Circular No. 57/2003/TT-BTC guiding the payment mechanism for goods and services to offset debts to the Russian Federation, replacing Circular No. 10/2001/TT-BTC dated January 30, 2001 issued by the Ministry of Finance.

 

CIRCULAR

Guidelines for the mechanism of payment of goods and services to repay debts to the Russian Federation

to replace Circular No. 10/2001/TT-BTC dated January 30, 2001 30/1/2001 of the Ministry of Finance

                       

Pursuant to the Agreement between the Government of the Socialist Republic of Vietnam and the Government of the Russian Federation on the settlement of Vietnam's debt to the Russian Federation and the Protocol between the Government of the Socialist Republic of Vietnam and the Government of the Russian Federation on the mechanism of debt repayment signed on September 13, 2000 (hereinafter referred to as the Agreement and the Protocol).

Based on the actual implementation of the mechanism of payment of goods and services for debt repayment to the Russian Federation approved by the Prime Minister and stipulated in Circular No. 10/2001/TT-BTC dated January 30, 2001 of the Ministry of Finance guiding the mechanism of payment of goods and services for debt repayment to the Russian Federation.

The Ministry of Finance reissues the mechanism of payment of goods (or services) for debt repayment to the Russian Federation according to the Agreement and the Protocol as follows:

I. MECHANISM FOR DEBT REPAYMENT TO THE RUSSIAN FEDERATION:

1. Annually, at two debt repayment periods under the Agreement (January 15 and July 15), the Ministry of Finance will transfer funds into the Debt Repayment Account opened at the Vietnam Bank for Foreign Trade (Vietcombank) to serve as the source of payment for export enterprises (or service providers) repaying debts to the Russian Federation.

The accounting format of the above-mentioned Debt Repayment Account shall be agreed upon by the Ministry of Finance and Vietcombank.

2. Based on the debt repayment schedule specified in the Agreement, annually, the Russian Federation side will organize selection rounds and notify the Vietnamese side of the names of Russian organizations authorized to import goods (or services) from Vietnam for that year, with the final notification not later than November 1 of each year.

3. Within the debt repayment quota announced by the Russian Federation, the authorized Russian organizations may freely choose goods, services, and Vietnamese enterprises (of all economic sectors) as counterparties to sign export contracts (or service provision contracts) for debt repayment (hereinafter referred to as foreign contracts) in accordance with international trade practices, Vietnamese and Russian laws. Prices for goods (or services) shall be determined based on international prices denominated in US dollars and according to standard commercial terms.

Authorized Russian organizations may re-export or entrust Vietnamese counterparts to re-export purchased goods to third countries. Such entrustment must be established through an appendix to the foreign contract or lawful entrustment agreements between both parties.

All foreign contracts must include a clause specifying the export of goods (or services) for Vietnam's debt repayment to the Russian Federation in accordance with the Agreement and the Protocol.

4. All Vietnamese enterprises of all economic sectors are eligible to participate in the export of goods (or provision of services) for debt repayment to the Russian Federation as regular commercial transactions.

5. Payment for goods (or services) provided by Vietnam for debt repayment shall be made based on Irrevocable Letters of Credit (L/C) issued by the Soviet Economic Relations Bank through the Vietnam Bank for Foreign Trade according to the foreign contracts and in compliance with the Uniform Customs and Practice for Documentary Credits (UCP 500).

The delivery date and service provision period under the annual debt repayment obligation in the foreign contracts shall not be later than June 30 of the following year, regardless of the signing date of the foreign contracts (except in cases confirmed by Russia for extension). Beyond this deadline, Vietnamese enterprises that have signed foreign contracts and export debt repayment contracts with the Ministry of Finance but fail to deliver goods or provide services shall be subject to penalties as stipulated in Clause II.3 of this Circular.

6. Vietnamese enterprises exporting goods (or services) for debt repayment to the Russian Federation shall enjoy all provisions of export incentive regimes applicable to goods (or services) exported through regular commercial means.

II. SPECIFIC PROVISIONS ON PAYMENT FOR EXPORT OF GOODS (OR SERVICES) FOR DEBT REPAYMENT TO THE RUSSIAN FEDERATION

1. Signing Export Debt Repayment Settlement Contracts with the Ministry of Finance:

After officially notifying the authorized Russian organization, Vietnamese enterprises need to present the foreign contracts and appendices (if any) to the Ministry of Finance. Based on the foreign contracts, appendices, and confirmation notices from the authorized Russian organization regarding the foreign debt repayment contracts signed with Vietnamese enterprises, the Ministry of Finance will proceed to sign Export Debt Repayment Settlement Contracts with the Vietnamese enterprises that have signed the aforementioned foreign contracts (according to the model attached to this Circular). The foreign contracts and appendices (if any) shall only be considered valid if they are signed and presented to the Ministry of Finance within thirty days from the signing date.

In cases where Vietnamese enterprises do not directly export, they need to present additional entrustment or domestic export linkage contracts to the Ministry of Finance when signing the settlement contracts.

Export Debt Repayment Settlement Contracts shall be signed in chronological order of registration of foreign contracts by enterprises until the total value of such contracts in the year equals Vietnam's external debt repayment obligation for that year.

2. Payment Procedures:

Immediately after delivering goods (or services) for debt repayment, enterprises need to submit the payment documents in accordance with the requirements of the L/C and the foreign contract to Vietcombank for verification and forwarding of the documents to the Soviet Economic Relations Bank for debt deduction procedures. To ensure debt repayment with Vietnamese goods, enterprises must submit the original Certificate of Origin (C/O) of the goods issued by competent Vietnamese authorities to Vietcombank.

The list of goods or groups of goods and the name of the Vietnamese exporting enterprises (direct exporting enterprises and/or entrusted/exporting joint venture enterprises) recorded on the Certificate of Origin (C/O) must be consistent with the list of goods or groups of goods and the names of enterprises stated in the Letter of Credit (L/C), foreign contracts, or entrusted/exporting joint venture contracts (if any) and registered in the payment contract with the Ministry of Finance. The Certificate of Origin (C/O) will only be considered valid if it is issued from the date the foreign contract is signed.

After the Soviet Foreign Economic Bank deducts the debt and the Vietnamese enterprise presents a complete and valid Certificate of Origin (C/O), the Vietnam National Bank for Foreign Trade shall notify the Ministry of Finance (Department of Foreign Finance) in writing to make payment to the enterprise. The Ministry of Finance will pay the full value of the goods (or services) executed in Vietnamese Dong. The exchange rate for payment shall be the buying rate of VND/USD (by transfer) announced by the Vietnam National Bank for Foreign Trade on the day the Ministry of Finance processes the payment for the Vietnamese enterprise.

3. Responsibilities of enterprises:

Vietnamese enterprises participating in debt repayment are responsible for negotiating, signing, and implementing foreign contracts with authorized organizations of the Russian Federation according to specific provisions in Section I above, current Vietnamese laws, and international trade practices.

Vietnamese enterprises shall fulfill debt repayment through goods (or services) in accordance with common trade regulations guided by the Ministry of Commerce, ensuring the quality and competitiveness of goods and services, and creating conditions for enterprises to expand exports to the Russian Federation market.

Vietnamese enterprises participating in export shipments for debt repayment shall bear sole responsibility for the legality of foreign contracts signed with authorized partners of the Russian Federation (including re-export contracts to third countries if agreed upon by both parties), payment documents, and export documents (including C/Os) in accordance with Vietnamese laws and international trade practices.

In cases where Vietnamese enterprises do not directly export goods for debt repayment but entrust or form joint ventures with other enterprises for export, they must present the entrusted or joint venture export contracts along with the export documents to the Vietnam National Bank for Foreign Trade for verification and shall be responsible for the legality of such entrusting/joint ventures.

In the foreign contracts signed, the responsibilities of the participating parties must be clearly defined. Enterprises have the responsibility to promptly inform the Ministry of Finance (Department of Foreign Finance) about any issues that may lead to non-performance of foreign contracts as well as any violations (if any) from the authorized Russian partner.

If a foreign contract has been signed but cannot be performed due to the fault of the Vietnamese enterprise (such as late delivery, incorrect specifications, poor quality...), in addition to the obligations arising under the foreign contract or the decision of the arbitral tribunal, the enterprise must submit a penalty amount equal to 2% of the value of the payment contract for exported goods (or services) that were signed but not performed to the Ministry of Finance to compensate for Vietnam's interest penalties to the Russian Federation under the Agreement.

4. Responsibilities NATIONAL of the Vietnam National Bank for Foreign Trade:

- Receiving and checking the payment documents of enterprises in accordance with the format of the Letter of Credit and Bank Agreement already signed; Sending these documents to the Soviet Foreign Economic Bank for settlement procedures at the request of enterprises with payment contracts for exported goods (or services) signed with the Ministry of Finance.

- Checking the Certificate of Origin (C/O) presented by enterprises in accordance with Article II.2 above. The inspection period shall not exceed two working days from the date when enterprises present a complete and valid Certificate of Origin.

- Notifying the Ministry of Finance (Department of Foreign Finance) about the recording of the Debt Account of the Soviet Foreign Economic Bank after enterprises have presented a complete and valid Certificate of Origin so that the Ministry of Finance can make payment to the Vietnamese enterprise.

- Promptly transferring the payment amount to the enterprise from the Russian Federation Debt Account based on the Payment Order of the Ministry of Finance (Department of Foreign Finance) and the designation of the enterprise.

- In case the Vietnam National Bank for Foreign Trade delays in transferring funds, it shall be liable for compensation for losses to the enterprise in accordance with current laws.

5. Responsibilities of the Ministry of Finance:

Within three working days from the date of receipt of the notification from the Vietnam National Bank for Foreign Trade regarding the recording of the Debt Account of the Soviet Foreign Economic Bank, the Ministry of Finance shall pay in Vietnamese Dong the full value deducted by Russia to the Vietnamese enterprise into the account designated by the Vietnamese enterprise.

In case the Ministry of Finance delays in transferring funds to the Vietnamese enterprise, it shall be liable for compensation for losses to the enterprise in accordance with current laws.

III. EFFECTIVE DATE OF IMPLEMENTATION:

This Circular takes effect 15 days after its publication in the Official Gazette and replaces Circular No. 10/2001/TT-BTC dated January 30, 2001, guiding the mechanism for payment of goods and services for debt repayment to the Russian Federation.

During the implementation of this Circular, if there are any difficulties, relevant agencies and enterprises are requested to reflect them to the Ministry of Finance for prompt resolution.

                                                                                 SECRETARY OF THE MINISTER OF FINANCE

                                                                                 VICE MINISTER 

                                                                            (Signed)

 

                                                                            Le Thi Bang Tam

 

ANNEX

(Model attached to Circular number  57/2003/TT-BTC dated 13/6/2003)

SOCIALIST REPUBLIC OF VIET NAM YEAR

Independence - Freedom - Happiness

PAYMENT CONTRACT

EXPORT GOODS (OR SERVICES) TO REPAY DEBT TO THE RUSSIAN FEDERATION

 

Registration Number: …/LBN/(year)

Date: …

 

 

Based on the foreign debt repayment plan for the Russian Federation in …

 

Based on the registration request of (name of the enterprise registering the debt repayment) at document number … dated … accompanying the foreign contract number … dated … signed between:record the name of the enterprise registering the debt repayment and the authorized Russian organization receiving the debt)...

accompanied by:record related documents regarding the debt repayment such as:

the number and date of the Letter of Credit issued by the Soviet Foreign Economic Bank;

a copy of the contract appendix or a copy of other delegated agreement documents (confirmed by the head of the unit as true copies) between the enterprise registering the debt repayment and the authorized Russian organization receiving the debt regarding the delegation of export to a third country (if applicable)

..........)

The Ministry of Finance agrees to sign the Payment Contract for export goods (or services) to repay debt withrecord the name of the enterprise registering the debt repayment) …

 

according to the specific terms and conditions set forth below:

 

1. Export goods (or services) to repay debt: …

2. Contract value: …

3. Final delivery date: …

Extension (First time) …

Extension (Second time) …

4. Account number of the enterprise: …

at Bank: …

 

This payment contract is signed in four copies, each party retains two copies.

Both parties commit to implement this payment contract in accordance with the guidance provided in Circular No. 57/2003/TT-BTC dated 13/6/2003 issued by the Ministry of Finance.