Circular No. 6002/TC/TCDN regarding the settlement of tax for enterprises implementing shareholding reform and diversification of ownership.

DIRECTIVE

ON STRENGTHENING THE REORGANIZATION AND MODERNIZATION OF STATE ENTERPRISES IN ACCORDANCE WITH THE SPIRIT OF RESOLUTIONS 3 AND 9 OF THE 9TH PARTY CONGRESS.

The reorganization and modernization of state enterprises is a major policy in the Party's and State's reform program, aimed at ensuring continuous development and increased efficiency of state enterprises, maintaining their key position in the economy, contributing primarily to the role of the state economy as the leading force in the socialist-oriented market economy, and serving as the main force in international economic integration.

Implementing Decision No. 128/2003/QD-TTg dated June 26, 2003 of the Prime Minister on approving the overall plan for the reorganization and modernization of state enterprises directly under the Ho Chi Minh City People's Committee for the period 2003-2005, the work of reorganizing and modernizing state enterprises in the city has seen positive changes, completing the target of equitization of state enterprises in 2003, but some aspects of reorganization such as mergers, conversion to joint-stock companies with a single member, pilot organization of parent companies and subsidiaries,... have been slow, especially in the first six months of 2004.

To strengthen the reorganization, modernization, development, and improvement of efficiency of state enterprises in accordance with the spirit of Resolution 3, Resolution 9 (9th Congress), Decision No. 128/2003/QD-TTg dated June 26, 2003, Directive No. 11/2004/CT-TTg dated March 30, 2004 of the Prime Minister, and Resolution No. 02/NQ-TU dated January 16, 2002 of the Municipal Party Committee, the People's Committee issues the following directive:

1. Directors of departments, Chairmen of District and County People's Committees, Boards of Directors of State Corporations, and Directors of state enterprises must strictly implement the policy of reorganizing and modernizing state enterprises of the Party and State, and carry out the following tasks:

a) Continue to thoroughly study the above-mentioned Central and Municipal Party Committee resolutions to enhance understanding, achieve high consensus and determination to implement among sectors, levels of the city, and management staff and workers in state enterprises.

b) Develop timelines and measures to ensure the implementation of the content and schedule of reorganizing and modernizing state enterprises approved by the Prime Minister and the Ho Chi Minh City People's Committee regarding equitization, mergers, conversion to joint-stock companies with a single member, transformation to operate according to the parent company-subsidiary model,... Among these, prioritize equitization of state enterprises as the key task in the last six months of 2004 and in 2005.

c) Review and adjust the content and schedule of reorganizing and modernizing state enterprises according to the following directions:

- Accelerate the progress of reorganizing and modernizing state enterprises, including transferring state enterprises scheduled for equitization in 2005 to be implemented in 2004. Complete the target of equitization of state enterprises in 2004 and expand the scope of equitization of state enterprises, including those previously retained with 100% state capital. State enterprises, after addressing existing financial issues, particularly bad debts before determining the value of equitized enterprises, if not meeting the conditions for equitization, should promptly transfer to sale, dissolution, or bankruptcy, rather than merging with other state enterprises.

- Assign the Enterprise Management Reform Board to coordinate with the Stock Exchange Center to organize training for equitized enterprises, encouraging qualified enterprises to participate in the stock market. Select some equitized enterprises to pilot public offerings at the Stock Exchange Center.

- State enterprises within the merger scope must complete their proposals by the third quarter of 2004, submit them to the Enterprise Management Reform Board for review and report to the People's Committee for decision and implementation completion by the fourth quarter of 2004.

- State enterprises engaged in production and business that meet the criteria for retaining 100% state capital must urgently develop proposals to convert to joint-stock companies with a single member. Enterprises selected by the People's Committee before 2004 must complete this by the fourth quarter of 2004. Remaining enterprises must complete this by the second quarter of 2005.

- The Southern Agriculture Corporation, Southern Construction Corporation, Southern Trade Corporation, Southern Tourism Corporation, and Pharmaceutical Company must develop proposals to convert to the parent company-subsidiary model to facilitate operation under the amended State Enterprise Law of 2003. These proposals must be completed by October 2004, submitted to the Enterprise Management Reform Board for review and reported to the People's Committee for decision.

- State corporations and enterprises permitted by the Prime Minister and the People's Committee to pilot operations under the parent company-subsidiary model need to review, amend, and supplement their organizational regulations and financial rules according to the provisions of the amended State Enterprise Law of 2003, submit them to the Enterprise Management Reform Board and the City Business Financial Inspection Bureau for review and report to the People's Committee for decision. This amendment must be completed no later than September 2004.

Pending formal approval by the Government, the People's Committee allows the issuance of temporary organizational regulations and financial rules for state corporations and enterprises to facilitate operation under the parent company-subsidiary model.

- Assign the Enterprise Management Reform Board to report to the Central Steering Committee for Enterprise Modernization and Development and organize meetings with state corporations and enterprises operating under the parent company-subsidiary model to exchange experiences and resolve emerging issues during implementation.

2. Continue to implement administrative reform, separate the state management functions and production and business management functions of departments and district-township People's Committees towards state-owned enterprises, specifically as follows:

a) Entrust the Enterprise Management Reform Board of the city to take the lead and coordinate with departments and district-township People's Committees to develop plans to transfer the portion of state capital at joint-stock companies and state-owned production and business enterprises retained at 100% state capital directly under departments and districts to city State Holding Corporations and City State Enterprises. This plan shall be completed by August 2004 and reported to the city People's Committee for consideration and decision.

b) Entrust the Department of Finance to take the lead and coordinate with the Enterprise Management Reform Board of the city and relevant departments to develop a pilot project to establish a city Financial Investment Company. This project shall be completed by September 2004 to report to the city People's Committee for consideration and submit to the Prime Minister for decision.

c) The Boards of Enterprise Value Determination of the city and of city State Holding Corporations, departments, district-township People's Committees, the Enterprise Management Reform Board of the city, and the Office of the Municipal People's Council and People's Committee have the responsibility to process all related files of state-owned enterprises subject to restructuring and shareholding reform or of departments, districts, and city State Holding Corporations within their authority, within 15 days from the date of receipt of such files.

3. Immediately implement measures to resolve issues hindering the shareholding reform process and enterprise value determination that delay the implementation of restructuring and shareholding reform of state-owned enterprises, specifically as follows:

a) The establishment and examination of tax and financial settlement reports of state-owned enterprises undergoing shareholding reform and other conversion processes, by the City Tax Service and the City Enterprise Financial Department, must be conducted according to the prescribed schedule. By the end of August 2004, in cases where state-owned enterprises undergoing shareholding reform have already established and submitted their tax and financial settlement reports but have not yet been examined by the City Enterprise Financial Department and the City Tax Service, the city People's Committee permits the city and State Holding Corporation Boards of Enterprise Value Determination to base their enterprise value determination for shareholding reform on the enterprise's financial statements, in accordance with Circular No. 6002/TC/TCDN dated June 10, 2003 of the Ministry of Finance.

b) State-owned enterprises currently undergoing shareholding reform, which have had decisions made prior to 2004, must select the valuation date for shareholding reform according to the regulations applicable to state-owned enterprises selected for shareholding reform in 2004. For state-owned enterprises that have had shareholding reform decisions made prior to 2004 and are in the process of developing shareholding reform proposals, the city People's Committee permits the shareholding reform date to be set as December 31, 2003, to compile lists of employees eligible to purchase preferential shares and to calculate the period for determining the number of preferential shares for employees until the enterprise submits its shareholding reform proposal.

c) The Chairpersons of the city and State Holding Corporation Boards of Enterprise Value Determination have the responsibility to complete the enterprise value determination for shareholding reform of state-owned enterprises according to their respective levels by the third quarter of 2004 to ensure achievement of the targets assigned by the Prime Minister for 2004.

d) The City Economic Institute has the responsibility to complete the research on managing and supporting state-owned enterprises after shareholding reform by August 2004 and report to the city People's Committee for consideration and decision.

e) Entrust the Enterprise Management Reform Board of the city to coordinate with the Department of Finance to compile a report to the city People's Committee on the land use situation of state-owned enterprises that have undergone shareholding reform by October 2004.

4. Amend certain contents in Directive No. 26/2002/CT-UB dated December 17, 2002 of the city People's Committee on accelerating the shareholding reform of city state-owned enterprises and strengthening post-reform enterprise management as follows:

a) Do not transfer fixed assets for shareholding reform for factories, warehouses, and other structures leased by state-owned enterprises undergoing shareholding reform from city and district property management companies.

Implement the policy of piloting the inclusion of land use rights value into the asset value of state-owned enterprises when conducting shareholding reform. State-owned enterprises may choose one of two forms when implementing shareholding reform:

- Incorporate the entire value of land use rights into the asset value of the state-owned enterprise, viewing this as the state's contribution of capital in the shareholding enterprise.

- Lease land according to the land price framework issued by competent state authorities.

b) Entrust the supervising agencies of enterprises, which are departments, districts, and State Holding Corporations, to take the lead and coordinate with the Standing Office of Steering Board 80 and the Enterprise Management Reform Board of the city to examine requests to transfer or not transfer assets to enterprises for shareholding reform or other conversions. The Enterprise Management Reform Board of the city will be responsible for reporting to the city People's Committee for consideration and decision.

c) Allow the application of construction unit prices according to Decision No. 118/2004/QĐ-UB dated April 28, 2004 of the city People's Committee, to determine the value of state-owned enterprises undergoing shareholding reform (replacing Decisions No. 5184/QĐ-UB dated November 9, 1996, Decision No. 5675/QĐ-UB-KT dated October 24, 1998, and Decision No. 15/2001/QĐ-UB dated February 23, 2001 of the city People's Committee).

5. Entrust the Enterprise Management Reform Board of the city to inspect, urge, guide, monitor, and regularly report to the city People's Committee on the situation of restructuring, renewal, and development of city state-owned enterprises; promptly identify difficulties, obstacles, and unreasonable aspects during the implementation process, and propose solutions to the city People's Committee or make recommendations to relevant agencies for resolution within their authority.

The People's Committee of the city requests the Directors of municipal departments, the Chairpersons of the People's Committees of districts and counties, the Chairmen of the Boards of Management and General Managers of State-owned Corporations and Companies of the city to strictly implement this Directive. State-owned enterprise management bodies and enterprises that fail to comply with the approved content and schedule for restructuring and shareholding reform shall bear full responsibility before the People's Committee of the city and the Prime Minister.

The Business Management Reform Board of the city is responsible for guiding, monitoring, and periodically reporting to the People's Committee of the city on the implementation of this Directive./.