Circular No. 61/2003/TT-BTC guiding the preparation of the state budget estimate for 2004

CIRCULAR

Guidelines for preparing the state budget estimate for 2004

Implementing Directive No. 15/2003/CT-TTg dated June 12, 2003 of the Prime Minister on the development plan and state budget estimate for 2004, the Ministry of Finance guides the evaluation of the implementation of the state budget in 2003 and the preparation of the state budget estimate for 2004 as follows:

A - EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET IN 2003:

To ensure the completion of 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 2003 assigned by the Prime Minister. They should capitalize on the significant achievements obtained in the first six months of the year, and in the last six months of 2003, they must fully implement the measures proposed according to Resolution No. 09/2002/QH11 of the National Assembly on the state budget estimate for 2003 and Resolution No. 02/2003/NQ-CP dated January 17, 2003 of the Government on major policies and key measures to be focused on implementing the economic and social development tasks for 2003. Strive to exceed all targets and tasks for economic and social development, state budget, creating a foundation for the preparation and implementation of the economic and social development plan and state financial budget for 2004.

I. Evaluation of the implementation of state budget revenue in 2003 as the basis for preparing the state budget revenue estimate for 2004:

1. Organizing the implementation of state budget revenue collection tasks in the last six months of 2003:

Based on the results of evaluating the state budget revenue collection in the first six months of the year, clearly analyze the subjective and objective reasons for increases and decreases in state budget revenue to propose and effectively implement measures for revenue collection in the last six months: 

Collect all taxes, fees, charges, land revenues, and other revenues into the state budget in accordance with the provisions of the law; strengthen measures to prevent tax arrears, and strictly handle cases of misappropriation or retention of funds that should be paid to the state budget.

Concentrate manpower to carry out inspection and supervision work on taxpayers, promptly detect and deal with any fraudulent activities and violations of tax laws, and enhance efforts to verify and recover all due amounts from the state budget for value-added tax refunds that were fraudulently claimed.

Strengthen coordination between Tax authorities, Customs, Land Administration, Market Management, Commercial Banks, Business Registration Management agencies, Foreign Affairs agencies, Exit and Entry Management agencies... in providing full and timely information related to taxpayers to the Tax authorities to serve the effective management of tax collection.

Implement land allocation and leasing through public auctions of land use rights according to Decision No. 22/2003/QD-BTC dated February 18, 2003 of the Minister of Finance on financial mechanisms for using land funds to build infrastructure, ensuring full and timely collection of revenues into the state budget.

Strengthen coordination with social organizations, trade unions, and local authorities at all levels to closely manage cultural, artistic activities, and commercialized social services to control income generation and collect taxes promptly from individuals participating in these activities in accordance with the law, requiring units and organizations to comply with withholding tax regulations before paying income to individuals.

Promote publicity, explanation, and guidance to taxpayers so that all organizations and individuals understand tax policies, tax calculation rules, and timely tax payment into the state budget as prescribed.

Regarding tax collection from import and export activities:

The General Customs Departments of provinces and centrally-administered cities shall strengthen inspections of the implementation of the Law on Export Duties, Import Duties, and Value-Added Tax.

Accelerate the application of information technology in import and export management and tax collection at border gates; strengthen anti-smuggling efforts, post-clearance inspections, and recovery of overdue payments to the state budget; improve responsibility and resolve emerging issues to facilitate import and export activities.

2. Evaluation of the implementation of state budget revenue in 2003 as the basis for preparing the state budget revenue estimate for 2004:

Based on the revenue collection performance in the first six months of the year, evaluate the revenue results in 2003 based on the measures taken to strive for the completion and overachievement of the assigned estimates under Decision No. 158/2002/QD-BTC dated December 24, 2002 of the Minister of Finance, focusing on analyzing the following aspects:  

Clearly identify the amount of outstanding taxes carried over from 2002, new revenues generated during the year, ensuring full and timely collection in 2003 without leaving unpaid revenues to be carried over to 2004 contrary to regulations. Inspect, penalize units and individuals who misuse funds intended for the state budget for other purposes, strictly prohibit the use of state funds for investment, and implement Resolution No. 02/2003/NQ-CP dated January 17, 2003 of the Government, firmly refusing to record any income or expenditure for funds that should be paid to the state budget. From 2003, the head of the tax authority must take responsibility for promptly handling and not allowing enterprises under their jurisdiction to misuse tax funds for investment or other purposes contrary to regulations.

Analyze the factors affecting the revenue collection results in 2003: The actual performance compared to the plan for key product production volumes, production and consumption, cost prices, selling prices,…

Analyze the impact of supplementary and amended policies on revenue sources in the region.

a) For the state-owned enterprise sector:

Evaluate and analyze the situation regarding the restructuring of state-owned enterprises, reform, development, and improvement of the efficiency of state-owned enterprises according to Directive No. 01/2003/CT-TTg dated 16/1/2003 of the Minister of Finance, focusing on:

Grasp the production and business situation of enterprises; the current status of capital-assets, receivables-payables, fluctuations in the original value of fixed assets, new production capacities added - Number of workers - Wages - Revenue - Production costs - Economic and technical norms - Main product production and consumption situation - Realized profit and budget payments. Difficulties and advantages in 2003 and potential for development in 2004.

b) For the non-state commercial and service sector:

In this sector, it is necessary to evaluate according to two types of subjects: non-state enterprises and individual households engaged in production and business.

Non-state enterprises: grasp the number, scale of investment, results, and effectiveness of production and business operations of all enterprises within the area, especially those newly established in the year pursuant to the Enterprise Law, including those that have registered tax codes; the number of enterprises that have been dissolved, bankrupted, or ceased operations.

Individual households engaged in production and business: The number of entities in 2002 that switched from paying taxes under the fixed-rate method to the declaration method; the number of entities that switched from direct payment to deduction-based payment. The number of households that have implemented accounting books.

Evaluate the declaration and payment situation of taxable entities; the results of implementing measures to control input VAT, output VAT, sales revenue, costs, and taxable income, compared with the previous year.

Assess the level of revenue loss in this sector, analyze and clearly identify the causes and solutions to address them.

c) For the sector of enterprises with foreign investment:  Total number of enterprises licensed, number still valid, number of expired licenses; among which: number of enterprises already operating, number of enterprises under construction, number of enterprises not yet implemented by 2003 and potential for development in 2004. Number of enterprises currently enjoying tax exemption and reduction benefits in 2004 and subsequent years.

Total number of workers, total wage fund, revenue, costs, and effectiveness of production and business operations.

d) For agricultural land use tax:

Based on the tax ledger for agricultural land use tax, assess the results of adding areas due for taxation to the tax ledger; implementation of tax exemptions according to Resolution of the National Assembly's 11th session, third meeting; management of tax collection from non-farmers participating in agricultural production, collective households, and households with agricultural land exceeding the limit. e) Land rental fees:

Aggregate the area of land managed for rent collection against the land lease fund within the management area. Evaluate the implementation of land rent management, rental land prices, and the area subject to land rental fees. The situation of arrears on the territory. Clearly analyze the reasons and promptly implement solutions to address them. g) Fees and charges:

Evaluate the collection and payment situation of fees and charges by organizations at the central, provincial, district, and commune levels that collect fees and charges according to Decree No. 57/2002/NĐ-CP dated June 3, 2002, detailing the implementation of the Law on Fees and Charges: Comprehensive evaluation of total collections, amounts allowed to retain, and amounts remitted to the State Budget. h) Regarding 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 market prices, import and export policies, and tax policies on the budget revenue from import and export activities in 2003.  

Determine the State Budget revenue carried over from 2002, the amount to be collected in 2003, the amount collected in 2003, and the amount transferred to be collected in 2004 according to regulations.

II/ Evaluate the implementation of budget expenditure tasks in 2003 as the basis for preparing the 2004 State Budget Expenditure Estimate:

1 - On capital construction expenditure:

Focus on evaluating the ability to complete work volume and settlement for all projects and works of the 2003 task. Achievements made and issues requiring resolution, analysis of causes, and remedial measures. For construction of economic and social infrastructure projects, welfare projects, housing development funds, agricultural and rural development investments, and forest regeneration funds of local budgets; based on targeted supplementary funds from the central budget to localities from land use rights revenues, land rental fees, proceeds from state-owned housing sales, lottery revenues, agricultural land use tax, and forestry resource tax, assess the ability to fulfill capital construction expenditure tasks from these sources appropriately.

Provinces and centrally-administered cities organize the implementation and report on the implementation of Directive No. 03/2003/CT-TTg dated March 7, 2003, of the Prime Minister regarding the handling of village-level budget debts.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 management agencies, projects, and localities need to evaluate the workload completed throughout 2003 in detail for each program and project; the management, operation, and results of implementing the national target programs according to Decision No. 42/2002/QĐ-TTg dated March 19, 2002, of the Prime Minister ; 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 on Program 135; Decision No.661/QĐ-TTg dated July 29, 1998 on the objectives, tasks, policies, and implementation organization of the project to plant five million hectares of new forests. 3 - For regular expenditures:  The Prime Minister on the Program 135; Decision No. 661/QD-TTg dated July 29, 1998 on objectives, tasks, policies, and implementation organization of the project to plant five million hectares of new forest.  3- For regular expenditure items:

Administrative agencies with revenue sources as prescribed shall use at least 40% of the revenue retained (after deducting collection expenses) under the relevant regulations to adjust salaries. BASED ON THE BUDGET PROJECTIONS ASSIGNED AT THE BEGINNING OF THE YEAR AND THE IMPLEMENTATION PROGRESS OF TASKS TO ASSESS THE ABILITY TO COMPLETE THE YEAR, USING THE STATE BUDGET AND THE RESULTS OF COMPLETING THE QUANTITY AND QUALITY OF ECONOMIC-SOCIAL TASKS OF MINISTRIES, CENTRAL AGENCIES, LOCALITIES, AND UNITS, WITH SPECIAL FOCUS ON ASSESSING THE IMPLEMENTATION OF MAJOR PROGRAMS AND PROJECTS SUCH AS: SEED PROGRAMS, TRADE PROMOTION, LAND SURVEYING, TRAINING OF SCIENTIFIC AND TECHNICAL STAFF OVERSEAS, NATIONAL SCIENTIFIC TOPICS, ETC., ANALYZE IN DETAIL THE STRUCTURE OF REGULAR EXPENSES, SALARIES, AMOUNTS WITH WAGE CHARACTERISTICS, AND EXPENSES ALLOCATED BASED ON WAGES (SOCIAL INSURANCE, HEALTH INSURANCE, UNION FEES, ETC.), REGULAR BUSINESS EXPENSES, AND UNEXPECTED OR NON-REGULAR EXPENSES (PURCHASES, REPAIRS, ETC.). EVALUATE AND REPORT ON THE IMPLEMENTATION OF EXPENSES FOR VEHICLE PURCHASES, EQUIPMENT FOR TELEPHONES, RENTAL AND PURCHASE OF OFFICE SPACE, MEETING AND ENTERTAINMENT EXPENSES. EVALUATE THE IMPLEMENTATION OF DECREE NO. 10/2002/NĐ-CP OF JANUARY 16, 2002 BY THE GOVERNMENT ON FINANCIAL REGIMES FOR SELF-FINANCING PUBLIC SERVICE UNITS, AND THE RESULTS OF IMPLEMENTING THE BUDGET ALLOCATION FOR ADMINISTRATIVE EXPENSES ACCORDING TO DECISION NO. 192/2001/QĐ-TTg OF DECEMBER 17, 2001 BY THE PRIME MINISTER.

EVALUATE THE IMPLEMENTATION OF THE 2003 SALARY REFORM: THE NUMBER OF STAFF INCREASES AND DECREASES DURING THE YEAR, THE INCREASE IN EXPENSES TO IMPLEMENT THE NEW SALARY SYSTEM; RESULTS OF CREATING FUNDS FOR SALARIES AS PROVIDED: FROM SAVING 10% OF REGULAR EXPENSES EXCLUDING SALARIES AND AMOUNTS WITH WAGE CHARACTERISTICS; FROM 35-40% OF THE RETAINED REVENUE UNDER THE REGIME; FROM THE SOURCE OF 50% INCREASED REVENUE FOR LOCAL BUDGETS.

4- FOR PROVINCES AND CITIES DIRECTLY UNDER THE CENTRAL GOVERNMENT: MUST BASE THE ORGANIZATION AND MANAGEMENT OF EXPENDITURES ON THE ABILITY TO COLLECT REVENUES; STRIVE TO INCREASE REVENUES AND RESERVE AT LEAST 50% OF THE INCREASED REVENUES IN 2003 COMPARED TO THE PROJECTIONS GIVEN BY THE PRIME MINISTER FOR THE LOCAL BUDGET PORTION TO HANDLE SALARIES IN 2003 AND TO COVER THE BUDGET FOR 2004 ACCORDING TO THE RESOLUTION NO. 09/2002/QH11 OF NOVEMBER 28, 2002 OF THE NATIONAL ASSEMBLY SESSION 11, PERIOD 2 AND DECREE NO. 03/2003/NĐ-CP OF JANUARY 15, 2003 OF THE GOVERNMENT REGARDING ADJUSTMENTS TO SALARIES, SOCIAL SUBSIDIES, AND MODERNIZING THE SALARY MANAGEMENT SYSTEM. ACTIVELY USE UP TO 50% OF THE REMAINING INCREASED REVENUES TO INCREASE EXPENDITURES, WITH A FOCUS ON IMPORTANT TASKS; PRIORITY SHOULD BE GIVEN TO SETTLING DEBTS, ESPECIALLY THOSE OF COMMUNE BUDGETS ACCORDING TO DIRECTIVE NO. 03/2003/CT-TTg OF MARCH 7, 2003 OF THE PRIME MINISTER; HANDLING EMERGENCY TASKS ARISING FROM DROUGHT, FOREST FIRES, AND OTHER NATURAL DISASTERS; DO NOT SUPPLEMENT UNNECESSARY TASKS IN THE FIELD OF ADMINISTRATIVE EXPENSES, LIMIT EXPENDITURES ON PURCHASES AND REPAIRS OF UNNECESSARY EQUIPMENT.      

B - BUILDING THE 2004 STATE BUDGET PROJECTIONS:

2004 IS THE FIRST YEAR OF IMPLEMENTING THE STATE BUDGET LAW PASSED BY THE NATIONAL ASSEMBLY SESSION 11, PERIOD 2 ON DECEMBER 16, 2002, AND ALSO THE YEAR TO IMPLEMENT THE LAWS AMENDING AND COMPLEMENTING CERTAIN ARTICLES OF THE VALUE-ADDED TAX LAW, THE SPECIAL CONSUMPTION TAX LAW, AND THE ENTERPRISE INCOME TAX LAW (AMENDED). THEREFORE, ALL LEVELS AND SECTORS MUST FULLY UNDERSTAND AND CONCENTRATE ON GUIDING AND IMPLEMENTING ACCORDING TO THE PROVISIONS OF THE STATE BUDGET LAW AND THE ABOVE-MENTIONED TAX LAWS.

I/ OBJECTIVES AND REQUIREMENTS FOR THE WORK OF BUILDING THE 2004 STATE BUDGET PROJECTIONS:

1- Objective:

THE 2004 STATE BUDGET PROJECTIONS MUST ENSURE THE IMPLEMENTATION OF THE ECONOMIC-SOCIAL DEVELOPMENT TASKS FOR 2004 AND THE 2001-2005 ECONOMIC-SOCIAL DEVELOPMENT PLAN OF THE STATE, EACH MINISTRY, SECTOR, AND LOCALITY.

THE 2004 STATE BUDGET REVENUE PROJECTIONS MUST CONTINUE TO IMPLEMENT POLICIES TO RAISE REVENUES IN A REASONABLE MANNER, CONTRIBUTING POSITIVELY TO CREATING A STABLE AND FAVORABLE ENVIRONMENT FOR PRODUCTION AND BUSINESS TO PROMOTE THE DEVELOPMENT OF THE ECONOMY, STRIVING FOR AN ECONOMIC GROWTH RATE OF AT LEAST 7.5% GDP. STRIVE TO REDUCE PRODUCTION COSTS, INCREASE COMPETITIVENESS AND ECONOMIC EFFICIENCY, STABILIZE MACRO-ECONOMY; CONTINUE TO TRANSITION THE ECONOMIC STRUCTURE, REORGANIZE AND MODERNIZE STATE ENTERPRISES TO IMPROVE THEIR EFFECTIVENESS; CREATE A STABLE AND SOLID SOURCE OF REVENUE, IMPLEMENT IMPORTANT TASKS TO INCREASE SOCIAL INVESTMENT, ENHANCE THE FINANCIAL CAPACITY OF THE COUNTRY, PROVIDE A BASIS FOR THE DEVELOPMENT OF THE FOLLOWING YEARS, AND SUCCESSFULLY COMPLETE THE FINANCIAL-BUDGETARY TASKS FOR THE 2001-2005 PHASE.

THE 2004 STATE BUDGET EXPENDITURE PROJECTIONS MUST FOCUS ON BUDGETING FOR IMPORTANT NATIONAL TASKS: NATIONAL KEY PROJECTS, PROGRAM 135 PROJECTS, PLANTING 5 MILLION HA OF FORESTS, CREATING SUPPORT MECHANISMS FOR QUICK DEVELOPMENT IN KEY ECONOMIC AREAS; PAYING ATTENTION TO INVESTING IN THE DEVELOPMENT OF ECONOMIC-SOCIAL AFFAIRS IN THE NORTHERN MOUNTAINOUS PROVINCES, THE WESTERN HIGHLANDS, AND THE DELTA OF THE LONG RIVER; DEVELOPING EDUCATION-TRAINING, SCIENCE AND TECHNOLOGY ACCORDING TO THE RESOLUTION OF THE 2ND PLANNING SESSION (SESSION VIII); INCREASING INVESTMENT IN THE HEALTH, CULTURE, SOCIAL SECTORS BASED ON ENSURING POLICIES AND REGIMES FOR EACH SECTOR AND REGION; SIMULTANEOUSLY PROMOTING SOCIALIZATION IN EDUCATION, HEALTH, CULTURE, SPORTS; IMPLEMENTING THOROUGH SAVINGS AND PREVENTING WASTE; STRENGTHENING POVERTY ELIMINATION AND ADDRESSING URGENT SOCIAL ISSUES; CONSOLIDATING NATIONAL DEFENSE AND SECURITY, MAINTAINING SOCIAL ORDER AND SAFETY. IMPLEMENTING THE NEW FINANCIAL MANAGEMENT MECHANISM FULLY ACCORDING TO DECREE NO. 10/2002/NĐ-CP OF JANUARY 16, 2002 OF THE GOVERNMENT AND CONTINUING TO EXPAND THE PILOT TESTING OF BUDGET AND STAFF ALLOCATION FOR ADMINISTRATIVE UNITS ACCORDING TO DECISION NO. 192/2001/QĐ-TTg OF DECEMBER 17, 2001 OF THE PRIME MINISTER. CONTINUE TO IMPLEMENT THE SALARY REFORM PROCESS FOR CIVIL SERVANTS IN THE STATE SECTOR; IMPLEMENT ORDINANCE NO. 11/2003/PL-UBTVQH11 OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY ON APRIL 29, 2003 AMENDING AND COMPLEMENTING CERTAIN ARTICLES OF THE CIVIL SERVANT ORDINANCE, ESPECIALLY ENSURING NECESSARY FUNDS WHEN IMPLEMENTING REGIMES FOR CIVIL SERVANTS AT THE COMMUNE LEVEL.  THE HEALTH, CULTURE, SOCIAL SECTORS...BASED ON ENSURING POLICIES AND REGIMES FOR EACH SECTOR AND REGION; AT THE SAME TIME PROMOTING SOCIALIZATION IN EDUCATION, HEALTH, CULTURE, SPORTS; IMPLEMENTING THOROUGH SAVINGS AND PREVENTING WASTE; STRENGTHENING POVERTY ELIMINATION AND ADDRESSING URGENT SOCIAL ISSUES; CONSOLIDATING NATIONAL DEFENSE AND SECURITY, MAINTAINING SOCIAL ORDER AND SAFETY. IMPLEMENTING THE NEW FINANCIAL MANAGEMENT MECHANISM FULLY ACCORDING TO DECREE NO. 10/2002/NĐ-CP OF JANUARY 16, 2002 OF THE GOVERNMENT AND CONTINUING TO EXPAND THE PILOT TESTING OF BUDGET AND STAFF ALLOCATION FOR ADMINISTRATIVE UNITS ACCORDING TO DECISION NO. 192/2001/QĐ-TTg OF DECEMBER 17, 2001 OF THE PRIME MINISTER. CONTINUE TO IMPLEMENT THE SALARY REFORM PROCESS FOR CIVIL SERVANTS IN THE STATE SECTOR; IMPLEMENT ORDINANCE NO. 11/2003/PL-UBTVQH11 OF THE STANDING COMMITTEE OF THE NATIONAL ASSEMBLY ON APRIL 29, 2003 AMENDING AND COMPLEMENTING CERTAIN ARTICLES OF THE CIVIL SERVANT ORDINANCE, ESPECIALLY ENSURING NECESSARY FUNDS WHEN IMPLEMENTING REGIMES FOR CIVIL SERVANTS AT THE COMMUNE LEVEL.

2- Requirements:

The State budget estimate for 2004 must be prepared in accordance with the provisions of the State Budget Law and guiding documents implementing the law; focusing on several key issues as follows:

a) Regarding the revenue budget estimate of the state budget:

Prepare the state budget revenue estimate based on accurately calculating all tax revenues according to the tax laws and current collection regulations. Implement well the three newly revised tax laws passed by the National Assembly. Implement reasonable mobilization policies to ensure resources for important national tasks; enhance the internal strength of sectors and localities, concentrating resources to fulfill new important tasks arising.

The revenue estimate must be built based on analyzing and forecasting factors related to economic growth, markets, prices,… striving to strengthen management measures, prevent revenue loss, combat commercial fraud, and tax evasion.

The state budget revenue estimate should be positive, solid, highly feasible, aiming to achieve a mobilization rate of 20-21% of GDP, with tax and fee revenue reaching 18-19% of GDP. The revenue estimates of ministries, central agencies, and localities (excluding oil revenue) must strive to increase by more than 10% compared to the actual implementation in 2003;

b) Regarding the expenditure budget estimate of the state budget:

Concentrate capital and funds to implement important tasks serving the socio-economic development plan, ensuring national security, defense, and poverty reduction, including:

Prioritize funding for major national projects, programs under Decision 135, and the project to plant five million hectares of new forests; allocate sufficient counterpart funds for projects funded by ODA. Continue allocating investment capital to implement socio-economic development policies in particularly difficult northern mountainous provinces, Central Highlands provinces, and Mekong Delta provinces.

Ensure resources to accelerate industrialization and modernization of agriculture and rural areas;

Continue prioritizing funding and funds to implement Resolution No. 2 (Session VIII) of the Central Committee on education and training development, science and technology, and Resolution No. 5 (Session VIII) of the Central Committee on cultural information development.

Allocate sources to continue implementing salary reform to create motivation for good performance of socio-economic development tasks and promote administrative reform: Ministries, central agencies, localities, and budget-using units must fully understand and consider this as an important task of their units and localities; fully understand the requirement to proactively create sources for salary reform based on properly implementing the following measures: The state budget and budgets of local authorities at all levels must allocate at least 50% of the additional revenue realized in 2003 compared to the Prime Minister's approved estimate in 2003; continue allocating at least 50% of the additional revenue forecast for 2004 compared to the 2003 estimate; implement minimum savings in regular expenditures of 10% (excluding salaries and items with quality nature). Public service units with income must use at least 40% (except for the health sector which is 35%) of retained income to fund salary adjustments. Administrative agencies with income according to regulations must use at least 40% of retained income (after deducting collection costs) to fund salary adjustments. Only after fully implementing these measures and still lacking sources for salary adjustments will the Government stipulate; at that time, the state budget will support ministries, central agencies, and localities for the remaining shortfall.

Allocate reserves and financial reserves as prescribed by the State Budget Law to proactively respond  to natural disasters, floods, and handle urgent tasks.

c) Balance of the state budget:

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

The state budget deficit should not exceed 5% of GDP, consistent with domestic borrowing capacity and concessional foreign borrowing, without engaging in commercial foreign borrowing to cover the state budget deficit.

II/ Main contents of the work of preparing the state budget revenue and expenditure estimates  for 2004:

1/ Regarding state budget revenue:

Prepare the state budget revenue estimate for 2004 based on fully implementing revenue systems and policies, paying particular attention to new systems and policies implemented from 2003, as follows:

a) Corporate Income Tax:

Calculate and prepare the estimate according to the Corporate Income Tax Law (amended) No. 09/2003/QH11 dated June 17, 2003, of the 11th National Assembly, Session 3, and guiding documents implementing the Corporate Income Tax Law.

b) Value Added Tax:

The estimate is calculated according to the amended Law No. 07/2003/QH11 dated June 17, 2003, of the 11th National Assembly, Session 3, and guiding documents implementing the Value Added Tax Law.

c) Special Consumption Tax:

Calculate and prepare the estimate according to the guidance provided in the amended Law No. 08/2003/QH11 dated June 17, 2003, of the 11th National Assembly, Session 3, and guiding documents implementing the Special Consumption Tax Law.

d) Stamp Duty:

Implement according to Decree No. 176/1999/NĐ-CP dated December 21, 1999, of the Government on stamp duty, Decree No. 47/2003/NĐ-CP dated May 12, 2003, of the Government amending and supplementing Article 6 of Decree No. 176/1999/NĐ-CP dated December 21, 1999, and guided by Circular No. 28/2000/TT-BTC dated April 18, 2000, of the Ministry of Finance guiding the implementation of Decree No. 176/1999/NĐ-CP dated December 21, 1999, on stamp duty, and Circular No. 55/2003/TT-BTC dated June 4, 2003, of the Ministry of Finance guiding amendments and supplements to Circular No. 28/2000/TT-BTC dated April 18, 2000, of the Ministry of Finance guiding the implementation of Decree No. 176/1999/NĐ-CP dated December 21, 1999, on stamp duty.

e) Business License Fee:

The business license fee estimate is implemented according to Circular No. 42/2003/TT-BTC dated May 7, 2003, of the Ministry of Finance guiding supplements and amendments to Circular No. 96/2002/TT-BTC dated October 24, 2002, of the Ministry of Finance guiding the implementation of Decree No. 75/2002/NĐ-CP dated August 30, 2002, of the Government adjusting the business license fee rate.

f) Fees and Stamp Duties:

Pursuant to Decree No. 57/2002/NĐ-CP dated June 3, 2002 of the Government detailing the implementation of the Ordinance on Fees and Charges and Circulars of the Ministry of Finance guiding the collection, payment, and management of each type of fee and charge.

For road usage fees, implement according to Circular No. 109/2002/TT-BTC dated December 6, 2002 of the Ministry of Finance regarding the system for collecting, paying, and managing road usage fees.

g) Fuel oil fees:

Pursuant to Circular No. 70/2002/TT-BTC dated August 19, 2002 of the Ministry of Finance guiding the supplementation and amendment of Circular No. 06/2001/TT-BTC dated January 17, 2001 of the Ministry of Finance concerning fuel oil fees.

h) Revenue from lottery activities:

Calculate and prepare the budget estimate according to the provisions of the Law on Corporate Income Tax (Amended) No. 09/2003/QH11 dated June 17, 2003, the Law Amending and Supplementing Certain Provisions of the Law on Value Added Tax No. 07/2003/QH11 dated June 17, 2003, the Law Amending and Supplementing Certain Provisions of the Law on Special Consumption Tax No. 08/2003/QH11 dated June 17, 2003, adopted at the third session of the Eleventh National Assembly, and the implementing regulations of these three tax laws.

k) Revenue from import and export activities:

Forecast and calculate the volume of import and export trade, especially those items subject to import and export taxes; analyze and evaluate economic, market, and world price trends, forecast their impact on Vietnam's import and export volume in 2004, direct impacts on the main industries' export and import activities; forecast the effects of joining (CEPT, GATT,...); state policies and systems for import and export of important goods.

Based on the analysis and evaluation of the revenue collection situation in 2003, build the revenue budget with the requirement to collect accurately, fully, and promptly, prevent revenue loss, and combat commercial fraud,...

2/ Regarding State budget expenditure:

Ministries, central agencies, localities, and units at all levels using the state budget must prepare the 2004 state budget expenditure within the scope of the approved figures; based on the expenditure standards and budget allocation quotas decided by the Prime Minister, taking into account the assigned workload, allocate funds for key and major tasks, strictly economize and avoid waste. Prepare the 2004 state budget expenditure for each sector, ministry, central agency, and locality.  Must continue to implement the state policy of socialization. Specifically, for some key areas as follows:

2.1 - For investment and development expenditures:

2.1.1- Construction investment expenditure:

When preparing the budget for centralized construction investment, it is necessary to comply with the requirements of the State Budget Law and its implementing regulations: ensure focused and prioritized investment, avoid scattered investment leading to waste and loss; allocate the budget in the following sequence: Ensure capital for key national projects of sectors and localities that are significant for socio-economic development during the 2001-2005 period; prioritize funding for projects under Program 135, new forest planting projects, allocate capital from the state budget and other sources to continue achieving the goal of eliminating dilapidated meeting rooms, bamboo and thatch classrooms; increase investment capital for socio-economic development in northern mountainous provinces, Central Highlands, and the Mekong Delta.

Prioritize investment in ongoing projects that will be effective from 2003 onwards, projects expected to be completed and put into use in 2004; allocate sufficient counterpart funds for ODA projects according to commitments; clearly determine the capital needs for preparation for important projects and works scheduled to start construction in 2004 and subsequent years; for funds temporarily allocated from previous years, proactively arrange the state budget to repay them;

Specifically identify the amount of basic construction investment completed in 2003 without funding sources to proactively arrange in the 2004 budget to avoid accruing arrears in construction investment.

For Group C projects, the budget should be prepared according to the principle of ensuring sufficient funds for ongoing projects; new projects should be funded to complete within two years.

For Group B projects, ensure funding to complete within four years, avoiding scattered investment and ineffective prolonged investment periods.

Projects included in the 2004 state budget expenditure must have completed investment procedures and been approved before September 2003; allocate based on the state budget capacity according to the reviewed investment expenditure budget figures, not exceeding the state budget's capacity.

For projects funded through loans and resold loans, the project owner must proactively arrange matching funds consistent with the signed agreements and domestic financial regulations to ensure the project's progress is not affected.

Targeted supplementary funding from the central budget to local budgets for localities to construct economic and social infrastructure projects, social welfare projects, housing funds, residential planning, agricultural and rural development, including focusing on improving livestock and crop varieties, reforestation,... (from land rental income, income from selling state-owned houses, agricultural land use tax, forestry resource tax, part of lottery revenue,...). Allocate within the local budget balance to reinvest from land use rights revenue. After receiving the competent authority's decision, the Ministry of Finance will provide additional guidance.

The mechanism for arranging the budget for implementing projects on developing economic and social infrastructure from water resource tax revenues; investment returns for border economic zones according to Decision No. 53/2001/QĐ-TTg  dated April 19, 2001 of the Prime Minister shall be implemented according to the decision of the competent authority.

2.1.2 - For production and business support expenditures:

Continue to focus on supporting according to the prescribed regime for key products and industries; implement measures to gradually ensure sufficient registered capital for state-owned enterprises.

Support shall be provided for public welfare activities and public welfare enterprises in accordance with Circular No. 06 TC/TCDN dated December 19, 1997 of the Ministry of Finance on guiding financial management regulations for state-owned enterprises engaged in public welfare activities.

For mountainous, island, and ethnic minority regions, localities shall proactively allocate additional funds to state-owned commercial enterprises operating in mountainous, island, and ethnic minority areas in accordance with Decree No. 02/2002/NĐ-CP dated January 3, 2002 of the Government amending and supplementing certain articles of Decree No. 20/1998/NĐ-CP dated March 31, 1998 of the Government on developing commerce in mountainous, island, and ethnic minority regions.     

2.1.3 - Interest rate subsidy for state investment credit development loans shall be implemented in accordance with the provisions of the Government and the current guiding documents of the Ministry of Finance.

2.1.4 - For national reserve expenditures: based on the assigned national reserve tasks, ministries, sectors, and State corporations have the responsibility to assess and determine the level of reserves of the ministry, sector, and unit up to December 31, 2003; forecast the level of supplementary reserves for each type of goods and materials and prepare the budget increase for national reserve expenditures, goods preservation costs, and the plan to rotate and update the national reserve items of the ministry, sector, and unit in 2004.

2.2 - For price support expenditures for policy goods:

Price support and freight subsidies for policy goods in mountainous areas are stipulated in Decree No. 20/1998/NĐ-CP dated March 31, 1998 of the Government on developing commerce in mountainous, island, and ethnic minority regions; Decree No. 02/2002/NĐ-CP dated  January  3, 2002 of the Government amending and supplementing certain articles of Decree No. 20/1998/NĐ-CP and detailed guiding documents.

Implementing the policy of providing free newspapers and magazines to ethnic minority and mountainous regions according to Decision No. 1637/QĐ-TTg dated December 31, 2001 of the Prime Minister.

Continue to implement the system of funding support for localities to invest in developing community radio and broadcasting stations in mountainous provinces and ethnic minority regions.

Expenditures for seed price support, publication price support, film price support, etc., shall be implemented according to the current regulations. Ministries, localities, and units need to carefully calculate price support expenditures based on quantity, cost, transportation expenses, and specific price support levels for each item in accordance with the prescribed regulations.

2.3. For expenditure on public services and administrative management of the state, associations, and mass organizations:

For the state budget nationwide, the budget for education and training public service expenditure, and the budget for science and technology public service expenditure (including both investment and recurrent expenditures, additional salary costs, etc.) should reach over 17.1% and 2% of total state budget expenditure. At the same time, adjust the structure and management policies for science expenditure to ensure the effectiveness and practicality of research projects. For the cultural information sector, the budget allocation should increase in line with the economic growth rate as per Resolution No. 5 (Session VIII) of the Central Committee.

Public service expenditures for economic purposes need to focus on key areas; each industry and locality must adjust their expenditure structures to ensure high efficiency, contributing to promoting economic development.

For public service units granted financial autonomy rights, they can proactively allocate funds to fulfill their tasks and can proactively use the staffing quota assigned by the competent authority according to Decree No. 10/2002/NĐ-CP dated January 16, 2002 of the Government on financial regulations applicable to revenue-generating public service units and Circular No. 25/2002/TT-BTC dated March 21, 2002 of the Ministry of Finance. Based on the 2003 state budget allocation, in 2004, this amount will remain stable, with an additional percentage increase determined by the Prime Minister's decision (excluding unexpected expenditures arising in 2003 but not in 2004); for tasks involving state-funded programs, research topics at the national, ministerial, and sectoral levels, target programs, state-ordered tasks, counterpart funds for foreign-funded projects, and investment, units shall prepare the state budget expenditure according to current regulations and the guidance provided in this circular.  

Allocate the budget for administrative expenditure (state management, Party, associations, and mass organizations): Based on the budget allocation standards set by the Prime Minister; thoroughly economize on expenditures such as hospitality, conferences, outbound delegations, inbound delegations, etc. Expand the pilot program of allocating staffing quotas and administrative management budgets for state administrative agencies according to Decision No. 192/2001/QĐ-TTg dated December 17, 2001 of the Prime Minister and Joint Circular No. 17/2002/TTLT-BTC-BTCCBCP dated February 8, 2002 of the Ministry of Finance and the Government Civil Service Management Board guiding the implementation of Decision No. 192/2001/QĐ-TTg.

For tasks funded from borrowed capital and aid, detailed expenditure budgets must be prepared for each project and sufficient matching funds from Vietnam must be calculated according to commitments and prescribed regulations.

During the process of calculating expenditure budgets for administrative and public service units, full reports of expenditure tasks  from various fees, charges, and other revenues retained by the units according to prescribed regulations must be submitted.

2.4 - For expenditures to implement national target programs and important projects:

For national target programs: Allocate funds to achieve the goals as per Decision No. 42/2002/QĐ-TTg dated March 19, 2002 of the Prime Minister on managing and implementing national target programs.

Chapter 135: Implemented pursuant to 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; Circular Joint Circular No. 666/2001/TTLT/BKH-UBNTMN-TC-XD dated August 23, 2001 guiding management of investment and construction of infrastructure projects under Chapter 135.  New planting of 5 million hectares of forest: Implemented pursuant to Decision No. 661/QĐ-TTg dated July 29, 1998 on objectives, tasks, policies, and implementation organization of the new planting of 5 million hectares of forest project, Circular No. 43/2002/TT-BTC dated May 7, 2002 of the Ministry of Finance, and Circular No. 29/2003/TT-BTC dated March 27, 2003 amending and supplementing Circular No. 43/2002/TT-BTC.  

||| 2.5 - Allocation of budget sources for salary reform:  For units under Ministries and central agencies, implement according to the following method:

Utilize a minimum of 10% savings from regular expenditures of administrative and public service units (excluding salaries and salary-like allowances);

Public service units with income shall use a minimum of 40% of retained income (after deducting income expenses) to fund salary adjustments (for the health sector, it is 35%);

Administrative agencies with income as prescribed shall use a minimum of 40% of retained income according to regulations (after deducting income expenses) to fund salary adjustments.

For localities, implement salary reform according to the provisions set out in Item 3 below.

3/ Regarding the local government budget estimate:

In 2004, the first year of the period of stable local government budgets as stipulated by the State Budget Law, therefore, localities need to closely adhere to the goals and tasks of the State Budget for 2004 mentioned above, the provisions of the State Budget Law, and the implementing documents to prepare the 2004 budget estimate. In addition to the guidance provisions on budget preparation work as stated above, preparing the local government budget also implements the main provisions as follows:

On building the State Budget revenue estimate: Based on forecasting economic growth in 2004 for each industry, each field, and each economic entity in each locality, and newly generated revenues within the locality, calculate accurately and comprehensively each revenue field and each revenue item according to regulations (the State Budget revenue estimate of each province and centrally-administered city includes all revenue sources within the communes, wards, and towns).

On building the local government budget expenditure estimate:

Based on the development tasks of the locality's economy and society, current expenditure standards, and the 2004 budget allocation standards as decided by the Prime Minister, reasonably forecast specific needs for each budget expenditure field according to the State Budget Law (the 2004 local government budget expenditure estimate by field includes the tasks of the commune, ward, and town budgets).

Allocate sufficient counterpart funds for ODA projects or ODA project components implemented within the locality's responsibility as decided by the Prime Minister.

Allocate funds to implement Central Resolution No. 3, 5 (Session IX) within the local government budget expenditure; including

increasing expenditure for commune budgets to implement reforms and improve the quality of the grassroots political system.

Concentrate funds to implement infrastructure construction tasks, proactively allocate local government budgets to achieve the goal of eliminating third-shift classrooms, temporary classrooms made of bamboo, wood, and thatch, solidifying irrigation canals and rural roads; village craft infrastructure, tourism infrastructure; developing crop and livestock varieties; adjusting agricultural economic structures; trade promotion activities, expanding and seeking export markets; focusing on implementing poverty reduction, job creation, and social evil prevention tasks,... Allocate the budget to repay debts due on time, including handling commune-level budget debts, ensuring the soundness of the local government budget.

Allocate contingency funds for the local government budget according to the State Budget Law, proactively respond to natural disasters, floods, and handle urgent tasks at the local level.

The supplementary targeted funding from the central government budget to the local government budget from sources such as land rental fees, proceeds from selling state-owned housing, agricultural land use tax, forestry resource tax, a portion of lottery proceeds,...and implementing balance within the local government budget to reinvest from land use rights revenue, is carried out according to the provisions at Point 2.1.1, Section II, Part B of this Circular.

Based on the determined expenditure tasks and local government budget revenue sources, estimate the percentage ratio (%) between the central government budget and the local government budget, the amount of supplementary funding from the central government budget to the local government budget (if applicable).

Based on the estimated allocation of the national target program budget, Chapter 135 budget, and the new planting of 5 million hectares of forest project budget, build the budget estimate for implementing these tasks, and plan the allocation to start implementation early.

Building the 2004 government budget expenditure estimate, localities must proactively allocate local government budget sources to implement salary reform according to the following method: 

Local government budgets at all levels shall allocate a minimum of 50% of the increase in actual revenue in 2003 compared to the Prime Minister's approved budget; allocate a minimum of 50% of the increase in the 2004 budget estimate compared to the 2003 budget;

Implement a minimum of 10% savings in regular expenditures (excluding salaries and salary-like allowances).  Public service units with income shall use a minimum of 40% of retained income (after deducting income expenses) to fund salary adjustments (for the health sector, it is 35%).

Administrative agencies with income as prescribed shall use a minimum of 40% of retained income according to regulations (after deducting income expenses) to fund salary adjustments.

Ministries and state agencies, based on their functions, are responsible for building economic and social indicators in their respective fields and promptly notifying the Ministry of Finance, central ministries and agencies, and localities before July 15, 2003, to serve as the basis for preparing the 2003 state budget estimate.

Ministries and central agencies managing programs

1/ Ministries and state agencies, according to their functions, are assigned to build economic and social indicators within their areas of responsibility and promptly notify the Ministry of Finance, central ministries and agencies, and localities before July 15, 2003, to serve as the basis for preparing the State budget estimate for 2003.

III/ Implementation Organization:

Central ministries and agencies managing programs

2/ The ministries and central agencies managing the programs  The national target program, Program 135, and the project to plant five million hectares of new forests shall coordinate with the Ministry of Planning and Investment and the Ministry of Finance to work with relevant central agencies and localities regarding tasks and budget estimates for the year 2004 concerning the national target programs, Program 135, and the project to plant five million hectares of new forests within their respective areas of responsibility, and submit the consolidated report to the Ministry of Finance and the Ministry of Planning and Investment before August 15, 2003.

3/ The Ministry of Planning and Investment shall take the lead and coordinate with the Ministry of Finance to prepare the investment development budget estimate and develop allocation plans for certain sectors assigned to them, to be submitted to the Ministry of Finance before September 15, 2003.

4/ In conjunction with the preparation of the local budget estimate, the People's Committee at the provincial level shall study and submit to the Provincial People's Council for decision not later than July 2003 on the budget decentralization (revenue sources and expenditure responsibilities) for various levels of local government to serve as the basis for preparing the local budget estimate. At the same time, based on the budget allocation standards prescribed by the Prime Minister, the actual situation in the locality, and the regulations on budget decentralization decided by the Provincial People's Council, the People's Committee at the provincial level shall submit to the People's Council for decision the appropriate budget allocation standards for the local government at all levels to serve as the basis for preparing the local budget estimate.

5/ Ministries, central agencies, and provincial People's Committees and municipal People's Committees directly under the Central Government shall base themselves on this Circular and the revenue and expenditure budget estimate for the state budget for 2004 announced by the Ministry of Finance, the budget allocation standards according to the Prime Minister's decision, to implement: guiding, announcing the check figures, organizing discussions, and compiling the state budget estimate for 2004 in accordance with the provisions of the State Budget Law, government circulars and directives issued by the Ministry of Finance, and the stipulations of this Circular.

6/ The Ministry of Finance will organize meetings with ministries, central agencies, General Corporation 91, some General Corporations 90, and localities to discuss the state budget estimate for 2004 starting from around the end of July 2003 (the specific schedule will be announced later).

7/ The General Department of Customs and the General Department of Taxation have the responsibility to provide detailed guidance on this Circular to subordinate units for implementation and to prepare and compile the state budget revenue estimate within their assigned areas.

8/ Regarding the forms for preparing and reporting the state budget revenue and expenditure estimate for 2004:

For ministries and central agencies, they shall organize guidance for subordinate units to prepare and report the state budget estimate; based on that, they shall consolidate and report to the Ministry of Finance the state budget estimate for 2004 of the ministry or central agency in accordance with

the form and time specified in Circular No. 59/2003/TT-BTC dated June 23, 2003, of the Ministry of Finance detailing the implementation of the State Budget Law and additional forms to meet the requirements for the 2004 budget estimate as stipulated in this Circular.

For localities: It is requested that the People's Committees of provinces and cities proactively guide lower-level local authorities in preparing and reporting the budget revenue and expenditure estimate, and based on that, consolidate and build the local budget estimate and report to the Ministry of Finance according to the forms and times specified in Circular No. 59/2003/TT-BTC dated June 23, 2003, of the Ministry of Finance detailing the implementation of the State Budget Law and additional forms to meet the requirements for the 2004 budget estimate as stipulated in this Circular.

9/ During the process of preparing the state budget estimate for 2004, if new policies and regulations are issued, the Ministry of Finance will provide supplementary guidance and announcements when implementing them. If there are any difficulties, it is requested that ministries and localities reflect these issues to the Ministry of Finance for timely resolution./.