Circular No. 84/1999/TT-BTC guiding the preparation of the State budget estimate for the year 2000

CIRCULAR

CIRCULAR NO. 84/1999/TT-BTC OF JULY 1, 1999 OF THE MINISTRY OF FINANCE GUIDING THE CONSTRUCTION OF THE STATE BUDGET ESTIMATE FOR THE YEAR 2000

Implementing Directive No. 17/1999/CT-TTg dated June 30, 1999 of the Prime Minister on the construction of plans for economic and social development and the state budget estimate for the year 2000, the Ministry of Finance guides the work of evaluating the implementation of the state budget in 1999 and the construction of the state budget estimate for the year 2000 as follows:

A- ORGANIZATION AND EVALUATION OF IMPLEMENTATION
OF THE STATE BUDGET IN 1999

I- ORGANIZATION AND MANAGEMENT OF THE STATE BUDGET IN THE LAST 6 MONTHS OF 1999:

The results of implementing economic and social tasks and the state budget in the first six months of the year show that some important economic development indicators are showing signs of stagnation or are lower than the same period of previous years such as total industrial production value, export-import turnover, etc. Many domestically produced goods have increased in production but face difficulties in consumption with large stockpiles. State revenue for the first six months of the year has been lower than the estimate and lower than the same period in 1998. The implementation of the state budget expenditure plan in some ministries and localities is still slow, the volume of construction projects under the 1999 plan is low, the disbursement progress of foreign concessional loan projects is slow; many target programs are being implemented very slowly...

To promptly address these issues, it is required that ministries and localities base their actions on the economic and social development goals and state budget revenue and expenditure estimates assigned by the State for the whole year, focusing on implementing the management measures proposed at the beginning of the year; the solutions decided by the Government in Resolution No. 08/1999/NQ-CP dated July 9, 1999 of the Government on measures to manage and implement tasks in the last six months of 1999; paying attention to the following measures:

1. On Revenue:

- Completing the final settlement of tax finalization and tax audit for the year 1998, and processing final revenue from outstanding amounts carried over from previous years according to the tax finalization.

- Completing the issuance of tax identification numbers for taxpayers; through this process, striving to manage 100% of business entities operating within the jurisdiction, ending the situation of lost revenue due to unregistered taxpayers.

- Guiding enterprises in accounting record keeping, invoice usage, and invoice management to avoid errors and combat fake invoices. Gradually increasing the tax declaration rate, opening accounting books for taxpayers using the direct method. Linking inspection with guidance for enterprises to properly perform accounting and tax declaration tasks. Assisting and urging enterprises to declare taxes in accordance with the Law.

- Publicizing procedures and processes for tax declaration, notification, payment, tax exemption, and refund to ensure all taxpayers are aware, facilitating the work and preventing abuse in management. Timely implementing tax refunds according to the Law, ensuring speed and convenience without causing inconvenience to taxpayers.

- Concentrating on exploiting all sources of revenue, not leaving any uncollected revenue. Focusing on sources that can increase revenue, such as agricultural land use tax, property tax, fees and charges, income tax, non-state-owned industry and service sector tax, other budget revenues, etc.

2. On Expenditure:

To proactively manage the budget, concentrate resources on tasks already allocated in the initial budget and urgent new tasks, and prepare for potential natural disasters, the management of the budget in the last six months of 1999 will focus on implementing the following measures:

- Completing early procedures to provide grounds for payment and advance funding for completed work according to regulations; advancing 40-50% of the remaining value of the 1999 plan to accelerate construction progress. Completing documentation to settle debts for construction projects from 1996-1997 in the third quarter of 1999 according to government policy. Promptly resolving difficulties (land clearance, administrative procedures, matching funds, etc.) to accelerate the disbursement of ODA funds.

- Urgently implementing additional funds for transportation, water conservancy, health, education projects; clean water supply programs in mountainous areas, remote regions; employment generation, spontaneous migration, and economic and social development programs in border communes not included in the list of 1000 particularly difficult communes.

- Accelerating the implementation and timely provision of funds for target programs planned and allocated in the initial budget, especially poverty reduction programs and the economic and social development program for 1000 particularly difficult communes.

- Ministries and localities should proactively manage according to the state budget expenditure budget assigned by the Government; no additional funding outside the budget for units at both central and provincial levels. Strictly adhering to retaining 10% of the regular budget expenditure (excluding salaries) of the state budget according to the National Assembly and Government's policy to prepare for urgent tasks such as disaster relief, famine relief, and newly emerging important tasks at the beginning of the year without allocated funds...

- To ensure the management of the state budget according to the approved budget and maintain the level of budget deficit decided by the National Assembly, the central budget will not provide additional funding outside the budget for ministries and localities; localities must base their budget management on their ability to collect state revenue:

+ For localities with state revenue exceeding the estimate, priority should be given to supplementing capital for local economic and social infrastructure projects, completing projects in 1999 to support production and business development, increasing financial reserves; no additional funding for administrative management, purchasing and repairing unnecessary equipment.

For localities, some revenue items may fall short of the budget estimate, it is necessary to exploit and strive to increase revenues from sources that have the potential to grow to ensure the achievement of the annual revenue target assigned at the beginning of the year; at the same time, it is necessary to proactively rearrange expenditures to be consistent with the local government budget revenue sources, while ensuring funding for important socio-economic development tasks such as investment in agriculture and rural areas, education and training, and science, etc.

II. EVALUATION OF THE IMPLEMENTATION OF THE STATE BUDGET IN 1999 AS A BASIS FOR BUILDING THE BUDGET ESTIMATE FOR 2000:
1. Regarding state budget revenue:

Based on the situation in the first six months of the year, evaluate the results of revenue collection in 1999 on the basis of actively implementing measures to complete and exceed the assigned budget estimates under Decision No. 70/1998/QĐ-BTC dated December 26, 1998 of the Minister of Finance; focusing on analyzing the following issues:

- Determine clearly the amount of tax from 1998 carried over (separating business income tax and profit tax); the amount collected in 1999; the outstanding amount - specifying the reasons and measures for resolution. On this basis, determine the amount generated in 1999; the amount collected in the year and the projected amount generated in 1999 to be carried over to 2000.

- The value-added tax refunds due to arise in 1999; the amount refunded to enterprises in 1999; the projected amount due for refund in 1999 to be carried over to 2000.

- Analyze the factors affecting the revenue implementation results in 1999; the situation compared to the plan for key indicators such as production volume, cost, selling price, etc.

- Analyze the impact of additional and amended policies on revenue sources in the area.

1.1. For State-owned Enterprises:

Evaluate the business operation situation and effectiveness of each enterprise, the situation of tax payment to the State budget. Analyze the factors increasing or decreasing revenue such as market conditions, prices, and subjective factors in enterprise management including investment management, labor management, wages, revenue, costs, capital and asset management. At the same time, study and propose measures to improve business operation effectiveness and increase revenue for the State budget in 2000 and subsequent years.

1.2. Tax on the industrial-commercial and service sector outside state ownership (NQD):

- For taxpayers subject to VAT deduction method: Guidance, inspection, and urging of tax payment and declaration for these taxpayers; Analyze the effectiveness of managing taxpayers under the deduction method when transferring them from district offices to provincial offices.

- Management of tax collection for taxpayers subject to direct VAT method: Classified into two types of households, those declaring and those assessed, to evaluate; Through the registration of tax identification numbers, assess the level of household tax management: the number of households that have declared and received tax identification numbers compared to the number of households engaged in business; the number of households registered for business operations. Plan to gradually transfer households subject to the direct method to the deduction method, using VAT invoices, initially targeting fixed-location businesses dealing in production materials with high revenue.

Evaluate the level of sales management compared to actual sales; the situation of sales declaration, adjustment, value-added, taxable income, and tax of taxpayers; the level of adjustment of sales, VAT, and tax for each group of goods.

1.3. For foreign-invested enterprises:

- Summarize and evaluate the number of foreign-invested enterprises, those granted licenses, those in operation, those under construction, those not yet implemented; type of business; land and water area licensed for use; land area, rental fees; land value contributed through land use rights; capital; labor; scale and efficiency of business operations; compliance with tax obligations to the State; difficulties and advantages in implementing new tax laws, etc., of each unit.

- Analyze the reasons leading to units having their licenses revoked or not operating as planned at the beginning of the year.

- Evaluate and analyze tax collection from contractors and subcontractors.

1.4. For agricultural production sector:

- On the basis of completing the land use tax ledger, compare the number of taxpayers, agricultural land area managed for tax collection with the cultivated area and land structure according to the Land Law, of the unit. Compare with the tax payment results in 1999, evaluate the effectiveness of directing land use tax collection in the area.

- For State-owned enterprises, separate these indicators into a part and detail the enterprises with significant tax revenue.

- Organize the consolidation of the land area established for tax management compared to the land fund under management.

1.5. Property tax, land rental fees:

- The number of enterprises, land area, and land rental fees that cannot be collected; require a clear analysis of the reasons (due to non-signing of land lease contracts, due to enterprises not fully utilizing the area, and other reasons).

1.6. Revenue from land and sale of houses:

Evaluate the impact of issuing certain policies aimed at accelerating the progress of issuing property ownership certificates and land use rights such as Decree No. 25/1999/NĐ-CP of the Government issued on April 19, 1999 regarding procedures for transferring ownership of house purchases; Decree No. 17/1999/NĐ of the Government detailing specific cases of land use right conversion, land transfer, leasing, subleasing, and contribution by land use rights.

1.7. Fees and charges revenue on the territory:

- Evaluate the implementation results of Decree No. 04/1999/NĐ-CP of the Government dated January 30, 1999 and Circular No. 54/1999/TT-BTC of the Ministry of Finance dated May 10, 1999 on fees and charges belonging to the State budget.

- The situation of fee and charge collection by units and organizations under central, provincial, district, and commune levels that collect fees and charges: the amount collected, the amount allowed to retain, the amount paid to the budget.

2. Regarding State budget expenditure:

2. Regarding state budget expenditure:

2.1. Regarding basic construction expenditures: Focus on reviewing and classifying all projects and works under the 1999 investment plan of ministries, sectors, and localities to allocate funds according to the following principles:

- Prioritize funding for projects and works investing in agricultural development and rural economy (irrigation, dikes).

- Allocate funds for Group A projects, counterpart funds for ODA-funded projects, and projects to be completed in 1999.

- For projects and works that have been approved for investment but are deemed ineffective or unnecessary, firmly postpone and reduce funding.

Based on these principles, assess the total volume of work completed in the first six months and projected for the entire year, the amount of funds paid out in the first six months and allocated and paid out for the entire year, to determine the volume of funds to be allocated for payment in the 2000 budget estimate for each project and work.

2.2. For expenditures on constructing economic and social infrastructure works, social welfare works, housing fund development, agricultural and rural development investments, and forest regeneration expenditures from land use rights revenue, land lease fees, state-owned housing sale proceeds, lottery revenues, agricultural land use tax, and forest resource taxes; localities need to specifically evaluate their ability to collect each source of revenue to manage expenditures appropriately; if revenue does not meet the budget estimate, expenditure should be reduced accordingly, and expenditures should only be made when actual revenue is available to avoid unpayable work volumes.

2.3. For programs and targets: Based on the allocated budget estimates and implementation progress, national program management agencies need to assess the total workload completed in 1999, the workload and expenses incurred from the start of the program target until the end of 1999, to make specific recommendations on mechanisms and establish the budget estimate for implementing the program in 2000. For programs and targets ending in 2000, base the allocation of funds on the remaining tasks of the program to ensure the main objectives of the program are achieved in 2000; after 2000, the tasks of the program will be transferred to regular expenditures of ministries and localities.

2.4. For regular expenditures: Based on the annual budget estimate allocated at the beginning of the year and retained revenue sources, and the progress of implementing tasks, assess the ability to complete the year's expenditures closely aligned with the actual situation of ministries, localities, and units. The assessment of annual expenditures must clearly analyze expenditures from allocated budgets and retained revenue sources according to regulations, including detailed analysis of salary costs, salary-like items, mandatory deductions from salaries (social insurance, health insurance, trade union fees, etc.), regular business expenses, and non-recurring or non-regular expenses (purchases, repairs, etc.) to serve as a basis for calculating allocations for 2000.

 B- BUILDING THE 2000 STATE BUDGET ESTIMATE FOR REVENUE AND EXPENDITURE:

 I- OBJECTIVES AND REQUIREMENTS FOR THE 2000 STATE BUDGET ESTIMATE FOR REVENUE AND EXPENDITURE CONSTRUCTION WORK:

1. Requirements:

- Building the 2000 state budget revenue and expenditure estimate must fully implement the goals and tasks set forth in Central Committee Resolutions 4 and 6 (first session) of the Eighth Congress; the goal of socio-economic development for the 1996-2000 five-year plan.

- The 2000 state budget estimate must positively impact and contribute to promoting business production development, increasing savings, and stabilizing revenue sources. At the same time, it must be based on production and business indicators, thoroughly prevent revenue loss, and ensure feasibility and proactivity for both private and local government budgets.

2. Objectives:

a. The state budget revenue estimate must be constructed in accordance with current tax laws and collection regulations; while also considering factors to encourage capital accumulation for expanding production and business operations, aiming to foster long-term revenue sources. The tax revenue estimate for exports and imports must take into account the ongoing process of joining AFTA, trends towards participating in international and regional economic and financial organizations.

Building the 2000 state budget revenue estimate must ensure compatibility with economic growth rates and price indices, actively tapping all revenue sources, and preventing revenue loss.

b. Regular expenditure estimates must be constructed at necessary, reasonable, and frugal levels; implementing administrative and public service cost-sharing. In 2000, cost-sharing will initially be implemented for administrative units and some public service units with suitable conditions. The Ministry of Finance will coordinate with relevant ministries to submit to the Prime Minister for approval of central-level ministries, agencies, and units to implement the cost-sharing mechanism starting from 2000; local finance authorities will coordinate with relevant agencies to submit to the Chairman of the People's Committee at the same level for approval of units managed by localities to implement the cost-sharing mechanism starting from 2000, serving as the basis for establishing, allocating, and managing the budget estimates of these units from the beginning of the year.

Continue prioritizing education and training, science and technology, and environmental affairs as per the Central Committee Resolution II (Eighth Congress); implement the elimination of state budget subsidies for enterprises, scientific research activities, healthcare, and training linked to production and business operations of State-Owned Enterprises; these entities must self-fund their operational expenses for public services (except in special cases decided by the Prime Minister).

The 2000 state budget construction investment estimate must be constructed with the following orientation: prioritize funding for key national works, counterpart funds for ODA-funded projects according to signed schedules, concentrate funds on transitional works to be completed and put into use within the year, allocate funds to repay previously advanced loans, effective transitional works from 1999, and allocate remaining funds for new works meeting specified conditions.

Allocate reserves in accordance with the level prescribed in Decree No. 87/CP dated December 19, 1996 of the Government. Financial reserves should be set at a necessary and reasonable level.

c. State budget balance:

- Tax revenue and fees must ensure regular expenditures at a reasonable, economical level, and guarantee repayment of maturing debts, continue to allocate an appropriate proportion for development investment, and adjust the salary system in one step.

- The state budget deficit must correspond to the ability to borrow domestically with certainty and borrow abroad with preferential terms. Do not borrow commercially abroad, do not issue and borrow short-term domestic loans with high interest rates to cover the state budget deficit. The deficit level should be below 5% of GDP.

d. For local government budgets at all levels:

+ Based on the projected state budget for 2000 announced by the Ministry of Finance; based on the current system of state budget management decentralization and additional funds from the central budget to provincial and centrally-administered city budgets in 1999, determine the local budget revenue sources to build the 2000 local budget expenditure plan.

Local budget planning must ensure the principle that total expenditures shall not exceed total local budget revenue; prioritize expenditures for development investment, education and training, science and technology, and the environment; allocate local budget reserves in accordance with the level prescribed in Decree No. 87/CP dated December 19, 1996 of the Government.

+ Continue to implement the mechanism of allocating expenditures for certain objectives corresponding to the entirety or part of certain revenue items (using 100% of agricultural land use tax for developing agriculture - rural economy, land rental fees, using land for infrastructure investment, etc.) as the budget allocation mechanism in 1999.

+ Based on the state budget plan for 2000 assigned by the Government, stabilize the ratio of revenue distribution between the central budget and provincial and centrally-administered city budgets; stabilize the level of additional funding from the central budget to provincial and centrally-administered city budgets with partial adjustments according to the annual state budget capacity.

To encourage localities to strengthen revenue management, starting from 2000, for provinces and cities whose central budget contributions increase year over year for shared revenue items between the central budget and local government budgets, the central budget will return 50% of the increase to the locality. For exceeding the budget revenue forecast for export-import taxes, special consumption taxes on domestic goods and imported goods (excluding VAT on imported goods), specific annual rewards will be implemented according to the State Budget Law. These excess revenues will be invested in building economic and social infrastructure in the locality.

On the basis of targeted supplementary funds from the central budget to provincial and city budgets to implement new policies of the State in the three years 1997-1999, incorporate these into the local budget expenditure tasks for 2000, and determine the ratio of revenue distribution and the amount of additional funding for provincial and city budgets in 2000.

Based on the overall capacity of the state budget and the available spending sources of the local budget as mentioned above, review and calculate adjustments to some expenditure standards and systems to guide ministries and localities in allocating resources to various fields and preparing budgets for subordinate units in line with assigned revenue and expenditure tasks (the Ministry of Finance will issue separate regulations on this matter).

II - MAJOR CONTENTS OF THE WORK OF ESTABLISHING THE STATE BUDGET INCOME AND EXPENDITURE PLAN FOR 2000:

1. Regarding state budget income:

1.1. State-owned enterprise sector: It is required to calculate specifically for each unit under the management area; when consolidating, separately list the refundable tax portion; separately list VAT at the import stage and VAT for production units and business units.

Specifically for Hanoi City, Ho Chi Minh City, and some other localities where companies or corporations have dependent units, they must prepare and consolidate the income budget including these dependent units.

a. Value-added tax: Calculated according to Circular No. 89/1998/TT-BTC dated June 27, 1998, Circular No. 175/1998/TT-BTC dated December 24, 1998 of the Ministry of Finance guiding the detailed implementation of the Value-Added Tax Law and subsequent amendments and supplements to Circular No. 175/1998/TT-BTC, and circulars guiding value-added tax for specific industries.

b. Special consumption tax: Calculated according to Circular No. 168/1998/TT-BTC dated December 21, 1998 of the Ministry of Finance guiding the implementation of Decree No. 84/1998/NĐ-CP dated December 12, 1998 of the Government detailing the implementation of the Special Consumption Tax Law.

c. Resource tax: Calculated according to Circular No. 153/1998/TT-BTC dated November 26, 1998 of the Ministry of Finance guiding the implementation of Decree No. 68/1998/NĐ-CP dated September 3, 1998 of the Government detailing the implementation of the Resource Tax Ordinance (amended).

- The taxable value for resource tax: is the selling price per unit of the resource (excluding VAT) at the place of extraction. In cases where the resource has not been sold, the Government will stipulate the taxable value for resource tax.

Note:

- The taxable value for resource tax on natural water used for hydropower production is the selling price of commercial electricity, and for wood it is the price at site 2 (price excluding VAT).

- Specifically for oil and gas, the taxable value for resource tax is implemented according to the Oil and Gas Law and Article 47 of Decree No. 84/CP dated December 17, 1996 of the Government detailing the implementation of the Oil and Gas Law:

+ The taxable value for crude oil is the FOB price at the time of delivery according to the price announcement by the agency authorized by the Vietnamese Government based on international reference prices.

+ The taxable value for natural gas is the price at the time of delivery according to the price announcement by the agency authorized by the Vietnamese Government based on international reference prices.

d. Corporate income tax: Calculated according to Circular No. 99/1998/TT-BTC dated July 14, 1998 of the Ministry of Finance guiding the implementation of Decree No. 30/1998/NĐ-CP dated May 13, 1998 of the Government detailing the implementation of the Corporate Income Tax Law.

- Request to ensure strict management and budgetary forecasting for corporate income tax on businesses engaged in production and trade with profits, particularly those that did not make profits in 1999 but have the potential to generate profits in 2000 due to effective operations. Based on determining the comprehensive cost factors of the business in 1999, predict the increasing and decreasing cost factors in 2000 to calculate the corporate income tax.

For businesses operating in goods and service production and trading such as lottery, electricity, cement, postal and telecommunications services, and other products with high revenue due to lower VAT compared to previous turnover taxes, in addition to calculating and paying corporate income tax and additional income tax, if the revenue from VAT paid is still significantly lower than the previous turnover tax, they must continue to pay into the state budget according to the percentage specified in Circular No. 175/1998/TT-BTC dated December 24, 1998 issued by the Ministry of Finance.

1.2. Enterprises with foreign investment capital:

a. Accurately grasp the number of units that have been granted licenses in the area, those units that have commenced production and business activities to organize collection and calculation for inclusion in the budget revenue forecast, including:

- Joint ventures, wholly foreign-owned enterprises;

- Foreign parties involved in business cooperation activities;

- Enterprises located in export processing zones and industrial parks;

- Joint venture banks, branches of foreign banks;

- Foreign organizations and individuals operating in Vietnam not under the Law on Investment (contractors);

b. The method for calculating value-added tax is similar to that for state-owned enterprises. For foreign contractors and subcontractors implementing Vietnamese accounting systems, they shall pay VAT according to the deduction method prescribed by the Law on Value-Added Tax; for foreign contractors and subcontractors not implementing Vietnamese accounting systems, they shall pay VAT according to the direct payment method stipulated in Circular No. 169/1998/TT-BTC dated December 22, 1998 issued by the Ministry of Finance.

c. Corporate income tax: regarding the tax rate calculated according to Article 38, Article 43 of the Law on Investment in Vietnam and Clause 3 of Article 10 of the Law on Corporate Income Tax.

For foreign contractors and subcontractors implementing Vietnamese accounting systems, it shall be calculated according to Circular No. 99/1998/TT-BTC dated July 14, 1998 issued by the Ministry of Finance; for foreign contractors without sufficient grounds to determine taxable income and not implementing Vietnamese accounting systems, the corporate income tax shall be determined according to the percentage rate based on taxable turnover for each type of business activity as stipulated in Circular No. 169/1998/TT-BTC dated December 22, 1998 issued by the Ministry of Finance.

d. For land, water, and sea surface rental fees, refer to Decision No. 179/1998/QD-BTC dated February 24, 1998 issued by the Minister of Finance regarding the regulations on land, water, and sea surface rental fees applicable to foreign investment forms in Vietnam.

e. Taxes on contractors: Review ongoing construction projects, services requiring foreign contractors and subcontractors, and projects and services to be implemented; foreign organizations and individuals engaged in business activities in Vietnam not falling under the provisions of the Law on Investment in Vietnam.

g. Transfer tax on income of economic organizations and individuals transferred abroad: In preparing the budget forecast, note the following points:

- Income transferred abroad may be in the form of money, goods, products, or commodities; income obtained by foreign investors through investment in Vietnam under the Law on Investment (including refunded income and income from capital transfer) if transferred abroad (or retained outside Vietnam), kept in Vietnam but used to settle debts for the parent company, or spent on the representative office of the parent company in Vietnam, all must be subject to the transfer tax on income abroad.

- The amount of transfer tax on income transferred abroad payable is determined by the amount of income transferred abroad or considered as transferred abroad or the income retained by the investor outside the territory of Vietnam (x) multiplied by the transfer tax rate specified in Circular No. 99/1998/TT-BTC dated July 14, 1998 issued by the Ministry of Finance. The tax rate is recorded in the investment permit issued by the competent authority after consultation with the Ministry of Finance in writing.

h. For capital transfer activities: Calculated according to Circular No. 99/1998/TT-BTC dated July 14, 1998 issued by the Ministry of Finance. Taxes on capital transfer activities include corporate income tax and transfer tax on profits abroad.

1.3. Taxes on the non-state commercial and service sector:

Review and accurately grasp the business entities in the area. Evaluate the extent of revenue loss in terms of turnover and business entities in 1999 to determine the turnover and business entities in 2000, gradually reducing the rate of revenue loss. Specifically as follows:

a. Regarding households:

For fixed business households: Review the fixed business households, bring households not yet taxed under the business license tax into tax management. Based on the number of business licenses and the proposed tax brackets, bring all fixed business locations into the calculation of value-added tax and corporate income tax.

- For joint-stock companies, limited liability companies, private companies, cooperatives, production groups: Calculate in detail for each enterprise, especially large enterprises.

b. Regarding taxes:

- Value-added tax: The VAT payable by business establishments is calculated according to one of two methods: the deduction method and the direct calculation method on value-added.

+ Deduction method: For private enterprises, joint-stock companies, cooperatives, and large individual businesses using VAT invoices, it is calculated similarly to state-owned enterprises as previously described.

+ Direct calculation method on value-added: Calculated according to Circular No. 173/1998/TT-BTC dated December 22, 1998 issued by the Ministry of Finance.

- The basis for calculating VAT for individual households producing and trading who pay tax according to the direct calculation method on value-added is the value-added and tax rate.

- Develop plans to gradually shift households paying taxes according to the direct method to the deduction method.

- Corporate income tax:

+ For business establishments that declare and pay VAT under the deduction method: The calculation method is similar to that for state-owned enterprises.

+ For business establishments that declare and pay VAT under the direct declaration method, the basis for calculating tax is based on the ratio of taxable income to revenue and the tax rate.

1.4. Agricultural land use tax: When calculating, attention should be paid to the increase in land area due to new land being put into use, and the conversion from one rice crop to two or three rice crops.

1.5. Revenue from lottery activities:

- Based on an assessment of the collection situation in 1999, clearly analyzing subjective and objective reasons, including the State's measures to combat illegal lotteries, and taking into account the sales network, consumption capacity, adjustment of ticket price structures, and reduction of issuance costs, the revenue for 2000 is calculated.

- Regarding taxes: Implemented according to Circular No. 18/1999/TT-BTC dated February 6, 1999, issued by the Ministry of Finance. In addition to revenues to the State budget under the Law on Value Added Tax, the Law on Corporate Income Tax, and other taxes and revenues as currently prescribed by the State, Lottery Companies must also remit a portion of their remaining corporate income into the State budget due to lower VAT payments compared to previous business income tax payments without adjusting factors in the lottery ticket prices.

1.6. Fees and charges:

- Calculate revenue from all types of fees and charges within the management area, separately compiling central, provincial city, and district commune managed fees and charges.

- Detail calculations for all types of centrally managed fees and charges, and those provincial city fees and charges with significant revenue shares.

- To ensure all sources of revenue are reflected in the State Budget as stipulated by the State Budget Law, units previously allowed to retain a certain percentage for fee and charge management operations must fully compile retained revenue and expenditures into their revenue and expenditure budgets. The decision on whether a unit retains funds for expenditure (then records revenue and expenditure) or submits all collected revenue to the State Budget, which will then allocate sufficient funds according to approved budgets, must be approved by the competent authority. Units retaining part or all of the revenue for expenditure must also have their revenue and expenditure budgets approved by the competent authority.

1.7. For export duties, import duties, VAT on imported goods, and special consumption taxes collected by Customs: Based on the provisions of the Law on Export Duties, Import Duties (amended and supplemented), the Law on Special Consumption Taxes, and the Law on Value Added Tax, and considering the situation of import and export trade, Customs authorities are responsible for coordinating with relevant Ministries, sectors, and localities to prepare detailed budgets for collecting import duties, export duties, special consumption taxes, VAT on imported goods, and related revenues from import and export activities.

Based on agreements, commitments signed, and any amendments and supplements thereto, and taking into account the progress of implementing projects, detailed budgets for foreign debt borrowing and foreign aid receipts must be prepared according to each project, sector, and locality.

Ministries, localities, and budgetary units at all levels must prepare the 2000 State budget expenditure plan within the scope of the announced review; based on established expenditure standards and regulations, and taking into account the volume of assigned tasks, priority should be given to important and main tasks, with thorough efforts to save and prevent waste. The preparation of the 2000 State budget expenditure plan for each field, central agency, and locality must thoroughly implement the policy of socialization, mobilizing various social resources according to established regulations to better fulfill the tasks of each field and unit alongside State budget resources. Specifically, for some key fields as follows:

2. Regarding state budget expenditure:

2.1. For basic construction investment expenditures:

- Allocation of centralized basic construction investment expenditures must ensure the following sequence: prioritizing allocation of matching funds for ODA-funded projects, key national and local projects, repayment of temporarily borrowed funds from previous years, allocation of funds for unfinished basic construction investments in 1999 without settlement sources, allocation of funds for ongoing projects to be completed and put into use in 2000, and effective ongoing projects carried over from 1999. For projects funded through loans where the project owner must arrange matching funds in accordance with signed agreements and domestic financial regulations to avoid impacting project implementation schedules.

- Continue allocating investment returns to the oil and gas industry from profits after tax from the Vietnam-Soviet joint venture oil and gas operations, in accordance with the ratio specified by the Prime Minister.

- Continue implementing mechanisms for allocating investment funds for economic and social infrastructure projects, social welfare projects, housing development funds, agricultural and rural development investments, especially livestock and crop improvement, and forest regeneration from local government budgets sourced from land use rights transfer revenues, land rental fees, lottery revenues, proceeds from the sale of state-owned housing, agricultural land use taxes, forestry resource taxes, etc., as in 1999.

- Continue implementing mechanisms for allocating funds to implement infrastructure development projects from hydropower resource tax revenues, and reinvesting in border economic zones as decided by the Prime Minister.

2.2. Support for public utility activities, where public utility enterprises cannot cover their expenses from their own revenues, is provided according to Government regulations.

2.3. For National Reserve expenditures: Based on assigned National Reserve tasks, sectors and units are responsible for assessing and determining reserve levels as of December 31, 1999, planning purchases and sales in 2000; based on this, they forecast supplementary reserve levels for each type of commodity and material, and prepare the National Reserve expenditure budget for commodity storage protection in 2000.

2.3. For state reserve expenditures: based on the assigned state reserve tasks, relevant sectors and units shall assess and determine the level of reserves for their sector or unit up to December 31, 1999, develop plans for purchases and sales in 2000; on this basis, they shall forecast the levels of supplementary reserves for each type of goods and materials, and prepare the budget for state reserve expenditures for the storage of reserve goods for their sector or unit in 2000.

2.4. For subsidies for policy goods:

- Subsidies and transportation subsidies for policy goods in mountainous areas as stipulated in Decree No. 20/1998/NĐ-CP shall be calculated according to Circular Joint No. 11/1998/TT-LB/BTM-UBDTMN-BTC-BKHĐT dated July 31, 1998.

- Subsidies for seed stock maintenance, press subsidies, publishing house subsidies, film subsidies, etc., shall be implemented according to current regulations. Ministries, localities, and units need to carefully calculate subsidies based on clearly defined quantities, production costs, transportation expenses, and specific subsidy levels for each item in accordance with prescribed regulations.

2.5. For administrative and public service expenditures:

- Budget allocation for education and training, science, technology, and environmental affairs: The 2000 budget must comply with the requirements of Resolution Central Committee II; for the state budget nationwide: Allocate funds (including investment, regular, aid, and loan funds) for education and training sectors to reach 15% in 2000; for science, technology, and environment sectors to reach 2%; local budgets must prioritize funding to ensure these two sectors have the highest growth rates within the available budget.

- Reasonably allocate public service expenditures for health, culture, information, broadcasting, television, sports, and physical education based on thorough reviews of tasks and programs to ensure effective operations and sufficient funding to implement specific policies and systems issued by competent authorities.

- Administrative expenditures (state management, Party, mass organizations): Accurately calculate expenditure standards according to regulations and strictly economize on expenses such as hospitality, conferences, outbound and inbound delegations, etc.

- For expenditures using borrowed or aid funds, detailed budgets must be prepared for each project and the corresponding domestic funding required under commitments and regulations must be calculated.

- Operating costs of scientific, medical, and educational institutions under state-owned enterprises shall be accounted for according to Decree No. 27/1999/NĐ-CP dated April 20, 1999 of the Government; from 2000, no support will be provided from the state budget except in special cases decided by the Prime Minister.

- In 2000, regular expenditure for certain first-level budget units will be organized; before August 15, 1999, the Ministry of Finance will coordinate with relevant agencies to report to the Prime Minister for decision-making; Provincial Departments of Finance and Prices will coordinate with local agencies to report to the People's Committee Chairperson for the list of first-level budget units implementing the budget allocation mechanism from 2000 to serve as the basis for preparing, allocating, and managing the budget for these units proactively from the beginning of the year.

- During the calculation of budget expenditures for administrative and public service units, all tasks funded from fees, charges, and other revenues retained for expenditure according to current regulations must be reported fully.

2.6. For expenditures to implement target programs:

- For national target programs: Based on the assessment of effectiveness, workload, and funding for national target programs up to the end of 1999, forecast the workload that needs to be completed in the coming years and in 2000. Programs that are no longer national target programs from 2000 must be budgeted as regular expenditures for ministries and localities.

2.7. For repayment of domestic loans for development investment by local budgets as stipulated in Clause 3, Article 8 of the State Budget Law: Provinces and centrally-administered cities need to proactively review loans due for repayment and allocate funds for repayment within the scope of local budget allocations as prescribed by the State Budget Law and related guiding documents.

III- IMPLEMENTATION:

1. Ministries and state agencies responsible for economic and social indicators must establish these indicators and promptly notify the Ministry of Finance, central ministries, and localities before the deadline for preparing the state budget as specified in guiding documents for the implementation of the State Budget Law (amended and supplemented) to serve as the basis for preparing the state budget for 2000.

2. Ministries, central agencies, and provincial people's committees shall base their actions on this Circular and the check figures for the state budget revenue and expenditure for 2000 announced by the Ministry of Finance to guide, announce check figures, organize discussions, and compile the state budget for 2000 in accordance with the provisions of this Circular.

3. The Ministry of Finance will organize meetings with central ministries, agencies, and localities to discuss the 2000 state budget during the period from mid-August to September 10, 1999 (specific meeting schedules will be announced later).

After the National Assembly approves the 2000 state budget, the Ministry of Finance will organize meetings with central ministries, agencies, and localities regarding the 2000 state budget prior to submitting the budget allocation plan for 2000 to the Government and the Standing Committee of the National Assembly.

4. The General Tax Department, the General Investment and Development Department, the General State Capital and Asset Management Department at Enterprises, and the Central Treasury have the responsibility to provide detailed guidance on this Circular for implementation and to prepare and consolidate the state budget revenue and expenditure projections for their respective fields.

Regarding the forms for preparing and reporting the 2000 state budget revenue and expenditure:

- Central ministries and agencies shall organize guidance for subordinate units to prepare and report the state budget revenue and expenditure projections; based on this, they shall consolidate and report the 2000 state budget revenue and expenditure projections of the ministry or agency to the Ministry of Finance in accordance with the form and time frame specified in Circular No. 103/1998/TT-BTC dated July 18, 1998 of the Ministry of Finance.

- For localities: To have a basis for compiling and submitting to the National Assembly the budget revenue and expenditure forecast including all four levels of budgets (Central, provincial, district, commune) from 2000, it is requested that the People's Committees of provinces and cities direct and guide lower-level local authorities to prepare comprehensive budget revenue and expenditure forecasts according to the forms prescribed in Circular No. 103/1998/TT-BTC dated July 18, 1998 of the Ministry of Finance, and to compile and report the 2000 budget revenue and expenditure forecasts of communes and equivalent units according to the attached forms in this Circular to the Ministry of Finance for consolidation.

5. During the process of building the 2000 budget, if new policies and regulations are issued, the Ministry of Finance will provide supplementary guidance and notifications 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.