Circular No. 40a-TC/NSNN guiding the preparation of the State Budget (SB) draft for 1998

CIRCULAR

OF THE MINISTRY OF FINANCE NO. 40A TC/NSNN JUNE 30, 1997

GUIDELINES FOR BUILDING THE STATE BUDGET ESTIMATE FOR 1998

        To implement Directive No. 416/TTg dated June 14, 1997 of the Prime Minister on building plans for economic and social development and the state budget estimate for 1998; the Ministry of Finance guides the assessment of the implementation of the state budget in 1997 and the construction of the state budget estimate for 1998 as follows:

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

       The situation of implementing the plan for economic and social development 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 tasks of revenue and expenditure assigned by the Government, promptly implemented the State Budget Law and guiding documents for its enforcement. Revenue in some areas achieved satisfactory results (revenue from the foreign-invested enterprise sector, income tax, traffic 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 sectors compared to the National Assembly-approved budget estimate (revenue from the non-state-owned sector, agricultural land use tax, import-export tax; slow allocation and implementation of investment in construction and national target programs led to lower budget spending in these areas), wasteful and inefficient spending remained widespread.

       Ministries and localities base on the goals and tasks of economic and social development; the state budget revenue and expenditure estimates assigned to them, the results of the first six months of the year, 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 approved by the National Assembly. At the same time, assess the state budget implementation throughout 1997 under their management to have a basis for constructing the state budget estimate for 1998. Specifically:

I. ON REVENUE:

       1. For the state-owned enterprise sector:

       - 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 reform, liquidation, or bankruptcy should be classified accordingly.

       - Regularly urge enterprises to pay taxes, strengthen accounting and settlement inspections to eliminate unreasonable costs from production costs and circulation expenses, increase accumulation paid to the state budget. Strictly monitor the accrual of depreciation to ensure compliance with regulations. Carefully track advance accruals and reserve funds, if there is no corresponding need to reduce costs to determine taxable income and corporate income tax payable.

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

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

       2. For the foreign-invested enterprise sector:

       - Organize statistics on investment projects within the jurisdiction and classify them: projects currently under construction, projects already operational, projects whose tax exemption period has expired, land area, and duration of land use for 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 conditions of each project.

       - Focus on inspecting and settling tax accounts, ensuring that 100% of enterprises engaged in production and business activities are settled for taxes. Pay attention to inspecting imported materials and equipment exempted from taxes, penalize and recover taxes if they are misused.

       3. For the non-state-owned economy sector:

       - 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 production and business activities of non-state-owned commercial and service establishments into a regular system; end unregistered or improperly registered business operations, or those that do not pay taxes or pay 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 commodity type during different periods and seasons, organize spot surveys and recalculate revenue and tax rates accurately to prevent revenue loss. For households taxed through declaration methods, strictly check adherence to accounting records, invoices, and economic contracts when buying and selling goods; promptly detect and handle cases of inaccurate declarations such as concealing revenue, overstating expenses, losing invoices, selling invoices, and discrepancies between invoice copies and supporting documents. Expand the accounting system for larger households and companies. For households taxed through quota methods, the determination of revenue must comply with 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 business type or region to accurately predict taxable revenue; seek opinions from the People's Committee and the Tax Advisory Council at the commune level to ensure fair and objective revenue determination and tax rates, while publicly announcing tax rates for entities in the area at the commune People's Committee office.

       - Closely monitor the business operations of non-state-owned enterprises to collect all receivables accurately, fully, 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 products 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 collection of land use rights transfer fees: immediately collect outstanding land-related 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 issued or leased, applications for land use right certificates, construction permits, confirmation of changes in land use purposes, and transfers, in accordance 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.

       - Recommending 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 receipt documents, firmly grasp the amount of revenue, requiring timely submission or reflection into the State budget.

       - Traffic fees: implement the collection according to Circular 29 TC/TCT dated June 9, 1997 of the Ministry of Finance guiding amendments and supplements to Circular 117 TC/TCT dated December 24, 1994 of the Ministry of Finance regarding the collection of traffic fees through gasoline prices. Conduct inspections on the quantity of fuel stockpiled, sold, and inventory levels of gasoline and diesel fuel 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 allocated budget plan for the year, the progress of tasks, ensure expenditure in accordance with prescribed regulations and assigned tasks, practicing 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, serving as a basis for calculating the 1998 budget.

       1. From now until the end of the year, no additional budget expenditures outside the approved budget will be resolved, 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 with the ability to exceed the 1997 budget revenue target, 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 with lower-than-expected 1997 budget revenue, localities need to proactively rearrange expenditures to match revenue sources while ensuring funding for important economic and social development tasks, including education and training and science.

       2. On basic construction investment: Ministries, sectors, and localities focus on implementing the allocated basic construction investment plans, serving as the basis for timely disbursement and payment according to completed work volumes and proper procedures. For projects planned for 1997 but lacking necessary investment procedures by July 30, 1997, as per Government Decree 42/CP, they should be removed from the 1997 investment plan and considered for inclusion in the 1998 plan. Based on the evaluation of first-half work volume and the possibility of completing the year, determine the volume to be transferred to the 1998 budget allocation 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 rights transfer revenues, land lease payments, housing sales revenues, lottery proceeds, agricultural land use tax, and forestry resource taxes; localities need to base their spending on actual revenue to align with intended purposes. If revenue does not meet the budget, reduce spending accordingly, only implementing spending when there is actual revenue to avoid unpayable work volumes.

       4. For national programs: disburse program funds according to the approved budget and progress schedule. The managing agency of each national program should organize evaluations of each program's effectiveness: objectives, time frame, results achieved in 1997, and propose specific recommendations for management mechanisms and program adjustments.

       5. For regular expenditures: Based on the annual budget allocation, the progress of tasks implementation, and the budget capacity, estimate the full-year implementation to closely reflect the actual situation of the Ministry, locality. Each expenditure area needs to be analyzed specifically according to each item in the State Budget Schedule; analyze the requirements 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: budget management decentralization, budget allocation, budget execution, state budget accounting, village budget management, compliance with revenue and expenditure policies and systems... From this, they should propose recommendations to competent authorities to amend and supplement guiding documents for the implementation of the Law and other specific systems related to state budget management and operation.

B- BUILDING THE 1998 STATE BUDGET:

       The preparation of 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 the five-year plan 1996-2000 and the second year of implementing the State Budget Law. The situation in 1997 and recent years shows:

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

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

       - The demand for investment development funds, regular expenditures for education, healthcare, culture, social welfare, and national defense and security is increasing.

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

       - Building the State Budget must be carried out strictly in accordance with the provisions of the State Budget Law, Decree No. 87/CP dated December 19, 1996, of the Government, Circular No. 09 TC/NSNN dated March 18, 1997, and Circular No. 14 TC/NSNN dated March 28, 1997, of the Ministry of Finance regarding the following contents: general bases and requirements for preparing the budget; budget preparation forms; notification of budget verification figures; 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 budget and the additional amount transferred from higher-level budgets to lower-level budgets as in 1997. Specifically, the additional amount transferred 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 - 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 to suit 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 exploiting financial resources, revenue from natural resources, state assets, and strengthening efforts to prevent revenue loss.

       - Allocate approximately 30% of State budget revenue from taxes and fees for investment development expenditure and debt repayment, prioritizing the allocation of construction investment expenditure for key national projects, investment in education and training, science; allocate 70% of tax and fee revenue for regular expenditure; ensure necessary and reasonable regular consumption expenditure, with priority given to tasks such as education and training, scientific research, modern technology absorption, environmental protection, public health, national defense, security, and addressing urgent social issues. In accordance with Resolution of the Central Committee II, the budget estimate for 1998 (including both regular and development expenditure) must focus on education and training and expenditure for the science, technology, and environment sector, aiming to reach 15% of total State budget expenditure for education and training and 2% for science, technology, and the environment by the year 2000. The allocation for educational and health care services, culture should be calculated based on continued organization and restructuring to align with the functions and responsibilities of each unit and sector, taking into account the factor of gradually implementing the policy of socialization of resources for these sectors; reduce and eventually eliminate subsidies for training and healthcare in state-owned enterprises, creating conditions for enterprises to truly be financially autonomous. Reasonably and economically allocate administrative management expenditure, limit procurement and repair in state management agencies.

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

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

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

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

       - Value of service industries 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 CONTENTS TO BE CONSIDERED WHEN PREPARING THE 1998 STATE BUDGET ESTIMATE:
BUDGETED REVENUE AND EXPENDITURE OF THE STATE BUDGET IN 1998:

       1. Regarding revenue:

       1.1. For the state-owned economic sector:

       a. Regarding business income tax:

       Calculate according to 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. Calculate the full business income of enterprises, paying attention to income from other activities such as financial operations, selling materials and goods, liquidation of assets. In cases where enterprises sell goods and issue promotional lottery tickets, the taxable income shall be calculated according to 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 (the exemption and reduction 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 resource at the place of extraction or production.

       d. Corporate income tax: Based on determining the combined cost factors of enterprises 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 and 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 deducting depreciation of fixed assets. During the calculation process, pay attention to cases where the depreciation period is shortened; the deduction amount must ensure that the corporate income tax does not decrease compared to 1997; for fixed assets that have been fully depreciated but are still in use, they cannot be deducted from the cost.

       - Major repair costs of fixed assets: Calculate based on reasonable and legitimate occurrences. For assets with unique characteristics, the pre-deduction of major repair costs can be based on the enterprise's budget approved by the Ministry of Finance. Costs with the nature of investment in construction and development 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, note the following points:

       + When applying the adjustment coefficient, ensure the principle of not reducing the tax payment ratio, especially not reducing profits realized compared to 1997.

       - Other expenses such as hospitality, ceremonial, meeting, transaction, foreign affairs expenses directly related to business operations must be calculated according to the level and management regulations stipulated by the State.

       c. Revenue from the use of state budget capital; including property and capital contributions to joint ventures (including property, materials, and the commercial value of land when contributing capital through land use rights) shall be calculated according to 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 business entities on the territory according to the spirit of Directive No. 657/TTg of the Prime Minister. Evaluate the degree of revenue loss regarding 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, 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 on a leasehold basis: 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 proposed business license tax brackets, include all businesses with fixed locations in calculating turnover and income tax.

       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 development funds for agriculture and rural areas.

       - 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: Pay attention 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, estimate 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 calculated and recorded in the 1998 State Budget estimate to ensure proactive planning for state budget expenditures.

       1.7. For revenue from the transfer of land use rights and rent payments for land:

       - Revenue from the transfer of land use rights is calculated according to Circular 78 TC/TCT dated September 30, 1994, issued by the Ministry of Finance. Rent payments for land are 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, regarding the sale and operation 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 calculation.

       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 with such revenues must fully consolidate their revenue and expenditure budgets. The decision to retain part or all of the revenue for internal use (after recording the 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 internal use 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, provinces, cities, districts, counties, communes, and wards. To ensure that 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 collection management must fully consolidate the retained revenue and expenditure into their unit's revenue and expenditure budget. The decision to retain part or all of the revenue for internal use (after recording the 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 internal use 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 as specified by the Government used 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 for repayment (direct borrowing from the budget, borrowing from loans obtained by the budget for relending under projects and programs): They must proactively prepare the budget for repayment to the budget in 1998 for both principal and interest, according to the prescribed repayment schedule.

       2. On Expenditure:

       2.1. For investment construction 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 projects in mountainous areas, the Central Highlands, the Mekong Delta, and investment projects in education and training, science fields. Allocate sufficient capital for ongoing projects. End the situation of scattered and dispersed investment, especially for Group C projects. Reserve funds to settle the volume of completed construction projects in 1997 that have not yet been settled. Ensure sufficient counterpart funds for programs and projects funded by foreign loans and aid; it is necessary to ensure that programs and projects requiring counterpart funds will be considered and balanced in the budget estimate, while for loan repayment programs, 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 project.

       - Allocate investment from the oil and gas industry's post-tax profit share 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, 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 proceeds, agricultural land use tax on rice cultivation, and forestry resource taxes as in 1997.

       - Continue to allocate expenditures for the Son La Reservoir Project from hydropower resources tax revenues, allocate investment for the Mong Cai economic zone, allocate investment for Con Dao County, 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 that are developing their production and business operations effectively, paying full taxes to the state budget, making profits, and lacking capital, as well as enterprises producing export goods as decided by the Prime Minister.

       2.3. For state reserve expenditures: Based on the assigned state reserve tasks, relevant sectors and units must assess and re-determine the current reserve levels of their sectors and units as of December 31, 1997. On this basis, 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 state reserve expenditure budget estimates for 1998 for each sector and unit.

       2.4. For subsidies for policy goods:

       - Subsidies for policy goods transported to mountainous areas 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.

       - Current regulations shall apply to subsidies for seedling preservation, press subsidies, publishing house subsidies, etc. Ministries and localities need to carefully calculate and clearly determine the quantities, production costs, transportation expenses, specific freight subsidies for each product, breed, newspaper, and publishing house according to the established regulations.

       2.5. For administrative and public service expenditures:

       It is required to prepare 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 before the decision on the 1998 state budget, and all new expenditure needs arising after the budget decision time 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 areas, and calculate and clearly define the sources of funding for each area: state budget including program-project loans, revenues such as tuition fees, medical fees, aid, contributions from organizations and individuals, etc.

       - Allocate expenditures for educational and training public services based on continuing to reasonably reorganize the school network, taking into account the socialization policy in this field, 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 research and environmental public services towards prioritizing basic research, allocating sufficient funds 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 required; the preparation of the 1998 budget must comply with 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 state budget, the amount 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 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 budget). According to the Prime Minister's decision on the reorganization of national target programs, allocate the budget estimate for implementing 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 sources between 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, the People's Committees need to guide, announce the inspection figures, organize discussions, and compile the state budget estimate for 1998 in accordance with the provisions of the State Budget Law and related guiding documents, Directive No. 416/TTg dated June 14, 1997 of 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 budget for 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 comments and instructions. 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 mentioned above, 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 state budget estimate for 1998 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, of the Ministry of Finance.

       After assisting the Ministries and central agencies in guiding and announcing the inspection figures for revenue and expenditure of the budget for their subordinate units; the Financial Departments (or equivalent departments) of Ministries and central agencies shall base on the inspection figures announced by the Ministry of Finance, the tasks and specific work 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 subordinate units.

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

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

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

       Second Round: Time period approximately from August 25 to September 10, 1997, discussing the budget revenue and expenditure estimate for 1998 to determine and unify the budget allocation level for Ministries, central agencies, provinces, and centrally-administered municipalities (after the Ministries and central agencies have compiled the budget estimates from their 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.