Circular No. 55/2004/TT-BTC guiding the preparation of the state budget estimate for 2005

CIRCULAR

Guidelines for preparing the State budget estimate for 2005

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Implementing Directive No. 18/2004/CT-TTg dated May 31, 2004 of the Prime Minister on the development plan for economic and social growth and the State budget estimate for 2005, the Ministry of Finance guides the work of evaluating the implementation of the State budget in 2004 and preparing the State budget estimate for 2005 as follows:

A- EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET IN 2004:

In order to complete and exceed the State budget tasks decided by the National Assembly, ministries, central agencies, and localities shall base their actions on the goals, tasks of economic and social development, and the revenue and expenditure estimates of the State budget for 2004 assigned by the Prime Minister. They should leverage the significant achievements obtained in the first six months of the year, and in the second half of 2004, they must fully implement the measures stipulated in Resolution No. 17/2003/QH11 on the State budget estimate for 2004 of the National Assembly, Resolution No. 01/2004/NQ-CP dated January 12, 2004 of the Government on key measures that need to be focused on directing and managing the implementation of the plan and State budget for 2004, and Directive No. 29/2003/CT-TTg dated December 23, 2003 of the Prime Minister on rectifying management of investment and construction using state funds. Strive to comprehensively exceed all targets and tasks for economic and social development and the State budget in 2004.

Along with implementing the State budget tasks for 2004, ministries, central agencies, People's Committees of provinces and centrally governed cities shall focus on guiding the settlement and inspection of approval of the settlement of the State budget for 2003 in accordance with the provisions of the Law on State Budget; promptly address any existing issues and violations identified by auditing, inspection, and financial audit agencies; and organize an evaluation of the implementation of the State budget for 2004 as the basis for preparing the State budget estimate for 2005.

I- Evaluation of the implementation of State budget revenue in 2004 as the basis for preparing the State budget revenue estimate for 2005:

1- Focus on directing the implementation of the assigned State budget revenue tasks, striving to exceed the 2004 revenue target by at least 5%. Concentrate on implementing the following main measures:

- Directly organizing the implementation of newly amended tax laws. Promote and disseminate the contents of the amendments to each enterprise under management; identify any arising difficulties to provide timely guidance and resolution according to the law and related directives.

- Closely monitor business operations, thoroughly analyze factors influencing revenue increases and decreases in each locality to provide practical guidance.

- Organize close cooperation among departments, levels, and forces within the territory to inspect and combat smuggling, tax evasion, commercial fraud, price manipulation, etc., focusing on key areas and units with large revenue sources. Emphasize the allocation and delegation of revenue management responsibilities suitable to the actual situation of each locality.

- Collect taxes, fees, and other revenues due to the State budget in full and on time according to regulations; strengthen measures to prevent tax arrears, strictly handle cases of misappropriation or retention of funds that should be remitted to the State budget, and prevent new unauthorized arrears.

- Coordinate with land administration, urban management agencies, and other relevant agencies to organize land auctions and lease according to approved plans and regulations, ensuring timely and accurate collection of land use fees, transfer taxes, land lease payments, and real estate registration fees.

- Strengthen inspections of invoice and recordkeeping systems according to Circular No. 99/2003/TT-BTC dated October 23, 2003 of the Ministry of Finance on the management and use of invoices, to promptly address and penalize violations during the use of invoices and records, and minimize errors.

- Organize inspection and investigation activities to detect and strictly handle any fraudulent tax practices, ensure fairness in tax obligations, and create a healthy business environment for enterprises.

- Regarding the collection of taxes from import and export activities:

+ Fully and promptly compile tax arrears, classify debts according to causes to take timely revenue collection measures; firmly enforce coercive measures against enterprises deliberately delaying payment; cooperate with internal security agencies to investigate and strictly punish according to the law any violations concerning the collection and payment of State budget revenues.

+ Organize coordinated efforts among forces to concentrate on post-clearance inspections to combat smuggling and commercial fraud.

+ Enhance responsibility, resolve emerging issues, supervise and prevent harassment that creates difficulties for enterprises to facilitate import and export activities.

2- Evaluation of the implementation of State budget revenue in 2004 as the basis for building the State budget revenue estimate for 2005:

Based on the implementation of revenue in the first six months of the year, evaluate the overall revenue results of 2004 based on the implementation of measures aimed at exceeding the domestic revenue target for 2004 by at least 5% compared to the assigned task in Decision No. 191/2003/QD-BTC dated November 17, 2003 of the Minister of Finance; focus on analyzing and evaluating the following main aspects:

- Clearly determine the amount of outstanding taxes carried over from 2003, the amount collected in 2004, and the expected amount to be collected in 2005 according to regulations; the value-added tax refunds generated in 2004; the amount refunded to enterprises in 2004; and the estimated amount of refunds from 2004 to be carried over to 2005 according to the prescribed regulations.

- Analyze the factors affecting the results of the state budget revenue collection task for 2004: The situation in achieving key product production targets, production and consumption, cost, selling price; the impact of price fluctuations during the year; ...

- Analyze and assess the influence of additional and amended policies on the revenue sources within the jurisdiction. Pay special attention to analyzing the impact of amending three new Tax Laws: Value Added Tax, Special Consumption Tax, and Corporate Income Tax (amended).

2.1- For the state-owned enterprise sector:

- Regularly organize the consolidation, analysis, and evaluation of the business results of enterprises. Evaluate the management and use of capital, assets, accounts receivable; changes in the original value of fixed assets, new production capacities added, number of employees, wages, revenue, production costs, economic and technical norms, production and consumption of key products, realized profits, and tax payments (carried over from 2003, generated in 2004, actually paid in 2004, and projected carryover to 2005). Difficulties and advantages in 2004 and potential development in 2005.

- Summarize the implementation results of restructuring, modernization, shareholding, and improving the efficiency of state-owned enterprises according to Resolution No. 9 (Session IX) of the Central Committee. Assess the impact of these activities on business operations and state budget revenue collection within the jurisdiction.

2.2- For the non-state commercial and service sector:

For this sector, evaluate according to two types of entities: enterprises and individual households engaged in production and business.

- Continuously update and consolidate the number of newly registered enterprises under the Enterprise Law; pay particular attention to checking enterprises that have registered for business but have not declared and paid taxes; organize full tax collection from enterprises that have registered for business and obtained tax registration numbers in accordance with their actual business results and relevant tax laws and regulations; the number of enterprises that have been dissolved, bankrupted, or ceased operations.

- Fully consolidate the number of new individual households engaged in production and business and those that have stopped business operations within the jurisdiction. The number of taxpayers who switched from fixed-rate taxation to declaration-based taxation in 2004; the number of taxpayers who switched from direct taxation to deduction-based taxation; the number of households that have established accounting records.

Evaluate the declaration and payment of taxes by taxpayers. Measures to control input VAT, output VAT, sales, expenses, and taxable income, compared to the previous year. Assess the level of revenue loss in this sector, clearly stating the reasons and solutions to address them.

2.3- For the foreign-invested enterprise sector:

- Total number of enterprises granted licenses, valid and expired licenses; including: enterprises already operating, enterprises under construction, enterprises not yet implemented by 2004 and potential development in 2005. Enterprises benefiting from tax exemptions and reductions in 2004, 2005, and subsequent years.

- Total labor force, total wage fund, revenue, costs, and business performance and financial obligations to be paid to the state budget as stipulated by law.

2.4- Land use fees: Based on approved land planning and zoning plans, coordinate with land administration and urban management agencies to organize land use rights auctions; revenues from land use rights auctions must be fully and promptly deposited into the state budget, and shall not be kept in separate accounts at the State Treasury.

2.5- Agricultural land use tax: Based on the agricultural land use tax ledger, regularly update and supplement changes in taxable area into the ledger; assess the implementation of tax exemptions and reductions as specified in Decree No. 129/2003/NĐ-CP dated November 3, 2003, detailing the implementation of Resolution No. 15/2003/NQ11 dated June 17, 2003 of the National Assembly; management of tax collection from non-farmers involved in agricultural production, units, and households with agricultural land exceeding the land ceiling.

2.6- Land rental fees: Consolidate the area managed for rent collection against the land fund under management. Evaluate the implementation of land leasing within the jurisdiction, rental prices, and entities required to pay rental fees. The situation of overdue land rental fees. Identify causes and solutions to address them.

2.7- Fees and charges: Evaluate the collection and payment of fees and charges by organizations at central, provincial, district, and commune levels as prescribed in Decree No. 57/2002/NĐ-CP dated June 3, 2002, detailing the implementation of the Fee and Charge Ordinance. Fully consolidate the amount collected, retained, and remitted to the state budget. Organize timely, complete, and accurate record-keeping of receipts and expenditures for retained funds that must be accounted for through the state budget.

2.8- Revenue from import and export activities:

- Evaluate the implementation of export and import turnover, including: export and import turnover subject to tax for each type and major group of goods.

- Analyze the impact of domestic and international markets and prices on the adjustment of import and export tax rates throughout the year, affecting the revenue from import and export activities in 2004 (especially important items such as oil, fertilizers, steel, cement, etc.).

- Determine the state budget revenue carried over from 2003, the amount to be collected in 2004, and the amount actually collected in 2004 according to regulations.

II- Evaluate the implementation of state budget expenditure tasks for 2004 as the basis for preparing the state budget expenditure plan for 2005:

1- Regarding investment expenditures for basic construction: Evaluate the ability to implement the volume and payment for all projects and works under the 2004 mission. The results achieved and issues that need to be continued to address regarding the implementation of the policy on centralized capital allocation, avoiding dispersion; summarize and evaluate the results of using funds from the 2004 budget to settle construction debts according to the prescribed regulations; assess the results of implementing the provisions on managing investment construction funds; the effectiveness of investments and the outcomes of completed projects during the year; assess the implementation of programs to reinforce irrigation channels, rural transportation infrastructure, aquaculture infrastructure, village craft infrastructure; programs to reinforce schools and classrooms from state budget sources and education bonds. In particular, analyze clearly the causes and propose solutions to overcome them.

Ministries, central agencies, and localities assigned tasks to invest in projects funded by government bonds shall evaluate the results of implementing the projects allocated capital in 2004.

For infrastructure investment expenditures from land use revenue: Evaluate the ability to fulfill the task of collecting land use fees; based on this, evaluate the ability to fulfill the task of investing in infrastructure from these revenues, and the amount not yet implemented should be transferred to 2005 for implementation.

Ministries, central agencies, and localities shall compile reports on the implementation of Directive No. 29/2003/CT-TTg dated December 23, 2003, of the Prime Minister on rectifying management of investment and construction with state capital and Directive No. 03/2003/CT-TTg dated March 7, 2003, of the Prime Minister on handling debts of commune budgets.

2- For national target programs, Program 135, and the project to plant five million hectares of new forests: Based on the allocated budget estimates and progress, the program managers, project managers, and localities shall evaluate the volume of work completed throughout 2004 for each program and project in detail; the situation of management and execution of national target programs according to Decision No. 42/2002/QD-TTg dated March 19, 2002, of the Prime Minister; Decision No. 135/1998/QD-TTg dated July 31, 1998, and Decision No. 138/2000/QD-TTg dated November 29, 2000, of the Prime Minister on Program 135; Decision No. 661/QD-TTg dated July 29, 1998, on the objectives, tasks, policies, and implementation of the project to plant five million hectares of new forests.

3- For regular expenditure tasks: Based on the allocated budget estimates and the progress of implementing tasks, evaluate the results of using the budget in fulfilling economic and social tasks of ministries, central agencies, localities, and units according to the indicators assigned by the State. Focus on evaluating the implementation of major programs and important tasks in each sector and field, such as: seed programs; trade promotion; land administration tasks; implementing the reform of general secondary education programs - reforming textbooks, popularizing junior high school education, implementing educational policies in mountainous areas and remote regions, training scientific and technical personnel abroad; implementing free medical examination and treatment policies for the poor; national-level scientific research topics,... Analyze the structure of regular expenditures by groups and items: salaries, allowances with salary characteristics, and deductions made from salaries (social insurance, health insurance, union dues); regular business expenses; extraordinary or non-recurring expenses (purchases, repairs,...). Report on the situation of car purchases, telephone equipment procurement, rental and purchase of office premises, conference and reception expenses. Evaluate the implementation of Decree No. 10/2002/NĐ-CP dated January 16, 2002, of the Government on financial systems for public institutions with income; cost-sharing for administrative expenses according to Decision No. 192/2001/QD-TTg dated December 17, 2001, of the Prime Minister.

Evaluate the results of creating salary sources in 2004 as prescribed: From saving 10% of regular expenditures (excluding salaries and allowances with salary characteristics); from 35-40% of retained revenue according to the system; from increased revenue (50% for local budgets);...

4- For provinces and centrally-administered cities: In addition to the above requirements, based on their revenue capacity, organize the implementation of budget expenditures; report and analyze clearly the source of increased revenue in 2003 transferred to 2004 for salary reform; the revenue target increase compared to the 2004 State Budget estimate approved by the Prime Minister and allocate at least 50% of the increased revenue (excluding revenue from land use fees) for salary reform in 2004 and to cover the budget deficit in 2005 as stipulated in Resolution No. 17/2003/QH11 dated November 4, 2003, of the National Assembly's 11th session, fourth meeting on the State Budget estimate for 2004. Actively use the remaining increased revenue to focus on important spending tasks, prioritize settling debts: construction debts, commune budget debts according to Directive No. 29/2003/CT-TTg dated December 23, 2003, and Directive No. 03/2003/CT-TTg dated March 7, 2003, of the Prime Minister; handle the consequences of droughts, forest fires, and other natural disasters; do not supplement unnecessary tasks, limit purchasing unnecessary equipment.

B- BUILDING THE STATE BUDGET ESTIMATE FOR 2005:

I- Objectives and requirements for building the State Budget Estimate for 2005:

1- Objective:

- The State Budget Estimate for 2005 will contribute to achieving the best possible performance in fulfilling the economic and social development tasks, ensuring national security and defense in 2005 and the five-year plan for economic and social development from 2001 to 2005 set by the State, ministries, sectors, and localities.

- The State budget estimate for 2005 is built on the basis of implementing reasonable mobilization policies, encouraging enterprises to accumulate resources for expanding production and business activities, ensuring a stable, favorable, and equal business environment to promote economic development, striving to achieve an economic growth rate (GDP) of 8-8.5%. Continue to implement measures to reduce production costs, enhance competitiveness and economic efficiency, stabilize macroeconomic conditions; accelerate structural economic transformation, restructure, develop, and improve the efficiency of state-owned enterprises; create a stable and solid revenue source, ensure financial resources for the State to fulfill important tasks and increase social investment, strengthen the country's financial potential, successfully complete the financial-budgetary tasks for the period 2001-2005, and lay a foundation for development during the period 2006-2010.

- Focus on budget allocation to make significant progress in implementing strategic national tasks: Concentrate on investing in socio-economic infrastructure, key national projects, projects under Program 135, and the project to plant five million hectares of new forests; pay attention to investing in socio-economic development in northern mountainous provinces, Central Highlands, Mekong Delta, border areas with difficult conditions, ethnic minority regions; develop education-training, science, and technology according to Resolution No. 2 of the 8th Plenum; increase investment in the health sector, culture, etc.; strengthen poverty reduction efforts; ensure national defense, security, and social order; ensure policies and systems for each industry and region; promote socialization in education-training, health, culture, sports, etc. Fully implement the new financial management mechanism, staffing management, and specialized task development for public institutions as stipulated in Decree No. 10/2002/NĐ-CP dated January 16, 2002, of the Government, and expand cost and staffing quotas for administrative agencies as stipulated in Decision No. 192/2001/QĐ-TTg dated December 17, 2001, of the Prime Minister; fully implement policies to create sources for salary reform. Ensure strict, economical, and effective budget planning to combat waste.

2- Requirements:

The State budget estimate for 2005 shall be prepared in accordance with the provisions of the State Budget Law, Decree No. 60/2003/NĐ-CP dated June 6, 2003, of the Government, Circular No. 59/2003/TT-BTC dated June 23, 2003, of the Ministry of Finance, and other related documents; at the same time, pay attention to implementing the following main contents:

2.1- Regarding the State budget revenue estimate:

The State budget revenue estimate must accurately and comprehensively include all tax revenues as prescribed by tax laws and current collection regulations. Continue to effectively implement the Laws and Ordinances on Taxation decided by the National Assembly and the Standing Committee of the National Assembly. Implement reasonable mobilization policies to leverage the internal strength of the economy to ensure resources for fulfilling important national tasks;

The revenue estimate must be based on analyzing and forecasting factors such as economic growth, market fluctuations, prices, etc.; implement measures to encourage production and business activities, expand markets, increase exports, and fulfill commitments under the process of international economic integration; strengthen measures to manage revenue, prevent revenue loss, and combat commercial fraud and tax evasion.

The State budget revenue estimate should be positive, solid, highly feasible, aiming to mobilize resources to reach 21-22% of GDP, with tax and fee revenues reaching 20-21% of GDP. The domestic revenue estimate (excluding oil revenue) must increase by at least 12% compared to the actual implementation in 2004. Based on the actual implementation in 2004, strive to increase by at least 5% compared to the State budget revenue estimate assigned by the Prime Minister.

2.2- Regarding the State budget expenditure estimate:

Focus the budget on implementing important tasks in the socio-economic development plan, ensuring national defense, security, and poverty reduction, including:

Allocate sufficient funds according to the implementation schedule for key national projects. Prioritize increasing investment to implement policies for socio-economic development in northern mountainous provinces, North Central provinces, Central Highlands, border areas with difficult conditions, ethnic minority regions, provinces with wide areas and large populations, weak infrastructure; prioritize allocating funds for projects under Program 135, the project to plant five million hectares of new forests, projects for planned farming and resettlement in reservoir areas of major hydropower projects; allocate sufficient counterpart funds for projects funded by ODA, ensuring planning and preparation funds.

Prioritize the budget and other financial sources to implement tasks for economic restructuring and accelerating industrialization and modernization in agriculture and rural areas;

Allocate funds and expenses to implement Resolution No. 2 of the 8th Plenum on developing education and training, science and technology, and Resolution No. 5 of the 8th Plenum on developing cultural information.

Fully implement measures to create sources for salary reform to create motivation for better socio-economic development and administrative reform; implement the following measures fully: The State budget and local government budgets at all levels must allocate at least 50% of the additional revenue achieved in 2004 compared to the Prime Minister's estimate for 2004; continue to allocate at least 50% of the additional revenue (excluding land use fees) estimated for 2005 compared to the estimate for 2004; implement a minimum of 10% savings in regular expenditures (excluding salaries and salary-like allowances). Public institutions with revenue must use at least 40% (except for the healthcare sector which must use at least 35%) of retained revenue to fund salary adjustments. Administrative agencies with revenue as prescribed must use at least 40% of retained revenue (after deducting collection costs) to fund salary adjustments. After fully implementing these measures, if there is still insufficient funding to implement salary adjustments as required, the State budget will support the remaining amount for ministries, central agencies, and localities to implement.

Local government budgets at all levels allocate reserves, provincial budgets allocate financial reserves in accordance with the State Budget Law to proactively respond to natural disasters and handle other urgent tasks arising outside the budget estimate.

Ministries, central agencies, localities, and budgetary units at all levels must build their budget estimates to fully anticipate tasks that will arise within the budget year to construct the budget; on this basis, they should arrange the budget to ensure the implementation of important tasks; focus on organizing the implementation of the 2005 budget to ensure assigned tasks and new tasks arising within their functions; avoid situations where additional requests are made outside the budget estimate during implementation. Due to the central and local government reserve budgets according to the State Budget Law implementing important tasks, there will be no supplementation for expenditures that ministries, central agencies, and localities did not allocate funds for when distributing the budget.

2.3- National budget balance:

- Tax and fee revenues must ensure reasonable, frugal regular spending, repay maturing debts, allocate funds for salary reform, and accumulate for development investment.

- The State Budget deficit must not exceed 5% of GDP, aligning with domestic borrowing capacity and preferential foreign borrowing, without engaging in commercial foreign borrowing to cover the State Budget deficit.

II- Main contents of the work on preparing the national budget revenue and expenditure plan for 2005:

1- Regarding the construction of the national budget revenue estimate:

1.1- Domestic revenue estimate: Implement the construction of revenue estimates for each economic sector and each revenue area: state-owned economy sector, foreign-invested capital sector, non-state-owned economy sector, etc. Within each sector, build according to each tax category; construct from the base level for each business entity. Revenue estimates are based on tax laws, collection systems; comprehensively evaluate the results of 2004; strive to achieve targets for 2005; ensure accurate and full revenue collection, prevent revenue loss; ensure the reported 2005 revenue estimate figures are organized and reported according to the format specified in Circular No. 59/2003/TT-BTC dated June 23, 2003 issued by the Ministry of Finance. At the same time, pay attention to the following issues in 2005:

- Land use fee revenue: Based on approved land planning and plans, conduct auctions for land use rights or lease land based on established regulations and price ranges under the Land Law and related guiding documents.

- Revenue from lottery activities: Calculate and prepare estimates according to the relevant tax laws and guiding documents, Decrees, and Circulars; simultaneously follow the guidance provided in Circular No. 129/2003/TT-BTC dated December 23, 2003 issued by the Ministry of Finance regarding financial management for post-tax income from lottery activities.

- Income tax for high-income individuals: Implement Resolution No. 35/2001/PL-UBTVQH10 dated May 19, 2001 of the Standing Committee of the National Assembly; Resolution No. 14/2004/PL-UBTVQH11 dated March 24, 2004 of the Standing Committee of the National Assembly amending and supplementing certain provisions of the High-Income Individual Income Tax Resolution and related guiding documents.

1.2- Revenue from import and export activities:

- Forecast and calculate import and export turnover, especially those subject to import and export taxes; analyze and assess economic, market, and global price trends, forecast their impact on Vietnam's import and export turnover in 2005, direct impacts on major industries and products; evaluate and quantify the impact of implementing the ASEAN Trade in Goods Agreement (ATIGA), bilateral trade agreements (BTA), and the impact of joining the World Trade Organization (WTO); state policies and regimes for important goods.

- Based on analyzing and assessing the implementation of revenue collection in 2004, build revenue estimates with the requirement to collect accurately, fully, prevent revenue loss, combat fraudulent trade, and promptly recover overdue taxes.

2- Regarding national budget expenditure:

Ministries, central agencies, localities, and budgetary units at all levels must prepare the 2005 budget expenditure within the reported verified figures; based on expenditure standards and quotas, taking into account the volume of assigned tasks, concentrate funds on prioritizing key essential tasks, thoroughly economize, and prevent waste. When building the 2005 budget expenditure, each field, ministry, central agency, and locality must continue to implement the state's socialization policy. Specifically, for some main fields as follows:

2.1- For development investment expenditure:

2.1.1- Construction investment expenditure:

The construction of the construction investment expenditure budget must be based on the budget capacity according to the reported construction investment expenditure verification figures; allocate the budget according to the following priority sequence: allocate sufficient capital according to the progress for key projects of significant importance to socio-economic development during the 2001-2005 period and subsequent years; prioritize projects under Program 135, the new forest planting program of five million hectares; allocate investment capital from the budget and other sources to quickly complete the goal of eliminating three-shift classrooms, bamboo and thatch classrooms; increase investment capital to implement socio-economic development policies in northern mountainous provinces, North Central provinces, the Central Highlands, border areas with difficult conditions, ethnic minority regions, provinces with wide areas, large populations, weak infrastructure; continue to allocate capital to implement programs for solidifying irrigation channels, water conservancy, rural transportation development, aquaculture infrastructure, village industry infrastructure, tourism infrastructure, market infrastructure, etc.

Ensure funding for key projects carried over from 2004 to be completed and put into use in 2005; counterpart funds for ODA projects according to commitments; investment preparation funds for projects and works scheduled to start construction in 2005 and subsequent years; proactively allocate the state budget estimate to fully repay the amount temporarily borrowed by the state budget that must be repaid in 2005 as stipulated.

Proactively allocate in the 2005 budget estimate to settle investment construction debts from state budget sources implemented before 2004; simultaneously allocate the budget estimate and organize implementation in 2005 to avoid new construction debts arising.

For Group C projects, ensure funding to complete within no more than two years; for Group B projects, ensure funding to complete within no more than four years; avoid spreading out and prolonging ineffective investment periods. Only include newly completed construction projects with investment procedures finalized before September 2004 in the 2005 state budget expenditure plan. Local investment expenditures from land revenue in 2005 and transferred revenues from 2004 to 2005 (if applicable) must comply with the relevant regulations.

Project leaders of projects funded through loans and relending must proactively arrange corresponding funds for these projects in accordance with signed agreements and domestic financial regulations to not affect project progress.

2.1.2- For production and business support expenses:

- Develop the budget for supporting public service products mainly in accordance with legal provisions.

- Develop the budget for promoting trade, developing markets, and supporting exports, etc., in accordance with established regulations, ensuring focus on key areas.

2.1.3- Interest rate subsidy expenses for state credit lending: Implement in accordance with Decree No. 106/2004/NĐ-CP dated April 1, 2004, of the Government on state investment development credit; Decree No. 78/2002/NĐ-CP dated October 4, 2002, of the Government on credit for the poor and other policy targets; and current guiding documents of the Ministry of Finance.

2.1.4- For national reserve expenses: Based on assigned national reserve tasks, ministries and units entrusted with national reserve tasks shall assess their reserve levels as of December 31, 2004; forecast the level of additional reserves for each type of goods and materials, and develop the budget for increased national reserve expenses, storage costs for reserve goods, and the rotation plan for reserve goods in 2005 according to National Reserve Law No. 17/2004/PL-UBTVQH11 dated April 29, 2004, of the Standing Committee of the National Assembly and related guiding documents.

2.2- For expenses on education and training development, cultural information, health, sports, social security, national defense security, and administrative management of the state, the Party, and mass organizations:

- The budget for educational and training services, science and technology, health, culture, sports, national defense security, administrative management of the state, the Party, and mass organizations... shall be based on verified figures reported, the 2004 state budget estimate allocated by authorized authorities (excluding expenses generated in 2004 but not in 2005), and standard cost norms. Prioritize important tasks of the sector and field.

- Allocate the budget for educational and training services, the budget for scientific and technological services (including investment, regular, and additional salary expenses) in accordance with the Central Resolution No. 2 (Session VIII). Allocate the budget for health services to ensure prescribed standards, norms, and subsidies for medical examinations and treatments for the poor and free medical care for children under six years old. For cultural information fields, allocate the state budget increase in line with economic growth as stipulated in the Central Resolution No. 5 (Session VIII).

- The budget for economic construction services shall be based on the volume of tasks assigned by authorized authorities and the prescribed state budget cost norms; focusing on important tasks contributing to economic growth and structural transformation.

- For self-financing public institutions, establish stable budgets in accordance with Decree No. 10/2002/NĐ-CP dated January 16, 2002, of the Government. For program and research topic expenses at the national and ministry levels, national target programs, expenses for state-ordered tasks, counterpart funds for foreign-funded projects, and other important expenses, units shall prepare state budget estimates in accordance with current regulations and this circular, while providing detailed explanations of calculation bases.

- For price subsidies for policy items:

+ For postal and transportation subsidies, price subsidies, and free provision of certain policy items, support for investment in developing community radio and broadcasting stations in mountainous provinces and ethnic minority regions in 2005 shall be stabilized at the 2004 level supplemented by the central budget for local budgets; provincial People's Committees shall base on the central government's support level and proactively balance in the local budget estimate, submitting to the People's Council for approval the objectives, contents, and budget for implementing these tasks in 2005 in line with local conditions.

+ The budget for implementing policies of free provision of certain types of newspapers and magazines for ethnic minority and mountainous regions shall be carried out in accordance with Decision No. 1637/QĐ-TTg dated December 31, 2001, of the Prime Minister.

+ The budget for publishing subsidies, seed preservation subsidies, etc., shall be implemented in accordance with current regulations and Joint Circular No. 04/2004/TTLT/BTC-NN&PTNT dated January 16, 2004, of the Ministry of Finance and the Ministry of Agriculture and Rural Development. Ministries, central agencies, localities, and units need to carefully calculate subsidies based on determining quantities, production costs, transportation costs, and specific subsidy rates for each item according to prescribed regulations.

- Budget for administrative management expenses of the State, the Party, and mass organizations: Prepare the budget based on the figures reported from inspections, the state budget for 2004 already assigned by the competent authority (excluding tasks that will not be continued in 2005, and incorporating new tasks arising in 2005 with full explanations of the calculation bases). For administrative agencies piloting the allocation of staff quotas and administrative management funds, prepare the budget according to Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister and Circular Joint No. 17/2002/TTLT-BTC-BTCCCP dated February 8, 2002 of the Ministry of Finance and the Government Civil Service Organization Board.

- For expenditure tasks funded from borrowed capital and aid, detailed budget estimates must be established for each project and sufficient counterpart funds for Vietnam must be calculated according to commitments and regulations.

- Establish the budget for administrative and public service units to fully reflect all expenditure tasks from sources such as fees, charges, and other revenues retained by the unit according to prescribed regulations.

2.3- Regarding expenditures for national target programs and important projects:

- For national target programs: Prepare the budget based on the objectives and tasks as stipulated in Decision No. 42/2002/QĐ-TTg dated March 19, 2002 of the Prime Minister on managing and implementing national target programs. In 2005, implement the National Program on Crime Prevention according to Document No. 6137/VPCP-NC dated December 10, 2003 of the Government Office.

- Budget for implementing Program 135: Follow the provisions of Decision No. 135/1998/QĐ-TTg dated July 31, 1998 and Decision No. 138/2000/QĐ-TTg dated November 29, 2000 of the Prime Minister; Joint Circular No. 666/2001/TTLT/BKH-UBDTMN-TC-XD dated August 23, 2001 guiding the management of investment and construction of infrastructure under Program 135.

- Budget for implementing the Project to Plant Five Million Hectares of New Forests: Follow the provisions of Decision No. 661/QĐ-TTg dated July 29, 1998 regarding the goals, tasks, policies, and implementation of the Project to Plant Five Million Hectares of New Forests, Circular No. 43/2002/TT-BTC dated May 7, 2002, and Circular No. 29/2003/TT-BTC dated March 27, 2003 of the Ministry of Finance.

- Base on the estimated allocation of the state budget for 2005 to implement national target programs, Program 135, and the Project to Plant Five Million Hectares of New Forests, relevant ministries and agencies responsible for these programs and projects should allocate the budget for these programs and projects to central-level ministries, agencies, and localities.

2.4- Allocation of resources for salary reform in 2005:

- For units under ministries and central-level agencies, the following applies:

+ Utilize at least 10% of the regular expenditure savings of administrative and public service units (excluding salaries and salary-like allowances);

+ Public service units with income should use at least 40% of their retained revenue (after deducting collection costs) to fund salary adjustments (except for the health sector, which should use 35%);

+ Administrative agencies with income as prescribed should use at least 40% of their retained revenue (after deducting collection costs) to fund salary adjustments.

After utilizing the aforementioned financial resources, if there is still a shortfall, the central government will supplement the budget for ministries and central-level agencies to ensure the implementation of salary reform in 2005 according to prescribed regulations.

- For localities, salary reform shall be implemented according to the provisions set out in Section 3 below.

3- On the preparation of local state budget estimates:

The 2005 local state budget is within the period of stable budget as stipulated in the amended State Budget Law. Local People's Councils at all levels proactively prepare their own local state budget estimates based on the stable revenue and expenditure assignments; the 2005 local state budget estimates are prepared based on: revenue determined according to the percentage share of revenue divided among budget levels, local state budget revenue enjoying 100% according to the State Budget Law (amended), and supplementary balance transfers from higher-level budgets to lower-level budgets (if any) stabilized at the level of the 2004 budget estimate decided by the National Assembly, the Standing Committee of the National Assembly, the People's Council, the Prime Minister, and higher-level People's Councils. Localities base their estimates on the targets and tasks of the 2005 state budget as mentioned above and the provisions of the State Budget Law and guiding documents; while paying attention to the following main issues:

- Preparing local state revenue estimates: Based on forecasts of economic growth in 2005 for each industry, field, economic entity, and newly generated revenue sources in the locality, prepare revenue estimates for each field and revenue item according to regulations; domestic revenue from tax and fee sources (excluding land use rights transfer revenue) in 2005 should increase by at least 12% compared to the estimated actual performance in 2004.

- Preparing local state budget expenditure estimates: Based on the local budget revenue entitlements for the year within the stable budget period as guided by Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance; based on the socio-economic development tasks of the locality in 2005, current financial regulations and standards; prepare specific budget expenditure estimates for each field with reasonable needs, ensuring priority task order and the guidance mentioned above; including:

+ Prioritize funding for infrastructure construction tasks, focusing on major projects and works of the locality; actively allocate local budget funds to achieve the goal of eliminating three-shift classrooms, temporary classrooms made of bamboo, wood, and leaves, and investing in solidifying irrigation channels and rural roads; village craft and tourism infrastructure; developing crop and livestock varieties; transforming agricultural economic structures; promoting trade, expanding and seeking export markets; emphasizing poverty reduction, job creation, and addressing social evils;...

+ Ensure sufficient counterpart funds for ODA projects or ODA project components implemented within the local administrative area according to the Prime Minister's decision. Proactively calculate and allocate in the construction investment budget to settle all outstanding construction investment debts and debts of village budgets, ensuring the soundness of the local budget.

+ Allocate the local budget construction investment expenditure forecast corresponding to the revenue from land use fees to invest in economic and social infrastructure projects.

+ Allocate funding to implement Central Resolution No. 2 (Term VIII) concerning education-training and science-technology fields within the local budget expenditure responsibilities.

+ Allocate the village budget according to regulations, ensuring the financial resources to reform and improve the quality of the political system at commune, ward, and town levels; simultaneously build and fully incorporate the village budget into the local budget.

+ Allocate the local budget to ensure full repayment of local funds raised for investment that must be repaid in 2005 according to the provisions of the State Budget Law.

+ Allocate contingency reserves in the local budget, supplementing the financial reserve fund according to the provisions of the State Budget Law, to proactively respond to natural disasters, floods, and urgent tasks at the local level.

+ For the 2005 funding to implement newly issued policies such as the policy for village cadres and civil servants as stipulated in Decree No. 121/2003/NĐ-CP dated October 21, 2003 of the Government; the policy on Party work expenses at all levels as stipulated in Decision No. 84-QĐ/TW dated October 1, 2003 of the Central Committee,... calculate and determine the budget expenditure tasks; assess the local budget's allocation capacity and propose the anticipated central government support level.

+ Develop the expenditure budget to implement national target programs, Program 135, the 5 million hectare forest planting project, and the Eastern Sea - Island program at the local level based on: specific goals and tasks of each program and project as prescribed; results already achieved; progress and implementation capability; 2005 funding needs, local budget allocation capability, and proposed additional central government support levels.

+ For tasks: infrastructure investment according to Decision No. 168/2001/QĐ-TTg dated October 30, 2001, Decision No. 186/2001/QĐ-TTg dated December 7, 2001, Decision No. 120/2003/QĐ-TTg dated June 11, 2003 of the Prime Minister; infrastructure investment in border economic zones, tourism infrastructure, craft village infrastructure, aquaculture infrastructure, flood-prone area infrastructure,... based on the budget forecast and the implementation status of programs and projects in 2004, localities develop the 2005 budget, proactively allocate and arrange the 2005 local budget and other financial sources according to prescribed regulations for these tasks, estimate the level of central government support for 2005 with detailed explanations of calculation bases.

+ Develop the 2005 state budget expenditure plan, localities allocate sources to implement salary reform according to the following methods:

* Local government budgets at all levels allocate a minimum of 50% of the increase in revenue (excluding land use fee revenue) realized in 2004 compared to the Prime Minister's forecast; and allocate a minimum of 50% of the increase in the 2005 forecast compared to the 2004 forecast (excluding revenue from land use fee sources).

* Implement a minimum of 10% savings in regular expenditures (excluding salaries and salary-like allowances).

* Public service units with income use a minimum of 40% of retained income (after deducting collection costs) to cover salary adjustments (for the health sector, it is 35%).

* Administrative agencies with income according to regulations use a minimum of 40% of retained income (after deducting collection costs) under the prescribed system to implement salary reform.

After utilizing the above sources of funding, if there is still a shortfall, the central government will supplement the local budgets with funds to ensure the implementation of the 2005 salary reform according to the prescribed regulations.

C- IMPLEMENTATION:

1- Ministries and state agencies, according to their assigned functions and responsibilities, are responsible for developing economic and social indicators in their respective areas and promptly informing the Ministry of Finance, central ministries, and localities before July 1, 2004, to serve as the basis for preparing the 2005 state budget.

2- Ministries and central agencies managing national target programs, Program 135, and the 5 million hectare forest planting project coordinate with the Ministry of Planning and Investment and the Ministry of Finance to determine tasks and prepare the 2005 budget for national target programs, Program 135, and the 5 million hectare forest planting project, and estimate the budget for each central ministry and agency and each locality, to be sent to the Ministry of Finance and the Ministry of Planning and Investment before July 30, 2004.

3- The Ministry of Planning and Investment, in collaboration with the Ministry of Finance, will lead the preparation of the development expenditure budget and the distribution plan for certain sectors of the central budget as assigned, to be submitted to the Ministry of Finance before September 10, 2004.

4- Ministries, central agencies, and provincial people's committees directly under the central government, based on this Circular and the check figures for the 2005 state budget revenue and expenditure forecast announced by the Ministry of Finance, guide and announce the check figures for the 2005 state budget revenue and expenditure forecast to subordinate budget units and lower-level budgets.

Ministries, central agencies, and localities organize the work of building and consolidating the 2005 state budget in accordance with the provisions of the State Budget Law, guiding documents, and the contents stipulated in this Circular; report comprehensively, content, and forms as required by Circular No. 59/2003/TT-BTC dated June 23, 2003 of the Ministry of Finance and related forms specified in this Circular; submit to the Ministry of Finance before July 20, 2004 (for ministries and central agencies) and before July 25, 2004 (for provinces and centrally-administered cities).

5- The Ministry of Finance will organize meetings to discuss the state budget estimate for 2005 with the 91 State-owned Joint Stock Companies from late June 2004, and with ministries and central agencies from late July 2004 (specific schedules will be announced later).

For localities, the state budget estimate for 2005 is the budget year during the stabilization period as prescribed by the State Budget Law. The Ministry of Finance will conduct discussions with the People's Committees of provinces and centrally-administered cities regarding the state budget estimate for 2005 upon request by the People's Committees. Localities that require discussions on the state budget estimate for 2005 are requested to register their schedules with the Ministry of Finance before July 25, 2004, to arrange (the expected completion time is before September 1, 2004), ensuring sufficient time for consolidation, reporting to the Government and relevant National Assembly bodies about the state budget estimate for 2005.

6- The General Department of Customs and the General Department of Taxation are tasked with providing detailed guidance on this Circular to subordinate units to implement the construction, consolidation, and reporting of the state budget revenue estimate within their assigned fields.

7- Regarding the forms for preparing and reporting the state budget estimate for 2005:

- For ministries and central agencies, they shall guide subordinate units in preparing and reporting the state budget estimate; based on which, they shall consolidate and report the state budget estimate for 2005 to the Ministry of Finance according to the specified forms and deadlines set out in Circular No. 59/2003/TT-BTC dated June 23, 2003, issued by the Ministry of Finance detailing the implementation of the State Budget Law and additional forms prescribed in this Circular.

- For localities: It is recommended that the People's Committees of provinces and centrally-administered cities guide lower-level local authorities and subordinate units in preparing and reporting the budget revenue and expenditure estimates; based on which, they shall consolidate and prepare the local budget estimate for 2005, and report to the Ministry of Finance according to the forms and deadlines stipulated in Circular No. 59/2003/TT-BTC dated June 23, 2003, issued by the Ministry of Finance detailing the implementation of the State Budget Law and additional forms prescribed in this Circular.

8- This Circular takes effect for the work of preparing and reporting the state budget estimate for 2005 as prescribed by the State Budget Law.

During the process of constructing the state budget estimate for 2005, when new policies and regulations are issued, the Ministry of Finance will issue supplementary guidance notices; in the organization and construction of the state budget estimate for 2005, if there are any difficulties, ministries, central agencies, localities, and the 91 State-owned Joint Stock Companies are requested to report them to the Ministry of Finance for timely resolution./.