly and fully collect taxes for the area.

- Recommend competent authorities to simplify procedures and reasonably adjust prices to promote the sale of state-owned housing.

6. Regarding fees and charges:

- Fees and charges of communes and wards: Grasp all commune and ward fee and charge revenues, requiring full submission or reflection of these revenues into the State budget.

- Various fees and charges collected by entities and sectors: Through the inspection of usage receipts, firmly grasp the amount of revenue, requiring timely submission or reflection into the State budget.

- Traffic fees: Implement collection according to Circular 29 TC/TCT dated June 9, 1997 of the Ministry of Finance guiding amendments and supplements to Circular No. 117 TC/TCT dated December 24, 1994 of the Ministry of Finance regarding traffic fee collection through gasoline prices. Conduct inspections on the quantity of fuel stockpiled, sold, and remaining in storage at companies and branches subject to traffic fees, urging units to promptly submit traffic charges into the State budget.

II. ON EXPENDITURE

Based on the annual budget estimate assigned, progress in implementing tasks, ensure expenditure in accordance with prescribed regulations and assigned tasks, practice thrift to prioritize important tasks. Evaluations must be based on the results of assigned tasks, analyzing wasteful areas, identifying causes, and implementing measures for the second half of the year to serve as a basis for calculating the 1998 budget estimate.

1. From now until the end of the year, do not approve additional budget expenditures outside the estimate, except in urgent cases such as disaster prevention and flood control. Ministries, sectors, localities, and units must practice thrift, rearrange expenditures to ensure essential new needs, and immediately cut unnecessary conference and hospitality expenses. For demands that have been decided but not included in the initial budget, review and delay implementation to be included in the 1998 budget. For provinces and centrally-administered cities capable of exceeding the 1997 national budget revenue estimate, allocate the excess revenue primarily to education and training, and science to implement Resolution 2 of the Central Committee in 1997, with the remainder allocated to infrastructure construction projects, without additional administrative expenditures. For provinces and centrally-administered cities likely to fall short of the 1997 national budget revenue estimate, localities need to proactively rearrange expenditures to match revenue sources while ensuring funding for critical economic and social development tasks, including education and training and science.

2. On basic construction investment: Ministries, sectors, and localities focus on implementing the approved basic construction investment budget, serving as the basis for disbursement according to actual work volume and completion of necessary procedures. For projects planned for construction in the 1997 budget but lacking necessary investment procedures by July 30, 1997, as per Government Decree 42/CP, remove them from the 1997 investment plan and consider inclusion in the 1998 plan. Based on evaluations of first-half-year work volumes and overall implementation capacity, along with disbursement and potential disbursement for the second half of the year, determine the volume to be reallocated to the 1998 budget for each project.

3. For investments in economic and social infrastructure projects, social welfare projects, housing funds, agricultural and rural development investments, and forest regeneration fund expenditures from land use right transfer revenues, land lease payments, housing sales revenues, lottery proceeds, agricultural land use tax, and forest resource taxes; localities need to base their expenditure management on actual revenue conditions to align with prescribed purposes. If revenue targets are not met, reduce expenditures accordingly, only implementing expenditures when actual revenue is available to avoid unpayable work volumes.

4. For national programs: Allocate program funding according to the budget and implementation schedule. The managing agency of each national program should organize evaluations of program effectiveness: objectives, implementation timeframes, achievements in 1997, and provide specific recommendations on management mechanisms and program adjustments.

5. For regular expenditure items: Based on the annual budget allocation, the progress of tasks implementation, and the budget capacity to estimate the full-year implementation closely reflecting the actual situation of the Ministry, locality. Each spending area needs to be analyzed specifically according to each item in the State Budget Schedule; analyze the demand for salary payments, allowances, mandatory deductions from salaries, regular business expenses, and non-recurring expenses such as procurement, repairs, famine relief, disaster relief, flood relief... to serve as the basis for calculating and allocating the 1998 budget.

III. EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET LAW AND GUIDING DOCUMENTS:

Ministries, central agencies, local authorities at all levels, and units shall base their evaluation of the implementation of the State Budget Law and guiding documents issued by the Ministry, locality, and unit in the first months of 1997 on the following aspects:分级管理预算的实施情况，预算分配情况，预算执行情况，预算会计，村级预算管理，预算收支制度的执行情况等。从中提出建议，对有权限的各级机关修改和补充指导文件和其他与国家预算管理和操作相关的具体制度。

B. BUILDING THE 1998 STATE BUDGET:

The work of establishing the 1998 State Budget must fully comply with the provisions of Decree No. 87/CP dated December 19, 1996, Circular No. 09 TC/NSNN dated March 18, 1997, and Circular No. 14 TC/NSNN dated March 28, 1997. Based on the requirements set out in Directive No. 416/TTg dated June 14, 1997 of the Prime Minister and the actual situation, the Ministry of Finance will provide guidance on the following issues:

I. REQUIREMENTS AND OBJECTIVES:

1998 is the third year of implementing the five-year plan from 1996 to 2000, and the second year of implementing the State Budget Law. The situation in 1997 and recent years shows that:

- The economy maintains a growth rate, but some sectors have shown signs of stagnation; encountering difficulties in product sales.

- Inflation has been controlled and is showing a downward trend.

- The need for investment development funds, regular expenditures for educational, health, cultural, social, and national defense and security affairs is increasing.

Given this situation, the work of building the 1998 State Budget must meet the following requirements and objectives:

1. Requirements:

- Continue to strengthen the country's financial potential, improve the health of the national financial system, and make a significant change in the implementation of the policy to restructure the State Budget.

- The State Budget revenue forecast must be established in accordance with the law, comprehensively covering all sources of income, effectively preventing revenue loss, ensuring fairness in production and business operations for all enterprises; while encouraging the development of production and business operations, expanding current and long-term revenue sources. Increase the proportion of State Budget expenditures for investment development, education and training, science, technology, and environmental affairs; implement well the policy of the State cooperating with the whole society to develop education, healthcare, culture, and social affairs. The growth rate of regular expenditures must be lower than the growth rate of investment development expenditures. The 1998 State Budget must be detailed down to each budget user unit and detailed to each item according to the State Budget Schedule.

- Building the State Budget must be carried out in accordance with the provisions of the State Budget Law, Government Decree No. 87/CP dated December 19, 1996, and Circulars No. 09 TC/NSNN dated March 18, 1997, and No. 14 TC/NSNN dated March 28, 1997 of the Ministry of Finance regarding the following contents: general bases and requirements for budget preparation; budget preparation forms; notification of budget verification numbers; discussion on the budget; time for submitting budget reports; tasks, powers, and procedures for preparing, consolidating, and deciding on the budget.

- Maintain the percentage ratio of revenue distribution between different levels of budgets and the additional amount from higher-level budgets to lower-level budgets as in 1997. Specifically, the additional amount from higher-level budgets to lower-level budgets will increase by 6% compared to the amount allocated in 1997.

2. Objectives:

- On the basis of promoting production to ensure a growth rate of 9.0% to 9.2% GDP.

- Strive for total State Budget revenue in 1998 to reach about 21% of GDP, of which tax and fee revenue should account for about 20% of GDP; actively adjust the budget revenue structure in line with the actual economic and social development. Tax revenue from exports and imports must take into account the factor of implementing the process of joining AFTA and the trend of joining international economic and financial organizations; build a stable and solid domestic revenue source. On the basis of developing and improving the efficiency of production and business operations, effectively utilizing and tapping various financial resources, revenue from natural resources, state assets, and strengthening efforts to prevent revenue loss.

- Allocate approximately 30% of tax and fees of the State budget for investment spending and debt repayment, prioritizing the allocation of funds for construction and development projects of the state, educational and training facilities, and scientific research; allocate 70% of tax and fee revenues for regular spending; ensure necessary and reasonable regular consumption expenditures, prioritizing education and training, scientific research, modern technology adoption, environmental protection, public health, national defense, security, and addressing urgent social issues. Implementing the Resolution of the Central Committee II, the budget estimate for 1998 (including both regular and investment spending) must focus on education and training, and spending for science, technology, and the environment, aiming to reach 15% of total spending for education and training and 2% for science, technology, and the environment by the year 2000. Budget allocations for educational and training services, healthcare, and culture should be based on continued organization and restructuring to align with the functions and responsibilities of each unit and sector, and should take into account the factor of gradually implementing the policy of socialization of resources for these services; reduce and eventually eliminate subsidies for training and healthcare in the state-owned enterprise sector, creating conditions for enterprises to truly be financially independent. Reasonably and economically allocate administrative management expenses, limit purchases and repairs in state management agencies.

II. FORECAST OF SOME ECONOMIC GROWTH INDICATORS FOR 1998 COMPARED TO 1997

- Gross Domestic Product (GDP) increases by 9%-9.2%;

- Total value of agricultural, forestry, and fishery production increases by 4.7%-4.8%;

- Value of industrial and construction production increases by 14%-14.5%;

- Value of service sectors increases by 11%-12%;

- Total export turnover increases by 28%-30%;

- Total import and export turnover increases by 18%-20%;

- Consumer price index and service prices increase by 7%-8%;

- Total social development investment increases by 26%-28%.

III. MAJOR POINTS TO BE CONSIDERED WHEN PREPARING THE 1998 STATE BUDGET ESTIMATE:

1. Regarding revenue:

1.1. For the state-owned economic sector:

a. Regarding business income tax:

Calculate according to the provisions of Circular No. 97 TC/TCT dated December 30, 1995 of the Ministry of Finance detailing the implementation of the Business Income Tax Law and the Law Amending and Supplementing Certain Provisions of the Business Income Tax Law. Ensure full calculation of business income, including income from other activities such as financial operations, sale of materials and goods, and asset liquidation. In cases where businesses sell goods and issue promotional lottery tickets, taxable income shall be calculated according to the guidance at Point 7 of Circular No. 3006 TC/TCT dated August 28, 1996 of the Ministry of Finance. Specifically forecast the portion of business income tax exemptions and reductions for businesses in mountainous areas according to Circular No. 24 TC/TCT dated May 10, 1996 of the Ministry of Finance (exemptions and reductions in 1998 must be based on specific decisions of the Ministry of Finance).

b. Regarding special consumption tax:

Calculate according to Circular No. 98 TC/TCT dated December 30, 1995 of the Ministry of Finance detailing the implementation of the Special Consumption Tax Law and the Law Amending and Supplementing Certain Provisions of the Special Consumption Tax Law.

c. Regarding resource tax: The basis for calculating the resource tax is the volume of extraction, the taxable price, and the tax rate. Specifically, the taxable price is generally the selling price per unit of the extracted or produced resource at the place of extraction or production.

d. Corporate income tax: Based on determining the aggregate cost factors of the enterprise in 1997, forecast the increase and decrease in cost factors in 1998 to calculate corporate income tax. Specifically as follows:

- Depreciation costs of fixed assets: Based on the original value of fixed assets in 1997, calculate the increase or decrease in the original value in 1998 to determine the depreciation rate of fixed assets according to Decision No. 1062 TC/QĐ/CSTC dated November 14, 1996 of the Ministry of Finance on the system of using and allocating depreciation of fixed assets. During the calculation process, pay attention to cases where the depreciation period is increased rapidly, ensuring that the corporate income tax does not decrease compared to 1997; for fully depreciated fixed assets still in use, they cannot be included in the cost.

- Major repair costs of fixed assets: Calculate based on reasonable and legitimate occurrences. Specifically, for assets with unique characteristics, pre-allocation of major repair costs can be made based on the enterprise's budgeted costs approved by the Ministry of Finance. Costs with the nature of investment in construction and development projects shall not be included in major repair costs of fixed assets.

- Raw material and fuel costs: Based on actual costs in 1997, raw material and fuel standards, and production volume increases, calculate raw material and fuel costs for 1998.

- Labor costs: The wage rate is applied according to Decree No. 28/CP dated March 28, 1997. Among which, the following points need to be noted:

+ When applying additional adjustment coefficients, ensure the principle that it does not reduce the tax payment ratio, especially not reducing profits realized compared to 1997.

- Other costs such as hospitality, ceremonial, meeting, transaction, and foreign affairs expenses directly related to business operations must be calculated according to the prescribed levels and management regulations of the State.

c. Revenue from the use of state budget capital; including property and capital contributions to joint ventures (including property, materials, and capital from the state budget, the commercial value of land when contributing to joint ventures through land use rights) shall be calculated according to the guidance in Circular No. 33 TC/TCT dated June 13, 1997 of the Ministry of Finance.

1.2. For the non-state-owned industry and commerce sector: Review and confirm the business entities on the territory according to the spirit of Directive No. 657/TTg of the Prime Minister. Evaluate the level of revenue loss due to sales and business entities in 1997 to determine sales and business entities in 1998, gradually reducing the revenue loss rate. Specifically:

a) For joint stock companies, limited liability companies, private enterprises, cooperatives, and production groups: Calculate in detail for each enterprise, especially large enterprises. For non-state-owned enterprises established under the Law on Enterprises and the Law on Private Enterprises, the transfer of capital by investors must be taxed according to the guidance provided in Circular 96 TC/TCT dated December 30, 1995, issued by the Ministry of Finance.

b) For households operating under leasehold arrangements: Review small businesses subject to business license tax and bring those not yet taxed under management for business license tax collection. Based on the number of business licenses and the tiers of business license tax, all households with fixed business locations should be included in calculating turnover and income taxes.

1.3. For registration fees: Pay attention to collecting full registration fees for assets that have been registered for ownership but are being used as capital contributions in joint ventures, following the guidance provided in Circular 93 TC/TCT dated December 21, 1995, issued by the Ministry of Finance, which supplements Circular 19 TC/TCT dated March 16, 1995.

1.4. For agricultural land use tax:

- Clearly calculate the agricultural land use tax for rice cultivation to serve as a basis for allocating investment funds for agriculture and rural development.

- For perennial crops that have exceeded the tax exemption period, they must be included in the calculation of agricultural land use tax.

- Regarding the taxable value: It is necessary to estimate the price of rice closely, ensuring it does not fall below 10% of the local market price for rice.

1.5. For real estate tax: Attention should be paid to enterprises transitioning from paying land tax to paying land rental fees.

1.6. For revenue from the transfer of land use rights:

- Based on the land use plan at the local level, anticipate the area of new land allocation to calculate revenue from the transfer of land use rights.

- In cases where localities have existing revenues from the transfer of land use rights from previous years that have not been reflected in the State Budget, these revenues must be clearly recorded in the 1998 State Budget estimate to ensure proactive planning for state budget expenditures.

1.7. For land transfer tax and rental income from land:

- Land transfer tax is calculated according to Circular 78 TC/TCT dated September 30, 1994, issued by the Ministry of Finance. Rental income from land is calculated according to the provisions in the document guiding Decree 85/CP dated December 17, 1996, issued by the Ministry of Finance; the rental land price is calculated according to Article 2 and Article 6 of the Framework Price for Land Rental issued pursuant to Decision 1357 TC/QĐ/TCT dated December 30, 1995, issued by the Ministry of Finance.

1.8. For revenue from the sale of housing:

- Calculated according to Government Decree 61/CP dated July 5, 1994, on the sale and trading of housing, and Government Decree 21/CP dated April 16, 1996, amending and supplementing Government Decree 61/CP.

- Localities with outstanding revenues from housing sales from previous years that have not been submitted to the State Budget must be included in the 1998 revenue.

1.9. For personal income tax: Calculated according to the Ordinance amending certain provisions of the Ordinance on Personal Income Tax for High-Income Individuals. Special attention should be given to taxpayers in joint ventures, representative offices, lottery winners, etc.

1.10. For revenue from lotteries: Based on the assessment of revenue collection in 1997, analyze the subjective and objective reasons, including the government's measures to combat illegal gambling, and based on the distribution network, consumption capacity, adjustment of ticket prices, and reduction of issuance costs, calculate the 1998 revenue.

1.11. For revenue from public services of units engaged in public service activities that have not yet transitioned to operate under a corporate financial mechanism: According to the State Budget Law, these revenues must be reflected in the State Budget, therefore, units engaged in public service activities with revenue must fully consolidate their revenue and expenditure budgets. The decision to retain part or all of the revenue for expenditure (after recording revenue and expenditure) or to submit all revenue to the State Budget and have the State Budget allocate sufficient funds according to the approved budget must be approved by the competent authority. Units retaining part or all of the revenue for expenditure must also have their revenue and expenditure budgets approved by the competent authority.

1.12. For fees and charges: Calculate in detail for each type of fee and charge managed by central authorities and provincial, city, district, county, commune, and ward levels. To ensure all sources of revenue are reflected in the State Budget as required by the State Budget Law, units previously allowed to retain a certain percentage for fee and charge management must fully consolidate retained revenue and expenditure into their unit's revenue and expenditure budget. The decision to retain part or all of the revenue for expenditure (after recording revenue and expenditure) or to submit all revenue to the State Budget and have the State Budget allocate sufficient funds according to the approved budget must be approved by the competent authority. Units retaining part or all of the revenue for expenditure must also have their revenue and expenditure budgets approved by the competent authority.

1.13. For transportation fees through fuel prices: Calculate according to the provisions in Circular 29 TC/TCT dated June 9, 1997, issued by the Ministry of Finance. Pay special attention to areas with large volumes of fuel imports.

1.14. For other budget revenues: Clearly identify and report revenues designated by the Government for specific purposes such as fines for traffic violations, penalties and confiscation of smuggled goods, etc.

1.15. For units borrowing from the budget in 1998 that are due to repay (directly borrowed from the budget, or borrowed from loans arranged by the budget for onward lending under projects and programs): They must proactively prepare the budget for repayment to the budget in 1998 regarding principal and interest, according to the prescribed repayment schedule.

2. On Expenditure:

2.1. For investment expenditures:

- The allocation of centralized investment funds for construction must ensure the principle of prioritizing capital for key national projects, economic and social infrastructure construction in mountainous areas, the Central Highlands, the Mekong Delta, and investments in education and training, science. Adequate funding must be provided for ongoing projects. End the situation of scattered and dispersed investment, especially for Group C projects. Reserve funds to pay for completed construction works in 1997 that have not yet been settled. Ensure adequate counterpart funds for foreign loan and aid programs; it must be ensured that programs and projects requiring counterpart funds will be considered and balanced in the budget estimate, while for rescheduled loans, project owners must proactively arrange sources in accordance with the content of signed agreements and domestic financial regulations to avoid affecting the implementation schedule of the projects.

- Allocate investment from the profits after tax distributed from the Vietnam-Soviet Joint Venture Oil Company according to the ratio prescribed by the Prime Minister for the year 1998.

- Continue to allocate investment for the construction of economic and social infrastructure projects, social welfare projects, housing development funds, agricultural and rural investment, and forest regeneration funds from sources such as land transfer fees, land rental fees, lottery revenues, housing sale revenues, agricultural land use taxes for rice cultivation, and forestry resource taxes as in 1997.

- Continue to allocate expenditures for the Son La Reservoir project from hydropower resources tax revenues, reinvest in the Mong Cai economic zone, reinvest in Con Dao district, and implement IFAX projects as in 1997.

2.2. For capital support to state-owned enterprises: In 1998, the state budget will allocate capital support for important and essential state-owned enterprises engaged in profitable business operations, which pay sufficient taxes to the state budget, are profitable, and lack capital, as well as export-oriented enterprises designated by the Prime Minister's decision.

2.3. For state reserves expenditure: Based on the assigned state reserve tasks, relevant sectors and units must assess and re-determine their current reserve levels as of December 31, 1997. On this basis, they should forecast the additional reserve levels for each type of goods, materials, and equipment according to the regulations to serve as the basis for building the 1998 state reserve expenditure budget estimates for each sector and unit.

2.4. For subsidies for policy goods:

- Subsidies for policy goods transported to mountainous regions to serve ethnic minorities shall be calculated based on Circular No. 7464/KTTH dated December 30, 1995 of the Government, and related guidance documents from ministries and sectors regarding the target groups, goods types, transportation distances, and subsidy rates.

- Expenditures for seed subsidies, press subsidies, publishing house subsidies... shall be implemented according to the current system. Ministries and localities need to carefully calculate the quantities, production costs, transportation expenses..., and specific freight subsidies for each product, breed, newspaper, and publishing house in accordance with the prescribed regulations.

2.5. For administrative and public service expenditures:

It is required to prepare the budget estimates based on the current budget expenditure regulations and socio-economic indicators issued by authorized authorities; any requests for supplementary expenditure regulations or adjustments to socio-economic indicators must be implemented in accordance with the regulations and before the decision on the 1998 state budget; all new expenditure needs arising after the budget decision time for ministries and localities must be arranged within the allocated budget to ensure compliance. Budget estimates for administrative and public services must be based on the tasks of the units and localities; at the same time, reorganize the network of facilities, promote the socialization policy in these fields, and determine clearly the sources of assurance for each field: state budget including program-project loans, revenues such as tuition fees, medical fees, aid, contributions from organizations and individuals,...

- Allocate expenditures for educational and training public services based on continuing to reasonably reorganize the school network, taking into account the implementation of the socialization policy in this area, increasing the proportion of expenditures for education and training compared to 1997 at each level of budget to gradually implement the Resolution of the Second Plenum.

- Allocate expenditures for scientific and technological public services and environmental protection in the direction of prioritizing basic research, ensuring adequate funding to implement national-level scientific and technological programs, increasing the proportion of expenditures for this field to gradually implement the Resolution of the Second Plenum. To concentrate funds for important research projects, for research institutes under the enterprise sector, restructuring is necessary; the requirement for the 1998 budget estimate must be carried out according to Decision No. 782/TTg dated October 24, 1996 of the Prime Minister.

For provinces and cities allocating expenditures for education and training, scientific research, and environmental protection in the provincial budget must not be lower than the figures announced by the Ministry of Finance.

- Allocate expenditures for health, culture, information, broadcasting, and sports public services; ministries, localities, and units must strictly review their tasks and programs to ensure effective operations, prioritize funding for important tasks; tasks already decided by the Prime Minister, tasks carried over from 1997, and tasks funded according to policies and regulations.

- Allocate administrative expenditures to ensure sufficient payment of salaries and deductions based on approved staffing levels. For regular business expenditures, allocate at a necessary level, being extremely frugal. Other expenditures such as procurement, repairs, and travel expenses should be allocated according to budget balancing capabilities; minimize the purchase of expensive assets that are not urgent; limit meetings, reviews, and summaries...

- The level of administrative and public service expenditures in the 1998 state budget estimate temporarily applies the level specified in Circular No. 38 TC/NSNN dated July 18, 1996 of the Ministry of Finance.

2.6. For national programs: Based on the assessment of the effectiveness of each program up to the end of 1997, review the content of each program, implementation time, and results (including tasks and funds). According to the Prime Minister's decision on rearranging the national target programs, allocate the budget estimate for implementing the national target programs in 1998.

IV. IMPLEMENTATION ORGANIZATION:

- In 1998, which is the second year of implementing the State Budget Law, the ratio of revenue distribution among different levels of budgets and the amount supplemented from higher-level budgets to lower-level budgets will remain stable as in 1997. Therefore, at all levels, People's Committees need to guide, announce the inspection figures, organize discussions, and compile the 1998 State Budget estimate according to the provisions of the State Budget Law and related guiding documents, Directive No. 416/TTg dated June 14, 1997, issued by the Prime Minister, and the guidance provided in this Circular, ensuring both quality and time requirements.

After assisting the provincial and municipal People's Committees in guiding and announcing the inspection figures for revenue and expenditure of the provincial units and subordinate local authorities, the Department of Finance and Prices needs to coordinate with the Taxation Department and relevant agencies based on the inspection figures announced by the Ministry of Finance, the specific situation and tasks regarding economic and social development in the locality in 1998, to form the preliminary budget estimate for revenue and expenditure of the locality in 1998 to be submitted to the provincial and municipal People's Committees for their comments and directives. The preliminary budget estimate for revenue and expenditure of the locality in 1998, after being commented on by the provincial and municipal People's Committees, serves as the basis for the Department of Finance and Prices to discuss the first round with the Ministry of Finance, with subordinate local authorities, and with provincial agencies.

- Central Ministries and Agencies shall organize guidance, announcement of inspection figures, organization of discussions, and compilation of the 1998 State Budget estimate to be sent to the Ministry of Finance within the specified time and format (with attached explanations) as stipulated in Circular No. 09 TC/NSNN dated March 18, 1997, and Circular No. 14 TC/NSNN dated March 28, 1997, issued by the Ministry of Finance.

After assisting the Ministries and central agencies in guiding and announcing the inspection figures for revenue and expenditure of the subordinate units; the Financial Departments (or equivalent departments) of the Ministries and central agencies shall base on the inspection figures announced by the Ministry of Finance, the tasks and specific works of the Ministry in 1998, to draft the preliminary budget estimate for revenue and expenditure of the Ministry in 1998 to be submitted to the leadership of the Ministry for finalization to serve as the basis for the first round of discussion with the Ministry of Finance and discussion with the subordinate units.

- The General Tax Department, the General Investment Development Department, and the General Department of State Capital Management and Asset Management in Enterprises have the responsibility to provide detailed guidance on this Circular for the subordinate units and organize work on compiling and reporting the 1998 budget revenue and expenditure estimates according to the assigned fields.

- The Ministry of Finance will organize meetings to discuss the 1998 budget revenue and expenditure estimates with Ministries, central agencies, provinces, centrally-administered municipalities, and large state-owned enterprises as follows:

First Round: Time period approximately from July 25 to August 10, 1997, for discussing and contributing opinions on the 1998 budget revenue and expenditure estimates of Ministries and localities based on the preliminary estimates as mentioned above.

Second Round: Time period approximately from August 25 to September 10, 1997, for discussing the 1998 budget revenue and expenditure estimates to determine and unify the budget allocation levels for Ministries, central agencies, provinces, and centrally-administered municipalities (after the Ministries and central agencies have compiled the budget estimates from subordinate units; centrally-administered provinces and municipalities have compiled the budget estimates from communes, districts, and subordinate units according to the provisions of the State Budget Law).

The specific schedule will be announced later by the Ministry of Finance.