Circular No. 46/2005/TT-BTC guiding certain issues regarding finance when restructuring, reforming, and developing state-owned agricultural and forestry farms

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 46/2005/TT-BTC DATED JUNE 8, 2005 GUIDING SOME ISSUES ON FINANCE WHEN REORGANIZING, RENEWING AND DEVELOPING STATE AGRICULTURAL AND FORESTRY ENTERPRISES

Implementing Decree No. 170/2004/NĐ-CP dated September 22, 2004 of the Government on reorganizing, renewing and developing state agricultural enterprises and Decree No. 200/2004/NĐ-CP dated December 3, 2004 of the Government on reorganizing, renewing and developing state forestry enterprises; the Ministry of Finance guides some issues on finance when reorganizing, renewing and developing state agricultural and forestry enterprises as follows:

This technical regulation sets out technical requirements, testing methods, sampling procedures; management requirements; responsibilities of organizations and individuals producing, trading, and importing cigarettes.

1. Scope and applicability.

1.1- The object to which this circular applies is state agricultural and forestry enterprises implementing renewal and reorganization as stipulated in Clause 2 Article 1 of Decree No. 170/2004/NĐ-CP dated September 22, 2004 of the Government on reorganizing, renewing and developing state agricultural enterprises and stipulated in Clause 2 Article 1 of Decree No. 200/2004/NĐ-CP dated December 3, 2004 of the Government on reorganizing, renewing and developing state forestry enterprises (hereinafter referred to as agricultural and forestry enterprises).

1.2- This circular guides financial issues when implementing reorganization, renewal and development of agricultural and forestry enterprises in the following forms:

- Agricultural and forestry enterprises continue to maintain as state-owned companies;

- Agricultural and forestry enterprises are converted into joint-stock companies with state capital;

- Agricultural and forestry enterprises implement mergers, divisions, dissolutions;

- Agricultural and forestry enterprises implement shareholding, transfer, sale;

- Forestry enterprises are converted into forest protection management boards, special-use forest management boards operating under the mechanism of public service units with income.

2. General provisions.

2.1- Agricultural and forestry enterprises that are state-owned companies operate according to the Law on State-Owned Enterprises and the Financial Management Regulations of State-Owned Companies and Management of State Capital Invested in Other Enterprises issued together with Decree No. 199/2004/NĐ-CP dated December 3, 2004 of the Government (hereinafter referred to as the financial regulations of state-owned companies) and Circular No. 33/2005/TT-BTC dated April 29, 2005 of the Ministry of Finance guiding some articles in the Financial Management Regulations of State-Owned Companies and Management of State Capital Invested in Other Enterprises;

Agricultural and forestry enterprises carry out public welfare tasks: public goods and services ordered by the state, assigned plans, or tendered for implementation according to Decree No. 31/2005/NĐ-CP dated March 11, 2005 of the Government on production and supply of public goods and services and current laws and regulations.

- New agricultural and forestry enterprises established, reorganized, dissolved, merged, divided, or split shall be carried out in accordance with Decree No. 180/2004/NĐ-CP dated October 28, 2004 of the Government on establishing new, reorganizing, and dissolving state-owned companies and Circular No. 38/2005/TT-BTC dated May 18, 2005 of the Ministry of Finance guiding procedures, formalities, and financial handling when establishing new, reorganizing, and dissolving state-owned companies.

- Agricultural and forestry enterprises implementing shareholding shall comply with the provisions of Decree No. 187/2004/NĐ-CP dated November 16, 2004 of the Government, Circular No. 126/2004/TT-BTC dated December 24, 2004 of the Ministry of Finance guiding the implementation of this Decree and current laws and regulations.

- Agricultural and forestry enterprises transferring to collectives of workers; selling or converting to joint-stock companies with state capital shall be carried out in accordance with current laws.

- Forest protection management boards, special-use forest management boards (referred to as forest management boards) shall implement the financial mechanism prescribed in Decree No. 10/2002/NĐ-CP dated January 16, 2001 of the Government on financial systems applicable to public service units with income and guidance documents of the Ministry of Finance.

2.2- During the process of reorganizing, renewing and developing agricultural and forestry enterprises, expenses for land surveying, boundary marking, land registration, and issuance of land use rights certificates for forest management boards and forestry companies shall be guaranteed by local budgets and implemented in accordance with the State Budget Law.

2.3- The handover of transportation roads, power systems, irrigation works, schools, and health stations of agricultural and forestry enterprises to local management shall be carried out according to Decision No. 255/2003/QĐ-TTg dated December 1, 2003 of the Prime Minister on the handover and handling of loans and investment assets of transportation roads, power systems, irrigation works, schools, and health stations of agricultural and forestry enterprises to local authorities and Vietnam Electricity Corporation, Circular No. 48/2004/TT-BTC dated June 1, 2004 of the Ministry of Finance guiding Decision No. 255/2003/QĐ-TTg and current laws and regulations.

II. SPECIFIC PROVISIONS

1. Inventory and assessment of existing assets and capital.

1.1- Inventory of assets and capital:

When there is a decision on reorganization from the competent authority, agricultural and forestry enterprises must conduct a full inventory of assets under their management and use, including: short-term assets, long-term assets, debts payable, owner's equity (including planted forests, orchards, livestock herds).

The method of re-evaluating assets, capital, planted forests, orchards, and livestock herds shall be in accordance with current state regulations and guidelines of the Ministry of Agriculture and Rural Development.

1.2 -Inventory time: It is the closing date of accounting, preparing the financial report at the end of the nearest quarter since the reorganization plan of agricultural and forestry enterprises was approved by the competent authority and became effective.

1.3 -Revaluation of asset value:

The revaluation of assets of agricultural and forestry enterprises is only conducted when ownership is transferred: shareholding, transfer, sale; revaluation of assets of agricultural and forestry enterprises remaining as state-owned companies is not carried out; agricultural and forestry enterprises converted into management boards, joint-stock companies with state capital, and those implementing mergers, consolidations, divisions, and splits.

1.4 -Handling discrepancies in inventory results and revalued asset values:

a. Discrepancies in inventory results and revalued asset values of agricultural and forestry enterprises implementing shareholding, transfer, and sale shall be handled in accordance with current state regulations on shareholding, transfer, and sale of enterprises.

b. For state-owned companies that continue to operate as agricultural or forestry enterprises with discrepancies identified during inventory, such discrepancies shall be handled in accordance with the Financial Management Regulations for State-Owned Companies and the Management of State Capital Invested in Other Enterprises issued together with Decree No. 199/2004/NĐ-CP dated December 3, 2004 of the Government and Circular No. 33/2005/TT-BTC dated April 29, 2005 of the Ministry of Finance guiding certain provisions of the Financial Management Regulations for State-Owned Companies and the Management of State Capital Invested in Other Enterprises.

c. For forestry enterprises transitioning to Forest Management Boards: Discrepancies identified after inventory must be clearly determined in terms of cause, responsibility, and compensation. The shortfall after compensation will be considered for reduction in state capital.

The industry management ministry shall consider and decide on reducing state capital for centrally-managed agricultural and forestry enterprises, while provincial people's committees (hereinafter referred to as provincial people's committees) shall consider and decide on reducing state capital for provincially-managed agricultural and forestry enterprises following written agreement from the Ministry of Finance.

1.5 - The handling of overdue debts of state-owned agricultural and forestry enterprises shall be carried out in accordance with Decree No. 69/2002/NĐ-CP dated July 12, 2002 of the Government and Circular No. 85/2002/TT-BTC dated September 26, 2002 of the Ministry of Finance regarding the management and resolution of overdue debts for state-owned enterprises, and Circular No. 89/2004/TT-BTC dated September 3, 2004 of the Ministry of Finance guiding the resolution of state investment credit risk.

2. Transfer of assets, planted forests, perennial orchards, and the value of land reclamation and improvement investments of agricultural and forestry enterprises to provincial people's committees or forest management boards.

2.1 - Assets and capital to be transferred include: All assets, materials, receivables, payables, other assets (including planted forests, orchards, livestock herds, and the value of land reclamation and improvement investments), and related documents.

2.2 - Principles of transfer: Transfer of assets and capital in their current condition based on inventory data at the time of transfer.

2.3 - The time of transfer shall be decided by the industry management ministry and provincial people's committees for each agricultural and forestry enterprise.

2.4 - The person in charge of the transfer:

- Representatives of the industry management ministry or authorized persons in charge of transferring centrally-managed agricultural and forestry enterprises.

- Representatives of provincial people's committees or authorized persons in charge of transferring provincially-managed agricultural and forestry enterprises.

2.5 - Parties involved in the handover:

- The handing-over party: The directors of agricultural and forestry enterprises.

- The receiving party: The directors of forest management boards responsible for receiving assets and capital or representatives of provincial people's committees (for assets attached to land when agricultural and forestry enterprises transfer land to local management).

2.6 - At the time of transfer, a Handover Protocol must be established with signatures from both parties. Representatives of the industry management ministry, provincial people's committees, and leaders of the总公司（如果是总公司下属单位）也需签字。交接清单内容应详细列出每项资产和转移资本的金额，以及双方存在的问题及处理责任。

2.7 - Accounting entries: Based on the handover protocol, inventory data, relevant documents, accounting records, the handing-over party shall reduce assets and capital, while the receiving party shall increase assets and capital.

For newly established forest management boards, accounting books must be opened to record transactions according to the accounting laws.

3. Regarding the use of proceeds from the liquidation of orchards, planted forests, and livestock herds for reinvestment in intensive cultivation, replanting orchards, purchasing equipment, technological innovation, and infrastructure construction.

3.1 - The subjects are state-owned agricultural enterprises that lack registered capital and have approved projects for intensive cultivation, replanting orchards, purchasing equipment, technological innovation, and infrastructure construction.

3.2 - Proceeds from the liquidation of orchards, planted forests, and livestock herds retained for reinvestment are the net proceeds from the liquidation minus the remaining value of the orchards, planted forests, and livestock herds, legitimate liquidation costs, and taxes as prescribed by law (excluding corporate income tax).

3.3 - Procedures and formalities for increasing registered capital of agricultural enterprises from liquidation proceeds:

a. Application documents include:

- A letter requesting an increase in registered capital from retained liquidation proceeds of orchards, planted forests, and livestock herds;

- An approval document for the registered capital of the agricultural enterprise from the competent authority (with certified true copies);

- An investment project using liquidation proceeds of orchards, planted forests, and livestock herds approved by the competent authority;

- The liquidation settlement report of the agricultural enterprise verified by the tax authority in the locality;

- Financial statements of the agricultural enterprise at the time of capital adjustment;

- Reports on the balance of basic construction investment funds of the agricultural enterprise.

b. Applications for increased capital should be submitted to the industry management ministry and the Ministry of Finance for centrally-managed agricultural enterprises, and to provincial people's committees and the Ministry of Finance for locally-managed agricultural enterprises.

c. Industry management ministries shall review applications for increased capital for centrally-managed agricultural enterprises, while provincial people's committees shall review applications for increased capital for locally-managed agricultural enterprises.

d. After reviewing, industry management ministries and provincial people's committees shall provide written opinions to the Ministry of Finance (along with the application documents) for consideration and processing of budgetary receipts and expenditures.

3.4 - The management and use of liquidation proceeds for replanting orchards, purchasing equipment, technological innovation, and infrastructure construction must comply with the current regulations of the State to ensure effectiveness.

3.5 - Accounting entries: After the decision of the Ministry of Finance, agricultural enterprises shall record an increase in state capital at the enterprise and manage and use the capital in accordance with current State regulations.

4. Support for agricultural enterprises to invest in economic and social infrastructure.

4.1 - Agricultural enterprises operating in remote areas, border regions, islands, strategic defense zones, and areas with particularly difficult socio-economic conditions shall be supported by the State budget for investment, maintenance, repair, and renovation of economic and social infrastructure.

The determination of remote areas, border regions, islands, and regions with particularly difficult socio-economic conditions as stipulated in Circular No. 41/UB-TT dated January 8, 1996, issued by the Committee for Ethnic Minorities and Mountainous Areas on guiding the implementation of criteria for each area in ethnic minority mountainous regions.

4.2 - Infrastructure supported by the state budget includes transportation systems, irrigation works, and electricity systems exclusively for agricultural farms.

4.3 - Annually, based on investment needs, maintenance, repair, and construction of infrastructure projects, agricultural farms shall prepare plans for investment, maintenance, and repair budgets together with their financial plans to report to competent authorities for approval. For construction projects, they must comply with regulations governing state budget-funded construction management.

4.4 - Approval authority for investment projects according to the Financial Management Regulations of State-Owned Enterprises:

- Ministries consolidate plans and budgets of central agricultural farms.

- Provincial People's Committees consolidate plans and budgets of local agricultural farms.

4.5 - Sources of funding support:

- The central government supports central agricultural farms.

- Local governments support local agricultural farms.

Procedures, formalities, methods for preparing budgets, allocating funds, settling accounts, and finalizing expenditures for support capital shall be carried out in accordance with the State Budget Law and related guiding documents.

5. Support for Forestry Companies to undertake part of social functions, national defense tasks, and other public services.

Forestry Companies must undertake part of social functions, national defense tasks, and other public services, which will be financially supported by the state to fulfill these responsibilities.

The sector management ministry places orders or assigns plans and budgets for implementing social functions, national defense tasks for central Forestry Companies, while provincial People's Committees assign plans and budgets for local Forestry Companies.

Orders or assignments to implement social functions, national defense tasks, and public service products and services shall be conducted in accordance with Decree No. 31/2005/NĐ-CP dated March 11, 2005, of the Government on the production and supply of public service products and services, and current laws.

6. Support for managing and protecting depleted natural forests.

6.1 - Forestry Companies assigned to manage areas of production forests that are depleted natural forests currently under nurturing and recovery without permission to harvest timber in remote, border regions, and areas with many ethnic minorities shall be supported by the state to manage and protect such forests in the same manner as protective forests.

6.2 - Criteria for identifying depleted forests are defined by the Ministry of Agriculture and Rural Development. Based on these criteria, Forestry Companies shall determine the areas of depleted forests and the time required for nurturing and recovery of each plot or section of forest, reporting to the sector management ministry (for central Forestry Companies) or provincial People's Committees (for local Forestry Companies) for approval.

Annually, based on the approved areas of depleted forests requiring nurturing, recovery, Forestry Companies shall prepare plans for support funding and report to competent authorities for consolidation into the annual budget plan of the ministry or locality.

Based on the annual capital allocation plan provided by the state, sector management ministries allocate to central Forestry Companies, while provincial People's Committees allocate to local Forestry Companies.

The level of support funding, allocation, management, utilization, settlement, and finalization of support funding for depleted forests shall be implemented in accordance with current state regulations.

III. EFFECTIVE DATE OF IMPLEMENTATION

This Circular shall take effect fifteen days from the date of publication in the Official Gazette.

During implementation, if there are any difficulties, relevant ministries, provincial people's committees, centrally administered cities, and agricultural and forestry farms should reflect them to the Ministry of Finance for research and resolution./.