JOINT CIRCULAR No. 41 - TC/NL-TTLB GUIDING THE IMPLEMENTATION OF TAX PAYMENTS AND CERTAIN FINANCIAL MEASURES FOR THE ELECTRIC POWER INDUSTRY IN 1993 - 41

JOINT CIRCULAR

GUIDELINES FOR IMPLEMENTING THE PAYMENT INTO THE STATE BUDGET AND SOME MEASURES TO BALANCE THE FINANCIAL INCOME AND EXPENSES IN 1993 FOR THE ELECTRICITY SECTOR

Pursuant to Circular No. 1309-KTTH dated April 1, 1993 of the Government Office on additional electricity charges in southern provinces and financial revenue and expenditure balance for the Electricity Sector.

The Ministry of Finance and the Ministry of Energy hereby unify guidelines for implementing additional electricity charges, payment into the State Budget, and some measures to balance financial income and expenses in 1993 for the Electricity Sector as follows:

I/ ADDITIONAL ELECTRICITY CHARGES:

From April 1, 1993 to June 30, 1993, the Electricity Sector is permitted to impose additional charges on electricity prices in southern provinces (from Khanh Hoa Province southward, excluding Ho Chi Minh City).

The level of additional charges and the objects subject to such charges shall be implemented according to the announcement of the Government Price Board, Circular No. 272 VGCP-TLSX dated April 12, 1993.

II/ TAXES PAID INTO THE STATE BUDGET AND MEASURES TO BALANCE REVENUE AND EXPENDITURE IN 1993:

1/ Regarding business tax: All units under the Electricity Sector must pay business tax into the State Budget. The tax rate, method of calculation, procedures for payment, and location for payment shall be carried out in accordance with Circular No. 294 TC-TCT dated March 11, 1991 of the Ministry of Finance "On the Implementation of Business Tax Law for Electricity and Coal."

In areas where progressive electricity pricing and additional charges are applied, the taxable revenue from electricity sales includes both progressive pricing revenue and additional charge revenue.

Specifically, for the Ho Chi Minh City Electricity Company, the taxable revenue from electricity sales does not include additional charge revenue. Additional charges in Ho Chi Minh City shall be implemented according to Decision No. 548/QĐ-UBCN dated April 15, 1993 of the Ho Chi Minh City People's Committee.

2/ Revenue from natural resource taxes:

Electricity companies have the responsibility to accurately calculate natural resource taxes in accordance with Circular No. 766 TC-TCT dated June 11, 1991 of the Ministry of Finance "Regarding Natural Resource Tax on Water Used for Hydroelectric Power Production" and to pay them into the State Budget in accordance with current regulations.

3/ Revenue from the use of State Budget funds:

Electricity companies must accurately calculate the revenue from the use of State Budget funds based on the amount of capital that has been preserved according to current regulations and the percentage specified in Circular No. 13 TC-TCT dated February 23, 1991 of the Ministry of Finance.

- The Electricity Company I must pay the entire revenue from the use of State Budget funds (by recording the use of State Budget funds by the Electricity Company I and recording expenditures for subsidies to the Electricity Company III).

- The Electricity Companies II and III are temporarily exempted from paying the revenue from the use of State Budget funds in 1993.

4/ Handling profits and losses in 1993:

- The Electricity Company I, due to high hydroelectric power generation in 1993, generated excess profits. These excess profits will be determined in the 1993 plan of the Electricity Company I. The Electricity Company I must pay all excess profits into the State Budget (by recording the excess profit of the Electricity Company I and recording expenditures for subsidies to the Electricity Companies II and III).

Any profits generated from efforts to reduce production costs are considered realized profits, and after paying corporate income tax, the Electricity Company I may establish three funds according to current regulations.

- After being temporarily exempted from revenue from the use of State Budget funds and reduced depreciation for the Electricity Company II, any remaining losses (if any) due to objective reasons will be subsidized by the Ministry of Finance in the form of subsidies.

The subsidy source for the Electricity Companies II and III is the excess profit revenue and revenue from the use of State Budget funds that the Electricity Company I must pay into the State Budget.

Based on the planned loss for the year, the Ministry of Finance will determine quarterly losses and provide temporary subsidies quarterly. To ensure timely and accurate subsidies, it is requested that each Electricity Company prepare quarterly plans and submit quarterly settlement reports to the Ministry of Finance and the Ministry of Energy. Based on the previous quarter's settlement report and the current quarter's plan, the Ministry of Finance will consider providing temporary subsidies for the quarter. The deadline for submitting quarterly plans is the fifth day of the quarter, and the deadline for submitting quarterly settlement reports is the thirtieth day of the quarter.

5/ Depreciation of fixed assets:

Units in the Electricity Sector must record depreciation of fixed assets in accordance with Circular No. 507 TC/DTXD dated July 22, 1985 of the Ministry of Finance and Circular No. 59 TC-CN dated December 5, 1990 of the Ministry of Finance. The original value of fixed assets is the value that has been preserved according to current regulations.

- The Electricity Companies I and III must pay the entire depreciation of fixed assets into the State Budget.

- The Electricity Company II can temporarily record depreciation of fixed assets in cost in 1993 at 50% of the depreciation that should be recorded according to the aforementioned Circulars, and this depreciation must be paid entirely into the State Budget according to current regulations.

At the end of the year, based on the settlement report of the Electricity Company II, the Ministry of Finance will review and decide on the formal reduction level for the company based on the actual losses incurred.

6/ Provision and use of major repair funds:

The provision and use of major repair funds must comply with the purpose and regulations stipulated in Circular No. 33 TC/CN dated July 31, 1990 of the Ministry of Finance. Based on the need for major repairs in 1993, the Electricity Sector determines the amount of major repair fund provisions according to actual reasonable costs into product costs. Specifically, the Electricity Company II can handle major repair funds according to Document No. 1492/KTTH dated April 9, 1993 of the Government Office "Regarding the Handling of Major Repair Funds for the Electricity Company II," but not exceeding 35 billion as requested by the company.

Based on the above regulations, it is requested that each Electricity Company instruct subordinate units to fully fulfill their obligations to the State Budget.

III\. IMPLEMENTATION:

At the end of 1993, based on the settlement report of each unit, the Ministry of Finance will review and decide on formal exemptions and reductions for each company.

For some items requiring recording of subsidies arising in the first quarter of 1993, it is requested that the companies submit reports to the two ministries for consideration and timely processing.

On the basis of the provisions in this Circular, it is requested that local tax authorities check the implementation and promptly report any issues to the two ministries for resolution.

- Ministry of Energy