Circular No. 77-TC/KBNN guides the opening of temporary holding accounts and the establishment and use of funds to combat illegal business activities.

CIRCULAR

OF THE MINISTRY OF FINANCE NUMBER 77 TC/KBNN SEPTEMBER 28, 1994 GUIDING THE OPENING OF TEMPORARY ACCOUNTS AND THE WITHDRAWAL, USE OF FUNDS FOR COMBATING ILLEGAL BUSINESS PRACTICES
IMPLEMENTING Decision No. 180/TTg dated December 22, 1992 of the Prime Minister on establishing funds to combat illegal business practices; Decision No. 299/TTg dated June 4, 1994 of the Prime Minister amending Article 5 of Decision No. 180/TTg dated December 22, 1992 of the Prime Minister; the Ministry of Finance hereby provides detailed guidance as follows:

1- Provincial Departments of Finance and Prices shall open temporary accounts at the State Treasury Branches to deposit and settle payments for proceeds from the sale of seized goods, fines, and hidden taxes collected from entities engaging in illegal business activities, which are submitted by the directly responsible inspection agencies.

II- SUPPORT MEASURES FOR STATE-OWNED AGRICULTURAL FARMS AND FORESTRY COMPANIES IN THE FIELD OF SCIENCE AND TECHNOLOGY

For central agencies directly involved in combating illegal business practices, the proceeds from such entities shall be deposited into the temporary accounts of the Provincial Departments of Finance and Prices.

All amounts in these temporary accounts, previously managed by Tax and Customs authorities, shall now be transferred to the temporary accounts of the Provincial Departments of Finance and Prices.

2. Agencies authorized to withdraw funds for combating illegal business practices (hereinafter referred to as the fund) include: Market Management, Public Security, Customs, Taxation, Border Guard, Forest Protection, and specialized state inspection agencies.

3. Agencies authorized to withdraw funds must adhere to the following principles:

- Withdrawals can only be made after a decision has been issued by a competent state agency or a court judgment, and there are no appeals within the prescribed legal timeframe. In cases where appeals exist, withdrawals may only occur after the appeal process is concluded.

- Withdrawals can only be made from proceeds from the sale of seized goods, fines, and hidden taxes that have been actually deposited into the temporary accounts of the Provincial Departments of Finance and Prices at the State Treasury. Withdrawals cannot be made from overdue tax payments or late payment penalties.

II- RESPONSIBILITIES OF THE RELEVANT AGENCIES IN THE WITHDRAWAL OF FUNDS FOR COMBATING ILLEGAL BUSINESS PRACTICES.

1. Provincial Departments of Finance and Prices, which open temporary accounts at State Treasury Branches, are responsible for:
- Monitoring and inspecting the deposit of funds into the temporary accounts by the directly responsible inspection agencies.

- Receiving all funds reflected in the temporary accounts and related documents transferred by the Tax and Customs authorities.

- Inspecting documents related to expenses for investigation, verification, loading, transportation, storage, testing, and appraisal conducted by the directly responsible inspection agencies.

- Processing withdrawals from the temporary accounts for entities specified in Point 2 of Section I above when all required documents under Section III, Point 2 of this Circular are complete.

- Preparing periodic quarterly and annual reports on the income and expenditure of the temporary accounts and submitting them to the Ministry of Finance (attached model).

2. The State Treasury Branches where the Provincial Departments of Finance and Prices open temporary accounts are responsible for:

Guiding the Provincial Departments of Finance and Prices to open and use deposit accounts in accordance with national regulations. Implementing withdrawals from the temporary accounts for entitled agencies and recording government revenue promptly upon receipt of complete documentation.

3. Agencies directly responsible for organizing inspections to combat illegal business practices, as specified in Point 2 of Section I, are responsible for:

- Retaining all files (in accordance with the current retention period for budget receipts and expenditures, which is ten years). Temporary holding records, seizure records, processing records, sales invoices, and decisions on rewards for individuals and groups.

- For cases discovered through direct inspections, if criminal responsibility is pursued due to the level of violation, the directly responsible inspection agency must manage and monitor the final disposition of all seized goods until completion.

- Conducting quarterly and annual settlements with the supervising agency and reporting to the local finance department on the distribution and use of funds for combating illegal business practices, particularly procurement funds. Settlement reports must be confirmed by the State Treasury.

- Organizing evaluations and learning from inspection campaigns, bearing responsibility for rewarding individuals with outstanding achievements or punishing staff who commit errors during the inspection process according to the management hierarchy.

III- OPENING ACCOUNTS AND PROCEDURES FOR DEPOSITING FUNDS INTO TEMPORARY ACCOUNTS

1. Opening Accounts.

1.1- Opening Temporary Holding Accounts: The State Treasury of provinces and cities shall open Account 922 "Temporary Holding Account Pending Disposition" with sub-account "Temporary Holding Account Pending Disposition of the Provincial Department of Finance and Prices" to collect proceeds from directly responsible inspection agencies and to settle costs, establish funds for combating illegal business practices, and remit to the state budget as requested by the Provincial Department of Finance and Prices.

1.2- For agencies specified in Point 2 of Section II, they may open accounts at the State Treasury Branches to monitor and use the withdrawn funds. If they lack legal entity status to open an account at the State Treasury, their immediate superior unit shall open an account at the State Treasury Branch to transfer the reward money to the benefiting unit (for example, various levels of industry inspectors...).

2. Procedures for Depositing Funds into Temporary Accounts: Competent state agencies issuing administrative penalty decisions for illegal business practices must follow the procedures and formalities for administrative penalties as stipulated in Articles 21, 27, and 33 of the Administrative Sanctions Decree dated November 30, 1989. Specifically, the handling of seized goods under the provisions of Directive No. 01/TTg dated October 6, 1992 of the Prime Minister shall be carried out in accordance with Points 1, 2, and 3 of Part I of Circular No. 77 TC/TCT dated December 5, 1992 of the Ministry of Finance regarding the handling of seized goods.

1.2- For the agencies specified in Point 2, Section II, deposit accounts may be opened at the Treasury Sub-Office to monitor the use of funds allocated from the reserve fund. In cases where such agencies do not have legal personality to open accounts at the State Treasury, their immediate superior managing units shall open accounts at the Treasury Sub-Office to transfer the allocated reward funds to the benefiting units (for example: inspection bodies at various levels...).

2. Procedures for depositing money into temporary holding accounts: When administrative sanction decisions are made by state agencies with authority to impose administrative penalties for illegal business activities, they must follow the procedures and formalities for imposing administrative penalties as stipulated in Articles 21, 27, and 33 of the Administrative Sanctions Law dated November 30, 1989. Specifically, regarding the handling of confiscated goods under the provisions of Directive 01/TTg dated October 6, 1992 of the Prime Minister, it shall be carried out according to the provisions set forth in Points 1, 2, and 3 of Part I of Circular 77 TC/TCT dated December 5, 1992 of the Ministry of Finance on guidelines for handling confiscated goods.

For agencies directly inspecting illegal business activities far from the center, revenues obtained from such illegal business activities shall be deposited at the State Treasury Branch within their jurisdiction. The State Treasury is responsible for collecting on behalf and transferring the entire amount collected to the temporary holding account of the Department of Finance and Prices opened at the State Treasury Office.

2.1- Regarding seized goods and items:

When selling seized goods and items, receipts for payment issued by the Ministry of Finance (Form CTT 11) must be used. All proceeds from the sale must be deposited into the temporary holding account of the Department of Finance and Prices opened at the State Treasury.

The documentation for seized goods and items includes: receipt for temporary storage of goods and items, decision on handling by the competent authority, receipt for payment (Form CTT 11), export invoice for seized goods and items, deposit slip for budget, auction record, decision to establish a fund, other expense vouchers (if any) such as investigation, verification, unloading, transportation, storage, testing, appraisal costs, and costs for organizing auctions.

2.2- Regarding hidden tax and fines (excluding late payment fines):

- For fines: Based on the penalty decision, the inspection unit collects the fine and issues a receipt for payment (Form CTT-11) to the penalized entity (or guides the penalized entity) to deposit the fine into the temporary holding account of the Department of Finance and Prices opened at the State Treasury.

- For hidden tax revenue: Based on the inspection report, the competent authority issues a decision to recover the hidden tax and immediately sends this decision to the entity (or individual) subject to the penalty to require immediate deposit of the hidden tax into the temporary holding account of the Department of Finance and Prices opened at the State Treasury.

2.3- Regarding revenues received in foreign currency: Inspection units combating illegal business activities deposit the funds into the temporary holding account of the Department of Finance and Prices opened at the State Treasury in foreign currency, which will be converted according to the buying rate of the provincial or city Commercial Bank at the time of deposit.

IV- PROCEDURE FOR ESTABLISHING, DISTRIBUTING AND USING THE FUND

1. The anti-illegal business activity fund of units is formed from the following sources:

1.1- Thirty percent of the total proceeds from the sale of seized goods and items and fines, after deducting investigation, verification, unloading, transportation, storage, testing, appraisal costs of goods and items, and compensation for losses due to objective reasons (if any). Proceeds from the sale of temporarily held goods shall not be included in the fund.

1.2- Two percent of the discovered and recovered hidden taxes for state-owned enterprises.

1.3- Five percent of the discovered and recovered hidden taxes for other enterprises and business households.

The revenues and expenses serving as the basis for establishing the fund are specified as follows:

- Total proceeds from the sale of seized goods and items, as decided by the handling council or court.

- Fines are the total actual revenue from anti-illegal business activities, as decided by the relevant authorities under Point 2, Section I of this Circular and reflected on valid collection vouchers.

- Investigation, verification, unloading, transportation, storage, testing, and appraisal costs of goods and items are deducted from the total proceeds when supported by valid vouchers, consistent with state regulations and verified by the Department of Finance and Prices as per Point 1, Section II.

- Discovered and recovered hidden taxes are additional amounts found beyond declared tax returns, annual financial reports, and monthly tax records of enterprises. Revenue from trading activities in the circulation phase shall not be counted (except in cases where hidden taxes and penalties for tax evasion during the circulation phase are recovered from traders who have not paid turnover tax or income tax before transporting goods).

2. Establishing the fund.

2.1- The Department of Finance and Prices establishes the fund according to the following procedure:

- Based on the amount deposited into the temporary holding account as reported by the State Treasury and related documents, the Department of Finance and Prices pays out any expenses (if any). It issues a Decision to establish the fund for the inspection unit according to the ratio determined in Article 2 of Decision 180/TTg dated December 22, 1992, of the Prime Minister. The establishment of the fund is carried out on a case-by-case basis.

- Prepare vouchers to send to the State Treasury where the temporary holding account is opened to transfer the established fund amount from the temporary holding account to the inspection unit's fund account and immediately process the remaining amount for deposit into Item 30 (for Tax Administration inspections); Item 33 (for Customs inspections); Item 47 (for other inspections) according to the National Budget Classification.

Revenues from illegal business activities inspected by a certain level shall be deposited into that level's budget.

2.2- Handling some cases:

- In cases where the inspected entity must pay both hidden taxes and fines simultaneously, the inspection unit must clearly record each type of payment in the inspection report and handling decision to avoid confusion when establishing the fund. If the inspection unit deliberately violates the rules, such as converting hidden taxes into fines to receive more rewards, they will be required to return the improperly allocated funds and face disciplinary action, administrative penalties, or criminal prosecution.

- In cases where multiple agencies cooperate in inspections, the agency leading the inspection will establish the fund and be responsible for rewarding cooperating units.

3. Distribution of the fund:

Units entitled to establish the fund must distribute the anti-illegal business activity fund according to Article 4 of Decision 180/TTg.

After the State Treasury transfers the established fund amount to the unit's fund account, the head of the unit entitled to establish and distribute the fund shall proceed as follows:

- Allocate twenty-five percent to establish the unit's reward fund.

- Dedicate 65% to establish a supplementary fund for operating expenses to combat illegal business activities of the unit. In cases where multiple agencies cooperate in inspections, the agency primarily responsible for organizing the inspection shall retain 65% to establish the supplementary fund without having to share with other agencies.

- Dedicate 10% to be submitted to the superior administrative management agency at the next higher level to establish a fund to combat illegal business activities and reward cooperative units. If there is no direct superior administrative management agency, the amount may remain with the unit to supplement operating expenses.

4. Use of the Fund:

4.1- Reward Fund:

The head of the agency establishing the fund is responsible for rewarding individuals directly and indirectly involved in combating illegal business activities according to the principle that those who contribute more receive more rewards, and those who contribute less receive fewer rewards. The maximum individual reward per case is not more than 200,000 VND/case and 600,000 VND/month/person.

- In cases where an inspection extends over several months, the number of months eligible for rewards is calculated based on the number of months recorded in the inspection report. Strictly prohibit dividing a large case into smaller cases to benefit from the reward system per case.

- Rewards must be finalized for each case, strictly prohibiting offsetting between cases with lower deductions against those with higher deductions to achieve absolute reward levels.

- Staff from outside the industry who directly participate in inspections also enjoy the same reward system as staff within the industry.

- Staff indirectly involved in combating illegal business activities (staff engaged in directing, summarizing, and supporting work), if recommended for rewards by inspection units, may receive up to 100,000 VND/case and 300,000 VND/month/person.

- Any remaining funds after rewards have been deducted shall be retained in the reward fund for use in rewarding cases where no revenue is collected into the temporary account, such as cases involving fake goods, confiscated items requiring destruction, etc.

4.2- The supplementary fund for operating expenses to combat illegal business activities shall be used for the following purposes:

- Purchase costs for working equipment.

- Costs for summarizing and promoting competition.

- Costs for press conferences and publicity campaigns.

- Allowances for staff members injured while performing their duties.

- Subsidies for regions facing difficulties in funding to combat illegal business activities.

4.3- The industry fund shall be used for the following purposes:

- Costs for press conferences and publicity campaigns.

- Additional purchase of working equipment.

- Awards for competition and annual summaries of anti-illegal business activities across the industry and rewards for cooperating sectors.

V- IMPLEMENTATION PROVISIONS

1. This Circular takes effect from October 1, 1994. Circular No. 25 TC/TCT dated March 24, 1993, Circular No. 37 TC/TCT dated May 10, 1993, issued by the Ministry of Finance, and other decisions conflicting with this Circular are hereby abolished.

2. Tax and Customs agencies previously holding temporary accounts (Account 922) at the State Treasury shall now transfer these accounts to the Provincial Department of Finance and Price Control on the same territory according to the following principles:

- Transfer all remaining funds in the temporary account as of September 30, 1994, and all files and documents related to cases still under review, being processed, or completed but not yet executed.

- The Finance Department (Department of Finance and Price Control) is responsible for opening a new temporary account (Account 922) at the Treasury Office and receiving all transferred files, documents, and funds from the Tax and Customs agencies.

3. Within fifteen days from the date this Circular takes effect, the transfer between Tax and Customs agencies and the Provincial Department of Finance and Price Control must be completed.

4. The National Treasury Bureau shall guide procedures for opening accounts, managing, and inspecting the use of temporary accounts and the establishment of funds to combat illegal business activities in accordance with the provisions of this Circular.

During implementation, any difficulties encountered should be reported to the Ministry of Finance for further guidance.

REPORT ON THE COLLECTION AND EXPENDITURE OF TEMPORARY ACCOUNTS BY THE INSPECTION UNIT:

Unit: Million dong

Note: Report on completed cases and expenditures from the temporary account.

Name of the inspection agency,

organization

.............

DETAILED REPORT OF EACH UNIT ON THE COLLECTION AND EXPENDITURE OF TEMPORARY ACCOUNTS

Note: Only report cases that have been decided upon.