Circular No. 836-TC/TCT on measures to strengthen tax collection management for non-state economic sectors

LETTER

OF THE MINISTRY OF FINANCE NUMBER 836-TC/TCT ON JUNE 25, 1991
REGARDING MEASURES TO STRENGTHEN TAX COLLECTION MANAGEMENT
FOR ECONOMY

Respectfully submitted to: - Department of Finance

- Tax Departments of provinces, centrally-administered cities and special economic zones

The implementation of the Value Added Tax Law and the Corporate Income Tax Law for non-state-owned economy has been ongoing for nearly nine months. Generally, localities have taken many measures to enhance tax publicity, increase the number of registered households, adjust revenue, and adjust tax rates; each subsequent month and quarter sees higher tax revenues than the previous ones. Some places have begun to innovate in tax collection work.

However, for the current non-state-owned economy, the main method of tax collection remains the quota system, which includes both medium and large-sized households. The situation of tax loss is very serious, with many people becoming wealthy quickly due to tax evasion and smuggling, thereby increasing their competitive advantage over state-owned enterprises, failing to ensure social equity... and this issue is being closely monitored and reminded by Party and State agencies.

In order to strengthen efforts against tax loss, strictly comply with tax laws, contribute to restoring market order, and ensure tax equality between state-owned and non-state-owned economies, localities need to develop specific plans and measures to implement the following key tasks, ensuring that from now until the end of 1991, there will be significant improvements in the quality of tax management for non-state-owned economic entities, preparing conditions for more effective tax management starting from 1992.

1. Strengthening the dissemination and promotion of tax laws to commercial and industrial economic entities, especially emphasizing the responsibility and obligations of taxpayers in declaring and registering taxes, maintaining accounting books and invoices, tax declaration procedures, and penalties for violating tax laws... to promote the rapid and systematic enforcement of tax laws. The important point is to proactively organize regular and close cooperation with district and commune authorities, women's associations, market management boards, trade management boards, business networks, and active tax supporters... so that tax work is not solely carried out by the tax authority and its staff. Where local authorities have not truly directed attention, the tax authority must immediately report to the party committee and government to organize forces to cooperate with the tax sector to complete the six-month tax collection plan for 1991.

2. Immediately organize a registration inspection campaign combined with the grasp of business registration on each territory, including all businesses under the scope of Decision 268 dated July 1991. The inspection content does not only target unregistered households but particularly focuses on comparing the declared indicators of registered businesses with actual operations: meticulously and specifically for key households of medium and large sizes. Regarding capital, goods, number of workers involved in business, scope of operation, sales location... record discrepancies between declarations and reality in written records, firmly penalize households with many errors in tax declarations, and indicators reflecting the material basis and scale of business operations from which taxable revenue can be inferred. The tax registration inspection can be organized in cross-checks between communes to ensure objectivity, clarify the quality of tax officers managing each commune and entity, under favorable conditions, additional cooperation with related sectors may be added, but it is essential to avoid cumbersome formalities that delay the progress of regular tax office operations.

3. Based on tax registrations and regular management results, review and adjust the classification of medium and large households subject to declaration-based tax payment systems, and small households subject to quota-based tax payments, avoiding confusion where medium and large households, which are key tax payers, are treated like small ones.

Currently, many localities apply the quota tax collection method not only for small households but also for medium and large ones because they do not keep accounting books and invoices according to regulations, lacking reliable bases for declaration-based tax collection. During the initial transitional period, quota collection to prevent tax loss for a certain period is necessary, but distinctions must be made: for genuinely small businesses, based on the quota revenue, calculate the value-added tax payable at the prescribed rate, plus (+) corporate income tax at 1% for production and construction - transportation; or 2% for commerce - catering - services calculated on the quota revenue. For medium and large households during the transition period, quota or fixed revenue determination must be stricter based on close management of monthly and quarterly business situations to calculate value-added tax at the prescribed rate under fluctuating prices; the taxable revenue of medium and large households must be adjusted regularly to match the actual situation. Revenue adjustment methods should be conducted democratically through business groups, gradually bringing revenue closer to reality, while corporate income tax must be based on detailed investigations of each industry according to the general guidance of the Tax Department, identifying taxable income and applying corporate income tax rates of 30%, 40%, and 50% as stipulated by law.

Therefore, the classification of households and the specific types A - B must be approved by the leadership of the Tax Branches according to the general guidance of the Tax Department, ensuring the proportion of households paying taxes under the declaration system matches the organizational level and capacity of tax officers, ensuring reasonable contributions of taxpayers among districts and counties within the locality, and absolutely not delegating such decisions to directly managing tax officers.

4. Resolutely direct the implementation of the mandatory process whereby each grassroots tax officer must delve deeply into a number of typical households of each type within each trade, especially those households classified as types A-B under their responsibility, through all means of tax investigation, both direct and indirect, utilizing the active support network of informants to accurately calculate revenue and taxes, serving as a basis for reviewing declarations, negotiating revenue determination for taxation purposes for similar households within the group and within the industry. These typical households must be registered with the management team and the leadership of the Tax Branch, and during briefing meetings, the specific activities of these typical households should be combined with the overall market situation to assess and formulate policies and plans for adjusting revenues and tax rates. At the beginning of the third quarter of 1991, localities need to adjust revenues and taxes for contracted households to align with inflation rates, prevent revenue losses, and promote business development, particularly for large and medium-sized households, which must review their tax levels monthly in comparison with actual business operations, especially seasonal products, to determine accurate tax rates.

The adjustment of revenues and tax rates by grassroots tax officers and tax agencies must be thoroughly prepared, following procedures, and based on justifiable explanations for the adjustment plans for revenues and taxes of households and industries that require adjustments. On this basis, they should seek the leadership of district and commune authorities, mass organizations, and related organizations to ensure good results.

5. The Value Added Tax Law and Income Tax Law; detailed guiding decrees and circulars stipulate that business establishments must implement accounting systems according to the Accounting and Statistics Ordinance issued by the State Council on May 10, 1988, and the National Accounting Regulations promulgated by Decision No. 25-HĐBT dated March 18, 1989; the Ministry of Finance has also issued accounting regulations for non-state-owned production and business activities according to Decision No. 598-TC-CĐKT dated December 8, 1990, specifying taxable revenue, record books, tax payment notifications, and direct tax collection. In the short term, it is necessary to immediately transfer responsibilities to the accounting department to establish tax household ledgers, issue tax payment notifications, monitor tax payments to the treasury, and follow the provisions of the Ministry of Finance and the General Tax Department. Inspection teams at Tax Branches must also strictly adhere to their assigned duties and responsibilities, not only passively handling complaints and grievances but also regularly planning and periodically inspecting the management work of tax officers and the implementation of the ten disciplinary rules for tax officers...

To effectively combat tax evasion, it is necessary to allocate staff with good moral character and relatively high professional qualifications to manage key urban areas and markets with diverse commercial activities, numerous households classified as types A-B, and significant tax revenues. It is essential to promptly replace staff who are ineffective, leading to prolonged tax evasion despite extensive guidance, directives, inspections, and assistance from higher authorities.

Strengthening tax collection management for non-state-owned economies and combating tax evasion and fraud is a long-term, complex struggle coexisting with a multi-sector economic policy. This effort is not merely aimed at financial revenue targets but also contributes to restoring economic and social order, protecting the legitimate rights of businesses that strictly comply with the law, and safeguarding state-owned economies.

Local tax bureaus need to strengthen leadership and direction regarding ideological perspectives, strict compliance with tax laws. Economic and social activities are constantly changing, and the business methods and tactics of non-state-owned economies are always evolving, so it is necessary to regularly guide and specifically direct the organization of tax collection, the implementation of tax management measures, delve into specific topics, identify new emerging issues, and promptly innovate tax collection management work to suit current realities.