CIRCULAR

GUIDING THE IMPLEMENTATION OF THE DECREE NO.60/2003/ND-CP OF JUNE 06, 2003 OF THE GOVERNMENT DETAILING AND GUIDING THE IMPLEMENTATION OF LAW ON STATE BUDGET

Pursuant to the State Budget Law No.01/2002/QH11 dated December 16, 2002 and the Decree No.60/2003/ND-CP of June 06, 2003 of the Government detailing and guiding the implementation of Law on State Budget;

Pursuant to the Decree No.73/2003/ND-CP dated June 23, 2003 of the Government promulgating the Regulations on considering and deciding on the estimates and allocations of local budget, approving the local budget standards;

The Ministry of Finance guides the decentralization, establishment, execution and settlement of the state budget as follows:

I. GENERAL PROVISIONS

1. The state budget is a unified system, including the central budget and budgets of local authorities (hereinafter referred to as local budgets) as prescribed in clause 1 of Article 5 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government.

2. Revenue collection sources and spending tasks of the central budget and local budgets are prescribed by the State Budget Law and the Decree No.60/2003/ND-CP of June 6, 2003 by the Government.

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4. Percentage (%) dividing the revenue collection sources and number of additional balance from the high level budget to lower-level budgets is stable during a period from 3 to 5 years (collectively, the budget stabilization period) . The Government submits to the National Assembly for decision on the budget stability period between the central budget and local budgets. Provincial-level People's Committees submit to the People's Councils at the same level for decision on the budget stability period between local budgets.

5. The assigned budget estimate adjustment shall comply with the authority and procedures prescribed in Article 43 and Article 44 of the Decree No.60/2003/ND-CP of June 06, 2003 by the Government.

6. The organizations and individuals, including foreign organizations and individuals operating in the territory of the Socialist Republic of Vietnam are obliged to pay in full and on time the taxes, fees, charges and other payables to the budget as prescribed by law; management, use of funds, funding granted by the state in accordance with the right purposes, regulations, economy and effectiveness.

7. Collecting agencies (including State Tax, Customs, Finance and other agencies to be allowed by the Government or authorized by the Ministry of Finance) cooperate with the State Treasury to organize management, focus the state revenue collection source, regularly inspect, urge, and ensure that all budget revenues should be focused fully, timely to the state budget.

8. All state budget expenditures must be checked, controlled before, during and after the process of allocation for payment. Payments must be in the assigned state budget estimates, in accordance with the regulations, standards and norms of expenditure defined by the competent state agencies and decided on expenditure by the head of the unit using budget or person authorized to decide spending. The persons who make spending decisions must take responsibility for their decisions, if they decide on spending improperly; they must be reimbursed and depending on the nature and seriousness of their violations, shall be disciplined, administratively sanctioned or examined for penal criminal.

9. All revenues and expenditures of state budget are accounted in Vietnam dong. The state budget revenues in foreign currency, in kind or by labor day are converted into Vietnam dong at the exchange rate of cost accounting or in kind, labor day rates defined by competent agencies for accounting state budget revenues at the arising time.

10. The organizations or individuals are responsible for collecting and remitting to the state budget, use of state budget must be organized accounting, reporting and settlement of budget revenues and expenditures according to the budget year, budget levels, contents of State budget, state accounting regime and the regulations in the Decree No.60/2003/ND-CP of June 06, 2003 of the Government, as well as the provisions of this Circular.

11. For some special activities in the field of national defense - security; allocation and payment of capital for basic construction investment; management mechanisms of loans and aid; the revenues and expenditures of oversea based Vietnam representative agency overseas; management of the communal budget, the Finance Ministry coordinates with the concerned agencies to issue the separate guidelines.

II. DECENTRALIZATION OF BUDGET MANAGEMENT

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1.1. The revenue sources of central budget include:

1.1.1. The revenues of central budget entitled 100%:

a) The value added tax of imported goods;

b) Export and import duties;

c) Special consumption tax of imported goods;

d) Corporate income tax of the entire branch accounting units. Income tax of the entire branch accounting units is the income remitted to budget from the business, production activities carried out the focused accounting of the following units:

- The business, production activities of power of the Electricity Corporation of Vietnam, the Electricity Companies I, II, III, The Electricity Company of Hanoi city, Electricity company of Ho Chi Minh City, Electricity company of Hai Phong, Electricity company of Dong Nai;

- The business activities of the Industrial and Commercial Bank of Vietnam, Bank for Agriculture and Rural Development of Vietnam, Bank for Foreign Trade of Vietnam, Bank for Investment and Development of Vietnam, Bank for Social Policies; Bank for Housing Development of the Cuu Long Delta;

- The business activities of the Vietnam national airline;

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- Insurance trading activities of Insurance Corporation of Vietnam;

- Transportation business activities of the Corporation of Vietnam's railway;

đ) Other taxes and revenues from the exploration and exploitation of oil, gas, including tax of transferring income abroad, rent for ground, water surface;

e) Payback of central budget at the economic facilities, loan recovery of the central budget (both principal and interest), collection from financial reserve funds of the central; income from capital contributed by the central budget;

g) The fees and charges, the parts remitted to the budget as prescribed by law organized the collection by the agencies and units of the central government, excluding costs of gas, oil and registration fees;

h) Non-business revenues, the parts remitted to the budget as prescribed by law of the units directly managed by the central agencies;

i) Revenue difference much more than expenditure of the State Bank of Vietnam;

k) Revenues from capital refund, liquidation of assets, other revenues of state-owned enterprises managed by the central government, the parts remitted to the budget as prescribed by law;

l) Revenues from fines and confiscation under the provisions of law;

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n) Revenues due to source transfer from the central budget of the previous year to the central budget if next year;

o) Non-refundable aids of governments of the countries, other organizations and individuals in foreign countries to the Government of Vietnam;

p) Other revenues of central budget in accordance with the law provisions.

1.1.2. Revenues divided by percentages (%) between the central budget and local budgets:

a) Value added tax, excluding value added tax of imported goods specified in section a point 1.1.1 Part II of this Circular and value-added tax collected from the lottery;

b) Corporate income tax, excluding corporate income tax of the entire branch accounting units specified at Section d, point 1.1.1 of Part II of this Circular and corporate income tax collected from the lottery;

c) Income tax for high income earners;

d) Special-consumption tax collected from services and goods produced domestically, excluding Special-consumption tax collected from the lottery;

đ) Fee for petrol.

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1.2.1. Expenditure for Investment and development on:

a) Investment in the construction of economic - social infrastructures that are unable to withdraw funds managed by the Central Government;

b) Investment and support for the enterprises, economic organizations, contribution to equity, venture into the enterprises in the areas required the participation of the State under the provisions of law;

c) Expenditure for financial support and funding supplement, support and reward of export for the enterprises, economic organizations in accordance with law;

d) The expenditure for investment and development in the national target programs and state projects made by and central agencies;

đ) Expenditure in support for state financial institutions managed by the central government;

e) Expenditure for adding state reserves;

g) Other investment and development expenses as prescribed by law;

1.2.2. Regular expenditure on:

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- The ethnic minority boarding high schools;

- Training for postgraduate, universities, colleges, vocational schools, vocational training and other forms of training and retraining;

- Medical prevention and treatment and other activities of health profession;

- The facilities of invalids, persons who have contributed to the revolution, the social camp, prevention and fighting of social evils and other social activities;

- Conservation, museums, libraries, restoration of historic relics ranked, the creative activities of literature, art and other cultural activities;

- Radio, television and other information activities;

- Retraining and training of coaches and athletes of the national teams; the national and international tournaments; sports facilities management and other activities of fitness, sports;

- Scientific research and technological development;

- Other activities;

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- The transportation profession: restoration, maintenance, repair of bridges, roads, other traffic works, signs fixing and other measures to ensure traffic safety on the roads;

- The agriculture, irrigation, fisheries and forestry: maintenance and repair of dikes, irrigation works, stations of agriculture, fisheries, forestry; encouragement of agriculture, fisheries, forestry; the farm zoning, protection and fighting of forest fire, and protection of fisheries resources;

- Basic Survey;

- Measurement of administrative boundaries;

- Mapping;

- Measurement of the border, border demarcation;

- Measuring, mapping and archiving of cadastral records;

- The sedentarization and new economic zones;

- The environmental protection activities;

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c) The duties of defense, security, social order and safety ensured by the central budget in accordance with the Government's own regulations and guidelines for implementation;

d) Activities of the National Assembly, the President, ministries, ministerial-level agencies, Governmental agencies, system of people's courts, the People's Procuracy;

đ) Activities of the central agency of the Communist Party of Vietnam;

e) Activities of the central agency of the Central Committee of Vietnam Fatherland Front of Vietnam; Labor Confederation of Vietnam; Veterans Association of Vietnam; Women's Union of Vietnam; Vietnam Farmers Association; Communist Youth Union of Ho Chi Minh City;

g) The subsidy by the State policy;

h) The regular expenditure in the national target programs and state projects implemented by the central agencies;

i) Compliance with the regime of retired people, health loss under the provisions of the Labor Code for the objects covered by the central budget; support of the Social Insurance Fund as prescribed by the Government;

k) Implementation of policies for war invalids, sick soldiers, martyrs, martyrs' relatives, families that contributed to the Revolution, and other objects of social policies;

l) Support for social - professional and political organizations, social organizations, social - professional organizations under the Central Government under the provisions of Article 17 and Article 18 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government;

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1.2.3. Repayment of principal and interest for the amounts borrowed by the Government;

1.2.4. Aid expenditure for the foreign governments and organizations;

1.2.5. Expenditure for loans under the provisions of law;

1.2.6. Addition to the Central financial reserve fund;

1.2.7. Addition to local budgets;

1.2.8. Expenditures for source transfer from the central budget of the previous year to the central budget of the following year.

1.3. Revenues of local budgets, including:

1.3.1. Revenues of local budgets entitled 100%:

a) Land and housing tax;

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c) Excise tax;

d) Land use right transfer tax;

đ) Agricultural land use tax;

e) Land use levy;

f) Land rent, water surface rent, excluding water surface rent collected from oil and gas activities;

g) Compensation for land damages;

h) Rental and sale of houses under state ownership;

i) Registration fees;

k) Proceeds from lottery operations;

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m) The fees and charges, the parts remitted to budget as prescribed by law organized to collect by the local agencies and units, excluding costs of gas, oil and registration fees;

n) Proceeds from public land fund and other revenue from yields of public products;

o) Non-business revenues, the parts remitted to budget in accordance with the laws of the units managed by the localities;

p) Mobilization from organizations and individuals to invest in construction of infrastructure works in accordance with law provisions;

q) Voluntary contributions from foreign and domestic organizations and individuals;

r) Revenue from mobilization for construction investment of infrastructure works in accordance with provisions in clause 3 of Article 8 of the State Budget Law;

s) Revenues from the fines and confiscation under the provisions of law;

t) Revenues from the balance of local budgets;

u) Other revenues of local budgets in accordance with law provisions;

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x) Revenues due to source transfer from the local budget of the previous year to the local budget of next year;

y) Direct non-refundable aids of organizations and individuals in foreign countries to the localities as prescribed by law;

1.3.2. Revenues divided in percentages (%) between the central budget and local budgets as prescribed in clause 1.1.2 of Part II of this Circular.

1.3.3. The decentralization of revenue sources specified in point 1.3.1 and point 1.3.2 of Part II of this Circular to the local budgets decided by the provincial-level People's Councils within the scope decentralized and comply with the principles specified in Article 6 of the Decree No.60/2003/ND-CP of June 6, 2003 of the Government, and must meet the following requirements:

a) Associated with the mission and management capabilities of each level, limiting the addition from the high-level budget to the lower budget; and encouraging all levels to strengthen revenue management, revenue loss prevention; limiting distribution of revenues of small-scale for many levels.

b) Budgets of communes and towns are entitled at least 70% of revenues as follows:

- Land use right transfer tax;

- Housing and land tax;

- Excise tax collected from individuals, small business households;

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- Registration fees for houses and land;

c) Budgets of towns and provincial cities are entitled at least 50% of registration fees, excluding the registration fees for houses, land.

1.3.4. The mobilization of infrastructure construction investment capital in accordance with provisions in clause 3 of Article 8 of the State Budget Law shall be implemented as follows:

a) When there is a need to raise capital for investment, the provincial-level People's Committee makes a plan and submits to the same level people's council for decision; the contents of the plan must be stated clearly:

- 5-year investment plan of the provincial budget is ensured the approval from the provincial-level People's Council;

- Investment projects proposed for mobilization of investment portfolio in five year plan decided by the People's Councils;

- The investment decision of the competent authorities on the investment project proposed for mobilization.

- Economic - social efficiency of project;

- Total investment capital needs to be mobilized and expected source of debt repayment of the provincial budget;

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- Outstanding mobilized capital at the time of submitting the plans and outstanding balance after the mobilization plan is approved must be ensured not more than 30% of capital for annual domestic basic construction investment of provincial-level budget, excluding additional investment capital by non-stable regularly target from the central budget for the provincial-level budget;

- Balancing the current annual provincial budget and the repayment capacity of the budget of the next years;

- Other documents to clearly explain the capital raising plan.

b) After the capital mobilization plan are decided by the provincial-level People's Councils, the People's Committees report to the Ministry of Planning and Investment, Ministry of Finance for monitoring and supervising the implementation and synthesis to report to the Prime Minister;

c) The capital of localities shall comply with Government regulations on the issuance of government bonds and from other lawful financial resources as prescribed by law.

d) Mobilization capital is accounted as revenue for provincial-level budget for spending the determined objectives and must be arranged in the balance of the provincial-level budget for active debt payment when due.

1.4. Spending tasks of local budget include:

1.4.1. Investment and development expenditure on:

a) Investment in the construction of economic - social infrastructure works that are unable to withdraw funds managed by locality;

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c) The expenditure for development investment in the national target programs implemented by the local agencies;

d) Other investment and development expenses as prescribed by law;

1.4.2. Regular expenditure on:

a) The activities of education, training, vocational training, health, society, culture and information, literature and art, sports, science and technology, environment, and other activities managed by the local agencies:

- High school education, additional culture school, kindergarten, ethnic minority boarding high school and other educational activities;

- Universities, colleges, vocational schools, occupational training, short-term training and other forms of training and retraining;

- Medical prevention and treatment and other health activities;

- The social camps, social donation, poverty relief, prevention and fighting of social evils and other social activities;

- Conservation, museums, libraries, performing arts and other cultural activities;

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- Retraining and training of coaches, athletes of provincial-level teams; the provincial-level tournaments, management of the competition facilities of sports and fitness and other activities of sports and fitness;

- Scientific research, application of technical advances, other activities of science, technologies;

- The other activities managed by local authorities;

b) The economic activities managed by local authorities:

The transportation profession: restoration, maintenance, repair of bridges, roads, other traffic works, signs fixing and other measures to ensure traffic safety on the roads;

- The agriculture, irrigation, fisheries, salt and forestry: maintenance and repair of dikes, irrigation works, stations of agriculture, fisheries, forestry; encouragement of agriculture, fisheries, forestry; the farm zoning, protection and fighting of forest fire, and protection of fisheries resources;

- Administrative urban activities: restoration, maintenance of lighting systems, sidewalks, drainage systems, urban traffic, parks and other administrative urban activities;

- Measuring, mapping and archiving of cadastral records and other cadastral activities;

- Basic Survey;

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- The other economic activities;

c) The duties of defense, security, social order and safety ensured by local budgets in accordance with the Government’s regulations and the implementation guidelines;

d) The operations of state agencies, the Vietnam Communist Party in the localities;

đ) Activities of the political - social organizations in the localities: Committee of Vietnam Fatherland Front, Vietnam Veterans Association, the Vietnam Women's Union, Vietnam Farmers' Association, Ho Chi Minh Communist Youth Union;

e) Support for the professional - social, political organizations, social organizations, the professional - social in the localities as stipulated in Article 17 and Article 18 of Decree No.60/2003/ND- CP dated June 06, 2003 by the Government;

g) Implementation of the social policies for the objects managed by local authorities;

h) The regular expenditure in the national target programs performed by the local agencies;

i) The subsidy according to policy of the State;

k) Other regular expenses as prescribed by law;

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1.4.4. Additional expenditure for provincial-level financial reserve fund;

1.4.5. Additional expenditure for lower-level budgets;

1.4.6. Expenditures of source transfer from the local budget of previous year to the the local budget of next year;

1.4.7. The spending tasks specified in Section b point 1.4.1 and the Points 1.4.3 and 1.4.4 of Part II of this Circular, only applying to the provincial-level budget, not applying to district-level and commune-level budget;

2. Percentage (%) dividing the revenues between the budgets of all levels in the first year of the stable period:

2.1. Percentage (%) dividing the revenues between the central budget and the budget of each province or city under central authority as prescribed in point 1.1.2 of Part II of this Circular decided by the National Assembly Standing Committee.

- This percentage is applied generally to all revenues divided and defined separately for each province.

- The determination of the percentage (%) dividing for local budgets’ enjoying by the following formula:

Call:

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+ The total number of local budget revenues entitled to 100% (after deducting the following revenues: additional revenue from high-level budget, the surplus revenue, mobilization revenue under clause 3 of Article 8 of the Law on State Budget, revenue from voluntary contributions, revenue from aid, revenue from source transfer of the previous year's budget) is B.

+ Total number of revenues divided between the central budget and local budgets are C.

If A - B <C, the percentage (%) of distribution is calculated by the formula:

Percentage (%)

=

A - B

x 100%

C

If A - B = C, the percentage (%) is determined by 100% and the difference will be added to balance local budget by central budget.

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2.2.1. The revenues divided between the local budgets include:

- The revenues of tax, fees, charges and other revenues entitled to 100% by local budgets as prescribed in point 1.3.1 of Part II of this Circular;

- The revenues divided between the central budget and local budgets, part of local budgets entitled as specified in point 1.1.2 of Part II of this Circular;

2.2.2. Provincial-level People's Council decides percentage (%) dividing the revenues between the provincial-level budget with budget of each district, town, provincial city and budget of each commune, ward or township.

3. When decentralization of revenue sources and spending tasks and determination of the percentage (%) dividing the revenues between local budgets must:

3.1. On the decentralization of revenue sources:

- The decentralization of revenues between the local budgets shall comply with the provisions of Article 6 of the Decree No.60/2003/ND-CP of June 6, 2003 of The Government and point 1.3.3 part II of this Circular.

- Focus on the ability to meet spending needs in place, encourage exploitation of revenues, and comply with the conditions and characteristics of each region. Revenues associated with the management role of a certain level of government shall be allocated to budget of that level of government.

- Decentralize maximum revenue in the area to ensure the spending tasks assigned; limit addition from the higher-level budget.

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 - Ensure the percentage (%) dividing the revenues for its budget and the budgets of all lower-levels shall not exceed the percentage (%) divided by the regulations of the higher level for each revenue divided.

3.2. On decentralization of spending tasks:

3.2.1. Decentralization of expenditures for basic construction investment:

- The decentralization of expenditures for basic construction investment of the projects of economic - social infrastructure for the districts, communes or townships under the provisions of Article 6 and Article 25 of the Decree No.60/2003/ND- CP dated June 06, 2003 of the Government, based on qualifications, management capability and volume of investment capital, the provincial-level People's Committees submit to the People's Councils for deciding on decentralization of expenditures for lower-level basic construction investment. Provincial-level towns and cities shall be assigned the spending task for construction investment: State schools at all levels and public welfare projects, lighting, water drainage and supply, urban traffic, traffic safety, urban sanitation; on the basis of decentralization, identify the spending tasks for lower-level basic construction in detail.

3.2.2. Decentralization for regular expenditures:

The decentralization for regular expenditure between local budgets must ensure the principles described in Article 6 of the Decree No.60/2003/ND-CP of June 06, 2003 of the Government, and must:

a) Comply with the decentralization of economic - social management, defense and security in the locality as prescribed by law and be consistent with economic characteristics, geography, population of each region and level, capacity of officials to ensure efficiency;

b) For the budgets of communes, townships, if sources of revenue 100% and revenues divided by the percentage (%) are greater than the regular expenditure tasks, provincial-level shall assign more expenditure tasks for the projects, health centers, kindergartens and other infrastructures managed by the communes, towns.

4. Additional number from the higher-level budget to the lower-level budget includes:

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Additional number for balance from the central budget to the local budget for the first year of stable period is determined as follows:

Additional level

=

Total expenditures of local budgets (according to the A content mentioned at Point 2.1 of Part II of this Circular)

-

Total revenues from local budgets entitled to 100% (according to the B content specified at Point 2.1 of Part II of this Circular)

+

Total revenues divided between the central budget and local budgets (the entitled local budgets which have been expanded to 100%)

Additional number for balance from the higher-level budget to the lower-level budget in the locality is determined according to the principles determining the difference between expenditures and revenues of lower-level budget (revenue 100% and the revenues entitled percentage (%) from the revenues divided between the local budgets).

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4.2.1. Addition targeted to support lower-level budgets for performing the following tasks:

a) Support in the implementation of policies, the new regime issued by higher level but not been included in the budget estimates of the first year of budget stabilization period, the specific level of support is determined on the basis of ability of budget balance of the relevant levels;

b) Support in the implementation of programs and national projects assigned the local agencies to implement, the specific level of support is implemented by expenditure estimates assigned by the competent authorities;

c) Support in the implementation of goals, works, projects of great significance to the requirements of economic – social development of the localities, in the planning and has been approved by competent authorities in accordance with law provisions on management of investment and construction, the lower-level budget allocated expenses but not enough sources, the support level is under the plan approved by competent authorities.

d) Support in part to handle irregular difficulty: recovery from natural disasters, fires, accidents in widespread with severity, after the lower-level budget was used for reserve, a part of local financial reserve fund, but not yet met the demand.

đ) Support in the implementation of some other urgent, essential tasks, the support level is under the decision by competent authorities.

4.2.2. Additional number targeted from higher-level budget to lower-level budgets is determined annually. Specific support level is based on capacity to balance of the higher-level budget and requirements on specific goals of the subordinates. The use of capital and funding supplemented by the goal must be according to the specified target.

5. Percentage (%) dividing the revenues between local budgets and additional number balanced from higher-level budget to lower-level budgets is stable from 3 to 5 years so for the years in the stable period, the People's Committees at all levels based on revenues and expenditures decentralized, percentage (%) dividing the revenues and the additional level from higher-level budget, regime of collection, standards, norms of budget expenditure and specific requirements for socio-economic development of the localities, submit to the same level People's Councils the estimates of revenues, expenditures and proactive to manage, operate estimates of budget revenues and expenditures which have been decided by the People's Councils.

III. ESTIMATION OF ANNUAL STATE BUDGET

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1.1. Based on the directive of the Prime Minister on the planning of economic - social development and state budget estimate of next year, the Ministry of Finance issues the Circular guiding the requirements, content, time limit to estimate the state budget and notify the inspection number of the state budget to the ministries, ministerial-level agencies, Governmental agencies, other central agencies and People's Committees of provinces and centrally-run cities.

1.2. The ministries, ministerial-level agencies, Governmental agencies, other central agencies based on directives of the Prime Minister, Circular, inspection number of the budget estimate of the Ministry of Finance and based on the requirements of specific tasks of the Ministries, agencies, notify inspection number of the state budget estimate to the subordinate units.

1.3. Provincial-level People's Committees based on the directives of the Prime Minister, Circular, inspection number of the budget estimate of the Ministry of Finance, based on the orientation of economic - social development, requirements and specific tasks of the localities, based on the ability to balance local budgets, guide and inform the inspection number of the budget estimate to the subordinate units and lower-level People's Committees.

1.4. The ministries, ministerial-level agencies, Governmental agencies, other central agencies, the People's Committees at all levels, when announcing the inspection number of the state budget estimate to the subordinate units and lower-level People's Committees must ensure that the revenue is not lower than the inspection number of revenue, expenditure number must be consistent with the inspection number of total and structure.

1.5. Prior to June 10 of the previous year, the Ministry of Finance announces the inspection number of the budget estimate to the ministries, ministerial-level agencies, Governmental agencies, other central agencies and People's Committees of provinces and centrally-run cities, the content of inspection number includes:

- Total and each sector of budget revenue and expenditure for the ministries, ministerial-level agencies, Governmental agencies and other central agencies.

- Total revenues, expenses and some important expenditures for the provinces and centrally-run cities.

2. Requirements for budget estimates:

2.1. State budget estimates and budget estimates of the authorities must synthesize by each sector of revenue and expenditure and by the structure of the regular expenditure, investment and development expenditures, and debt repayment expenditure.

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2.3. Budget estimates must be accompanied the report to clearly explain the basis, bases for calculation.

2.4. Budget estimates at all levels must ensure balance on the following principles:

2.4.1. For state budget estimates: total revenues of tax, fees and charges must be more than total regular expenditures and debt payments; deficit must be less than expenditures for development investment.

2.4.2. For the provincial-level budget estimates: it must balance between revenues and expenses on the basis of the provincial-level budget revenues including revenues from the provincial budget entitled to 100%, the revenues divided to the provincial budget according to percentage (%) which has been provided and the additional number balanced from the central budget (if any); number expected to mobilize domestic capital for investment in the construction of infrastructure works specified clause 3 of Article 8 of the State Budget Law and Article 26 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government.

2.4.3. Budget estimates of district and commune levels must be balanced revenues and expenditures.

3. Bases to make budget estimate:

3.1. The mission of economic - and social development and assurance of national defense - security; targets and specific tasks of the plan year and the targets reflecting the size, duty, operational characteristics, economic - social conditions and nature of each region as population by region, economic - social indicators notified by competent authorities to each ministry, ministerial-level agencies, Governmental agencies, other central agencies, each locality and unit;

3.2. The laws, ordinances on tax, collection regime; budget allocation norms; regime, standards and norms of budget expenditure specified by the competent authorities; in case of need to amend or supplement these documents, it must research to amend, supplement and issue before the time of estimating the annual state budget. Of which:

3.2.1. For state budget revenues, the estimate must be based on the economic growth, the relevant indicators and the provisions of law on state revenue collection;

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3.2.3. For regular expenditures, the estimate must follow the policies, regulations and standards and norms defined by the competent state agencies, in which:

- For the ministries, ministerial-level agencies, Governmental agencies, other central agencies: Based on the norms of allocation of central budget decided by the Prime Minister to issue norms for allocation of budget expenditure for the subordinate units, to ensure conformity with the total and details by each domain.

- For the localities: provincial-level People's Councils based on the allocation norms of local budget expenditure decided by the Prime Minister to issue norms for allocation of budget expenditure to the agencies and provincial units and lower level units.

- For the budget-using units, the estimate is based on the policies, regimes, standards and norms for expenditure issued by the competent agencies.

- For the administrative agencies implementing the lump sum payroll and administrative management expenditures and the non-business units with revenues, the estimate is made by separate regulations of the Government, the Prime Minister;

3.2.4. For payment of debts, it must ensure the sufficient payment of all due debts (including principal and interest) in accordance with repayment obligations;

3.2.5. For loans to offset state budget deficits, the estimate must be based on balance of the budget, the ability of each loan source, repayment ability and the budget deficit rate as prescribed by the competent authority.

3.3. The provisions on decentralization of economic - social management, decentralization of budget management.

3.4. For local budget estimates, the estimate within the budget stabilization period is based on percentage (%) dividing the revenues and the additional rate balanced from the higher-level budget assigned; for the first year of the budget stabilization period, based on the budget allocation mode and the estimate of budget revenues and expenditures of each locality.

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3.6. Inspection number on the budget estimate notified by the competent agencies.

3.7. The implementation of budget estimates of some previous years and some closest years.

4. Duties and powers on the budget estimate.

4.1. The enterprises based on the plan of production - business of the units, the laws, ordinances on tax and regulations of state revenue collection, tax estimate and amounts payable to the budget, expected value added tax returned under the regime; to send to tax agencies, customs offices and agencies tasked to collect the budget by the State;

4.2. Local tax agencies estimate state budget revenues (domestic revenue) in the areas and bases to calculate each revenue source, estimate the value-added tax required to return under the regime for the enterprises under the jurisdiction to send to the superior tax agencies, the People's Committees, financial institutions, agencies of planning and investment at the same level.

4.3. Taxation General Department reviews the revenue estimates, estimates the number of value added tax required to return under the regime made by the subordinate tax offices, synthesizes estimates of state budget revenue and bases to calculate each revenue source, sums up expectation of value added tax required to return for the enterprises in the whole country to report to the Ministry of Finance before July 20 of the previous year.

4.4. Departments of Customs of the provinces make revenue estimates of export, import duties, special consumption tax of imports, value added tax of imports, other revenues related to operation of import and export under the management scope to send to Customs General Department, the provincial People's Committee, and cc to the Department of Finance - Pricing, Department of Planning and Investment.

4.5. General Department of Customs reviews the revenue estimates made by the subordinate customs offices, synthesizes revenue estimates of export, import duties, special consumption tax of imported goods, the value added tax of imported goods and revenues assigned to manage to report to the Finance Ministry before July 20 of previous year.

4.6. The units using budget make estimates of budget revenue and expenditure under the scope of tasks assigned to send to the direct higher-level agencies. The direct higher-level agencies (if not being the estimate unit of level I) review and synthesize estimates of subordinate units to establish and send to the estimate unit of level I.

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4.8. The central and local state agencies (level-I estimating units) estimate the budget revenues and expenditures under its direct management, consider the estimates made by the units; synthesize and estimate the budget revenues and expenditures under its management to send to the financial agency, planning and investment agency at the same level, management agency of national target programs at the same level (the estimated expenditure for national target programs); collaborate with financial institutions at the same level to make estimation and budget allocation plans by sector of its budget. The central level-I estimating units send report before July 20 of previous year. Time to send reports of the local level-I estimating units shall be defined by provincial-level People's Committees. Based on the characteristics of the units and regulations of the time to send the budget estimates mentioned above, the level-I estimating units prescribe the time to prepare and submit reports for the subordinate estimating units accordingly.

Estimates of budget revenues and expenditures must be accompanied by a detailed explanation of bases to calculate each item of revenue and expenditure.

When the higher level estimating units consider the budget estimate report of the subordinate estimate units to synthesize, estimate the budget revenues and expenditures under their management should request the units to modify the estimates in the following cases: budget estimation not in compliance with bases on the norms, mode, scale and volume of assigned tasks, beyond the ability of budget balance, budget estimation not in compliance with prescribed form, not in compliance with state budget index, ...

4.9. Budget estimate of branches, sectors

The agencies managing branches, sectors centrally and locally coordinate with financial institutions and agencies of planning and investment at the same level to estimate the budget revenue and expenditures by branches, sectors to be in charge by their budgets. Central and local state management agencies in the field of education and training, science and technology coordinate with financial institutions and agencies of planning and investment at the same level to estimate the budget revenue and expenditure by sector to be in charge in the whole country and each locality. The central state agencies send reports to the Ministry of Finance, Ministry of Planning and Investment before July 20 of previous year.

4.10. Organization to work on the state budget estimate:

After the announcement of budget estimate inspection number, financial institutions at all levels shall work to discuss the budget estimate with agencies and units of the same level and the subordinate People's Committees, financial agency (for the first year of the budget stabilization period), higher-level agencies, organizations or units must hold to discuss the estimate with the units estimating central budgets.

4.11. People's Committees at all levels:

a) To guide, organize and direct the subordinate units, lower-level government to estimate the budget revenues and expenditures under its management; to coordinate and direct tax agencies, customs (if any) in the localities to make estimation of state budget revenues and expenditures, estimate the amount of value-added tax required to return under the regime for the enterprises in the area;

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4.12. The financial institutions at all levels:

a) For the first year of the budget stabilization period, to preside over and coordinate with the agency of planning and investment to work with direct lower-level People's Committee, agencies, units of the same level on the budget estimate; have the right to request for rearranging the revenues and expenditures in the estimates which are not in compliance with regulations, standards, which are not rational, economic, not consistent with the ability of budget and orientation for economic - social development. For the next years of the stable period, only work when the lower-level People's Committee requests;

In the course of work, the budget estimation and construction of budget allocation plan, if there are different opinions among the financial institutions with the agencies at the same level and subordinate authorities, financial institutions in the localities must report to the People's Committees at the same level for decision; the Ministry of Finance shall report to the Prime Minister for decision;

b) To preside over and coordinate with agencies of planning and investment and the relevant agencies at the same level in the synthesis, the budget estimates in their respective fields. For the field of education - training and science and technology, synthesize, estimate by the area in the locality and in the whole country;

c) To preside over and coordinate with the concerned agencies or units in the synthesis, estimate of the state budget, local budgets and budget estimate allocation plans of their levels;

d) To coordinate with the agency of planning and investment at the same level in the expenditure estimate for investment and development and budget estimate allocation plans for a number of expenditure field for investment and development of their level budgets in accordance with provisions in Section b point 4.13 part III of this Circular;

đ) The synthesis of estimate and plan for allocation of expenditure estimates of the national target programs (the regular expenditure) made by the national target program management agency;

e) To propose the budget balancing plans and the measures to implement policies to increase revenues and save expenditures of budget.

4.13. Agencies of planning and investment at all levels:

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b) The agencies of planning and investment coordinate with financial institutions at the same level in the synthesis, estimate of their level budgets; preside over and coordinate with financial institutions at the same level to make expenditure estimates for investment and development, plans of expenditure allocation for basic construction investment, additional expenditures for state reserve, expenditures for state credit support and expenditures for capital contribution, joint ventures according to regulations; in the central level, send to the Ministry of Finance before September 10 of previous year to sum up the state budget estimate and plan for allocation of the central budget to submit to the Government as prescribed in clause 3 of Article 21 of the Law on State Budget;

c) The Ministry of Planning and Investment shall synthesize the estimate and plan of expenditure allocation for national target programs (the expenditure for basic construction investment) made by the management agencies of national target programs and sum up estimates, the plan of expenditure allocation for national target programs to send to the Ministry of Finance before 10 September of previous year.

4.14. The state agencies at central and local levels:

a) The ministries managing branches, sectors collaborate with the Ministry of Finance in formulation of regimes, standards and norms of state budget expenditures under the branches or sectors to be in charge as provided in clause 5 of Article 10 of the Decree No.60/2003/ND-CP of June 06, 2003 by the Government;

b) The management agencies of national target programs preside over and coordinate with financial institutions, agencies of planning and investment to make expenditure estimates of national target programs; build the expenditure allocation plans of national target programs for the units, localities to send to the financial institutions, agencies of planning and investment at the same level for synthesis into the budget estimates and budget estimate allocation plans to submit to competent authorities for decision; at central level, send to the Ministry of Finance, Ministry of Planning and Investment before July 30 of previous year to sum up the state budget estimate and plan for allocation of the central budget to submit to the Government. The opinions of management agencies of national target programs which are not consistent with the opinions of the Ministry of Finance, Ministry of Planning and Investment shall be reported to the Prime Minister for consideration and decision.

5. Formation, decisions, allocation, and assignment of the state budget estimate.

5.1. Estimate of local budgets, the central budget and the state budget:

5.1.1. Estimate of local budgets:

Department of Finance - Pricing presides over and coordinates with the Department of Planning and Investment to consider the budget estimates of the provincial units, estimates of revenues made by tax authorities, customs offices (if any), the estimate of budget revenues and expenditures of the districts; estimates the revenue of state budget in the area, budget revenues and expenditures of the provincial budget (including district, commune budget estimates and provincial budget estimate), expenditure estimates for national target programs, reports to the provincial People’s Committee for submitting to provincial Standing People's Council for consideration before reporting to the Finance Ministry, the Ministry of Planning and Investment, the ministry managing the field of education, training, science and technology (for the expenditure estimates for education - training, science and technology), the central agencies managing national target programs (the expenditure estimates of national target programs) at least on July 25 of previous year.

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5.1.2. Estimate of the state budget and the central budget.

The Ministry of Finance presides over and coordinates with the Ministry of Planning and Investment and relevant ministries, agencies to review estimates of budget revenues, expenditure reported expenditure estimate of state budget according to areas by the ministries, ministerial-level agencies, Governmental agencies, other agencies in central and the provinces and cities directly under central authority (for the field of education - training, science and technology), and expenditures of national targeted programs reported by the management agencies of national target programs and reports, the demand for debt payment and borrowing capacity, sums up and estimates revenues and expenditures of state budget, makes plans to allocate the central budget to submit to the Government.

As assigned by the Government and authorized by the Prime Minister, report and explain to the National Assembly and the agencies of the National Assembly as stipulated in the Regulations of setting up, verification, submission to the National Assembly for deciding on the State budget estimate, plan of central budget allocation and approval of the state budget estimate issued by the National Assembly Standing Committee.

5.2. Decision on State budget estimate, central budget allocation, assignment of state budget estimate.

5.2.1. After the state budget estimate, the central budget allocation plan was decided by the National Assembly, the Ministry of Finance is responsible for:

a) Based on the Resolutions of the National Assembly on the state budget estimate, central budget allocation, for the first year of the budget stabilization period, submitting to the Government for submitting to the National Assembly Standing Committee for deciding percent (%) divided between the central budget and local budgets for the revenues specified in clause 2 of Article 30 of the State Budget Law;

b) Based on the Resolutions of the National Assembly on the state budget estimates, central budget allocation and Resolutions of the National Assembly Standing Committee on percentage (%) dividing revenues between the central budget and local budgets, submitting to the Prime Minister for deciding to assign task of budget revenue and expenditure for each ministry, ministerial-level agency, Governmental agency, other central agency by each sector; the task of revenues and expenditures, percentage (%) dividing revenues between the budget central and local budgets, the additional balance (if any), the additional rate targeted from the central budget, estimates of expenditure from funds authorized by the central budget to each province or city under central authority before November 20 of previous year;

c) Guiding tasks of budget revenues and expenditures for the ministries, ministerial-level agencies, Governmental agencies, other central agencies, the People's Committees of provinces and cities under central authority before November 25 of previous year.

5.2.2. On the basis of the decision of the Prime Minister to assign the task of budget revenue and expenditure for each province or city under central authority; Department of Finance - Pricing shall assist the provincial-level People's Committee to submit to the People's Councils at the same level for decision on estimate of provincial budget revenue and expenditure, the provincial-level budget allocation plans and the additional rate from the provincial-level budget to the lower-level budgets before December 10 of previous year; the provincial-level People's Committee is responsible for reporting to the Ministry of Finance, Ministry of Planning and Investment the provincial budget estimate and results of provincial budget estimate allocation which has been decided by the provincial-level People's Councils.

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5.2.3. After receiving the decision on assigning task of budget revenue and expenditure of the higher-level People's Committee; the People's Committee submits to the People's Council at the same level for deciding estimates of revenues and expenditures of local budgets and the plans for allocation of their respective budgets no later than 10 days since the direct higher-level People's Council has decided the estimates and budget allocation.

5.2.4. After receiving the estimates of budget revenues and expenditures assigned by the competent authorities; the estimating units must organize the allocation and assignment of estimates of budget revenues and expenditures to each subordinate unit, including expenditure estimates from authorized funds (if any) before 31 December of previous year.

5.3. No later than 5 days after the People's Council decides budget estimate or adjusted budget estimate, the People's Committee shall report to the higher-level People's Committee and financial institution (Provincial-level People's Committees report to the Finance Ministry, Ministry of Planning and Investment the estimates of the provincial budgets);

5.4. The Finance Ministry inspects the Resolution on the budget estimates of the provincial-level People's Council, in case of necessity; report to the Prime Minister for requesting the provincial-level People's Committees to submit to the People's Councils for revising local budget estimates. Financial institutions at local levels inspect the Resolution on the budget estimates of the lower-level People's Councils, in case of necessity; report to the People's Committees at the same level for requesting lower-level People's Councils to readjust budget estimates.

6. Documents for submitting estimates and budget allocations.

6.1. State budget estimates, plans of the central budget allocation, percentage (%) dividing the revenues between the central budget and local budgets and additional rate from the central budget to the budgets of the provinces and cities directly under the Central Government as submitted to the National Assembly must be accompanied by the necessary documents as prescribed in Article 42 of the State Budget Law and Regulations of formation, verification, submission to the National Assembly for diciding estimates of State budget, the plan of central budget allocation and approval of the state budget estimate issued by the National Assembly Standing Committee.

6.2. Budget estimates, plans of local budget allocation submitted to the People's Councils must be accompanied by the necessary documents as prescribed in Article 41 of the Decree No.60/2003/ND-CP dated June 06, 2003 and the Regulations to consider and decide on the estimates and local budget allocations; to approve the local budget estimate issued by the Government.

7. Formation of estimates, budget allocation plan.

7.1. Where the state Budget estimates, plans of central budget allocation have not been decided by the National Assembly, the Government re-makes the state budget estimates, plans of central budget allocation to submit to the National Assembly in the time decided by the National Assembly.

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8. Adjustment of the annual budget estimates.

8.1. Adjustment of the budget estimates of the lower-level local authorities in case the budget estimates of the local authorities have not been consistent with the state budget, or with the higher-level budget estimates, is made as follows:

The Ministry of Finance reports to the Prime Minister, financial institutions report to the People's Committees for requesting the lower-level People's Councils to readjust budget estimates after receiving reports on budget estimate decisions of the Councils of People at lower levels.

Provincial-level People's Committees shall report to the Government, Ministry of Finance and Ministry of Planning and Investment the adjusted budget estimates decided by People's Councils at the same level. The lower-level People's Committees shall report to the higher-level People's Committees, the financial institutions the adjusted budget estimates decided by People's Councils at the same level.

8.2. Where there are large fluctuations in the state budget required to adjust overall, the government estimates to adjust state budget, plans of the central budget allocation to submit to the National Assembly for deciding at the nearest session.

8.3. In case of urgent needs of national defense and security or for reasons of objectivity required to adjust the task of revenues and expenditures of a number of agencies, units and localities, but not volatizing the overall and the structure of budget, the Government submits to the Standing Committee of the National Assembly for decision and reports to the National Assembly at the latest session.

8.4. Where there are large fluctuations in local budgets required to adjust the overall, People's Committees shall estimate the local budget adjustment, budget allocation plan of their own levels to submit to People's Councils at the same level for decision.

8.5. In case of urgent needs of national defense, security or objective reasons required to adjust the task of revenues and expenditures of several affiliated agencies or of lower-level budgets, but not volatizing the overall local budgets, the People's Committees submit to People's Councils at the same level for decision.

The adjustment of the overall state budget estimate, local budget estimate as stipulated in point 8.2 and point 8.4 of part III of this Circular, shall comply with the procedures of formation, decision and allocation of annual budget estimate.

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8.6.1. When the Prime Minister, People's Committees decide to adjust the budget estimates of the agencies;

8.6.2. Need to reallocate the budgets for the subordinate units.

 9. Form for the annual state budget estimate.

9.1. The enterprises register to pay tax to the tax authorities and agencies assigned the task of the state budget revenue collection; the state-owned enterprises plan financial revenues and expenditures of the units according to the forms prescribed by the collecting agency, financial institutions.

9.2. The revenue collection agencies make the revenue collection estimate under the system of forms prescribed in Appendix 1 attached to this Circular.

9.3. The State management agencies, the estimating unit, the unit using budget make the estimate of budget revenue, expenditure under the system of forms specified in Appendix 2 attached to this Circular.

9.4. Social Insurance Agencies make the estimates of revenues, expenditures of social security under the system of forms specified in Appendix 3 attached to this Circular.

9.5. The Agencies of Labor - Invalids and Social affairs estimate expenditure for social allowances under the system of forms specified in Appendix 4 attached to this Circular.

9.6. Agency of Planning and Investment shall estimate expenditure for basic construction under the system of forms specified in Appendix 5 attached to this Circular.

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9.8. The Finance Ministry estimates revenues and expenditures of state budget under the system of forms specified in Appendix 7 attached to this Circular.

IV. STATE BUDGET EXECUTION

1. Allocation and assignment of the budget expenditure estimates.

1.1. After being assigned budget estimates by the Prime Minister, People's Committees, the local and central state agencies, the estimating units of level I proceed to allocate and assign the budget expenditure estimates for the subordinate units using budget under the principles defined in point a clause 1 Article 44 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government. For the Ministries, the General Department that are held by vertical branch, have not got conditions to allocate and assign the estimates directly to the units using the budgets, it can be allocated to the estimating units of level II and authorize these units to allocate, assign the estimates to the subordinate units using budget, but the Ministries, the General Department must sum up and take responsibility for the entire budget estimates which have been allocated and assigned to units using budget.

1.2. Regular expenditure estimates assigned to the units using the budget are allocated by each type of the state budget index, according to the categories:

- Payment for the individual.

- Expenditure for profession.

- Expenses for purchase and repair.

- Other expenses.

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1.3. Expenditure estimates for basic construction investment are allocated in details by each type and the items of the State Budget index and by implementing progress of each quarter.

1.4. When allocating the assigned budget estimates, agencies and units of estimate allocation must ensure to allocate capital and funding for the projects and tasks that have been advanced for estimates; at the same time, it must allocate all assigned budget estimates, if there are expenditure tasks which have not been clearly identified the performing units in the estimates at the beginning of year, they will be held for later allocation but when allocating, it must be sent to the same-level financial institutions for verification by process stipulated in point 1.5 and point 1.6 of Part IV of this Circular.

1.5. Allocation plans of budget estimates of state agencies and the estimating units of level I to the subordinate units using budget must be sent to the same-level financial institutions for verification. The verification contents include:

- Verification of the accuracy between the allocation of the agencies or units to the units using budget with the contents of estimates assigned by the competent authorities.

- Ensuring proper policies, regimes, norms and standards of budget expenditure.

Through the verification, if the allocation plans are detected not ensuring the above requirements, the financial institutions request the allocation agencies to readjust. Where the agencies or units allocate the budgets not consistent with the requirements of adjustment of the financial institutions, it shall be reported to the Prime Minister (for the central agencies, units), the People's Committee (for local agencies, units) for consideration and decision.

1.6. Within 7 working days after receiving the plan of budget estimate allocation, the financial institutions must verify and inform in writing of verification results to the agencies or units allocating budgets. Where the Ministries, the General Department held by vertical branch, only allocate and assign estimates to estimating units of level II, it must still sum up the entire allocation plans to the budget using units to send to the Ministry of Finance, the Ministry of Finance shall verify and notify in writing to the agencies or units allocating budgets.

1.7. After the budget allocation plans are agreed by the financial institutions, heads of agencies, units allocating budget decide to assign budget estimates to the subordinate units; c/c to the financial institutions, State Treasury at the same level and the State Treasury where the transactions are done to coordinate.

1.8. In case of delaying allocation or allocation results have not been unified by the financial institutions, the financial institutions, State Treasury temporary fund as prescribed in Article 45 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government.

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The same-level financial agency verifies the written request for adjusting the estimate under the provisions of Point 1.5 of Part IV of this Circular. Within 7 working days after receiving the requests for adjustment of the estimate units, the financial institutions must respond in writing to the allocation agencies, units and the State Treasury at the same level.

On the basis of agreeing with financial institutions at the same level, heads of agencies, units of budget allocation decide the adjustment of budget estimate assigned to the subordinate units; c/c to the financial institutions, the same-level State Treasury and state treasuries where transactions are done.

1.10. Where an estimating unit of level I need to adjust the estimates assigned to the subordinate units but does not make the total estimate assigned by the Prime Minister or the People's Committee to the units change, then there must be an agreement of the financial institution at the same level.

1.11. Where the financial institutions detect the observance of budget estimates of the units using budget slowly, with ability of not accomplishing goals or un-using up budget estimate assigned, they may request agencies, organizations allocating the budget, or propose the Prime Minister, People's Committee to take timely solutions or adjust tasks, estimates for ensuring the use of budget in compliance with targets, regulations, saving and effectiveness over state budget.

1.12. Where estimate is added from budget reserves or increasing budget revenue by decision by the competent authority, estimate unit of level I have to allocate to the units using in accordance with the right objectives assigned and send to the financial agency, State Treasury at the same level and state treasuries where transactions are done.

2. Organization of administering quarter budget.

2.1. Based on the tasks of revenue collection of the whole year assigned and source expected to generate revenues in the quarter, the collecting agency shall estimate revenues of quarter budget detailed by sector, location and principal collection objects to send to the financial agency at the same level before 20 of the last month of previous quarter:

- The tax agencies estimate tax revenues, fees, charges and other revenues under its management.

- Customs offices estimate the revenues from export, import duties, special consumption tax of imported goods, and other revenues under its management.

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2.2. On the basis of annual expenditure estimates assigned and tasks required to be spent in quarter, the budget using units set up quarter budget spending needs (divided into months), detailed according to the groups of items of expenditure specified in Point 1.2 of Part IV of this Circular, send to the State Treasury where the transactions are done and the higher-level management agencies before the 20th day of the last month of the previous quarter. The expenditure for individual payment and the regular expenses must be arranged frequently each month in year to spend in accordance with regulations. The seasonal expenses or expenses only arising in some time as basic construction investment, procurement, overhaul and other irregular expenditures must be followed the progress of implementation of each quarter written in the assigned estimates.

The higher-level management agencies synthesize quarter budget spending needs (divided into months), send to the financial institutions at the same level the 25th day of the last month of the previous quarter

2.3. The financial institutions based on ability of revenue sources and expenditure demand in quarter to make plans of operating quarter budget of its level budget, ensuring resources to meet spending needs in the estimates, in accordance with regime of the units funded.

Where the ability of revenue sources, including loans (for the central budget) does not meet the spending needs, the financial institutions proactively take the sources advancing solutions as defined in point 16, Part IV of this Circular. In special cases, if the above solutions have been performed but still cannot meet spending needs, the financial institutions must ensure sufficient resources to pay, make payment for wages and amounts of salary nature, expenditure for basic construction investment of important works, for the national target program and the regular expenditures must be spent timely to ensure normal operation of the agencies and units; for other expenses, order of priority shall be arranged. At the same time, it may request the State Treasury to suspend payments for some expenditure on procurement, repair according to each specific task to ensure the balance of the budget funds but not affecting the organization to perform the assigned duties of the units.

2.4. The plans to operate quarter budget of the financial institutions must be submitted to the State Treasury at the same level on the30 day of the last month of the previous quarter for coordinating implementation. In special cases required to be rearranged the task of expenditures in priority order or suspended payments for certain expenses, the financial institutions must also notify the concerned estimate units for active implementation. If on the first day of the first month of the quarter, the units have not received notice of the financial institutions, it shall be considered as expenditure needs of the registration units will be secured on the sources.

2.5. Where the urgent, needed expenses incurred, that cannot be delayed, within the assigned annual budget estimate, but beyond the quarter spending needs that the using units were sent to the State Treasury, the state Treasury still spends but must synthesize to report promptly through the treasury system to the financial institutions for actively balancing the source.

3. Organization of state budget revenue collection.

 3.1. Organizations and individuals are obliged to pay in full and on time the taxes, fees, charges and other revenues into the State budget as prescribed by law. In case of late payment without permission will be forced to pay under the provisions of the laws, ordinances on tax and regulations in Article 46 of the Decree No.60/2003/ND - CP dated June 06, 2003 by the Government.

3.2. The method of the state budget revenue collection:

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4. State budget revenue collection in foreign currencies.

4.1. The budget revenues and loans in foreign currencies are centrally managed at the Central State Treasury. When entering the fund, the State Treasury shall convert into Vietnam dong at the accounting exchange rate defined by the Minister of Finance for recording state budget revenues and distributing revenues to the budget at all levels as prescribed by regulations.

4.2. Local budgets (provinces, districts and communes) are not established its own foreign currency funds. All budget revenues in foreign currencies generated in the local State Treasury to be deposited in foreign currency accounts opened at state commercial banks, shall be periodically concentrate in the central State Treasury in accordance with provisions of the Minister of Finance.

Minister of Finance has specific regulations on the use of foreign currency of the budget.

5. Principles of expenditure, payment of expenses of the state budget.

Based on the annual state budget spending estimates assigned and requirements to perform the spending tasks of the units in compliance with regulations, standards, norms, financial institutions and State Treasury make payments the state budget expenditures on the principle of direct payments from the State Treasury to the salary enjoying people, those who provide goods, services and contractors.

In the short term, while having not yet been eligible to fully implement the principle of direct payments mentioned above, the payment for some state budget expenditures shall be applied by the form prescribed in clauses 7, 8, 9, 10, 11, 12 and 13 of Part IV of this Circular.

6. Payments, estimated payments from the State Treasury.

6.1. Objects of payments, estimated payments from the State Treasury include the regular expenses in the assigned estimates of the following agencies, units:

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- The non-business units;

- The political - social organizations, political and social- professional organizations, social organizations, socio-professional organizations frequently funded by state budget.

- The State Corporation supported to perform some regular tasks as prescribed by law.

6.2. Process of payments as follows:

6.2.1. Based on the quarter budget operating plans notified by the financial institutions, demand of quarter payment, expenditure of the units using budget, State Treasury proactively make capital plan; plan for payments; plan of cash, guaranteed to meet fully and timely expenditure requirements of the units funded by budget.

6.2.2. Based on the quarter spending need sent to the State Treasury and at request of expenditure task, heads of the budget using units make written withdrawals of budget estimate, together with payment records to send to the State Treasury where the transactions are done.

Where the competent authorities notify to adjust the quarter spending needs, the units can only be spent within adjusted limits.

6.2.3. State treasuries where transactions are done check payment records, the expenditure conditions specified in Article 51 of the Decree No.60/2003/ND-CP dated June  06, 2003 of the Government and written withdrawals of budget estimate of the heads of the units using the budget or of the authorized persons, make the payment and expenditure.

6.2.4. Where there are not sufficient conditions for implementation of direct payments through the State Treasury for all expenditures, it shall be advanced for some certain expenditure as prescribed by the Minister of Finance. After the work is completed and there are sufficient payment records, transfer from advance payment to the actual payment.

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7. Expenditure, payment in the form of payment order.

7.1. The expenditure tasks are conducted in the form of payment order including:

a) Expenses for the enterprises, social-economic organizations having no have regular contacts with budget;

b) Expenses for payment of debt and aid;

c) Additional expenses from higher-level budget for lower-level budget and some other expenses as decided by the heads of financial institutions.

7.2. Process of expenditure, payment is as follows:

7.2.1. Based on the state budget estimates assigned and requirements to perform the expenditure tasks, financial institutions consider, examine each expenditure requirement and if they meet all the conditions of payment specified in Article 51 of the Decree No.60/2003/ND - CP dated June 06, 2003 of the government, order payments to organizations and individuals that are entitled to the budget.

7.2.2. State Treasury implements the release of the budget funds, transfer money into accounts or grant cash to the organizations and individuals that are entitled to the budget.

8. Specific provisions for the payment, expenditure for some expenses with particular characteristics.

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- For the expenses for loans under regulations of the state budget, the financial institutions transfer funds to the agencies tasked to provide loans or by cash payment orders under the contract to the loaned organization in case of direct loans.

- The agencies tasked to provide loans or financial institutions in case of direct loans shall be responsible for management, loans, recovery of principal and interest to remit into the state budget and settlement under the regulations.

8.2. Debt repayment of the state budget:

8.2.1. Repayment of foreign loans: Based on annual estimates on payments for foreign debts and payment requirements, the financial institutions make payment orders to the organizations to provide loans.

8.2.2. Repayment of domestic debts

- For payment for bills and government bonds retailed by the State Treasury: based on requirement of payment, the State Treasury makes payment for bills and bond purchasers. On the basis of actual expenditure as reported by the State Treasury, the Ministry of Finance makes an order for payment to the State Treasury.

- For payment for bills and bonds issued by the State Treasury through the tender, guarantee: till the maturity, based on the proposal of the State Treasury, the Ministry of Finance makes the payment orders for direct payments to the banks and the organizations acting as agents or guaranteeing.

- For other payments for domestic debts: the State Treasury makes payment under the payment order of the Ministry of Finance.

8.3. Expenses for the implementation of national target programs:

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9. Payment for capital of basic construction investment.

The transfer of capital to the State Treasury for spending on basic construction investment and the advance, payment and final settlement of basic construction investment capital, the Minister of Finance has its own regulations.

10. Payment, expenditure in foreign currency.

For the expenditure tasks of the budget required to pay in foreign currency, the Minister of Finance has its own regulations.

11. Expenditure in kind and working day.

11.1. For state budget expenditures in kind, based on records handing over things in nature, price of things in nature according to market approved, the financial institutions shall convert into Vietnam dong to make the order of budget revenues, and the order of budget expenditure to send to the State Treasury for accounting revenues and expenditures of state budget.

11.2. For the expenses in working days, based on the price of working day to be approved, the financial institutions make the order of budget revenues, and the order of budget expenditure to send to the State Treasury for accounting revenues and expenditures of state budget.

12. Expenditure by authorized fund.

12.1. In case the higher-level state management agency authorizes to the lower-level state management agency to implement tasks of its functions, it must transfer fund from the higher-level budget to the lower-level budget to perform those tasks.

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12.2. Based on annual estimates of authorized funding and requirments to perform tasks of expenditure, the higher-level financial institutions making payment orders transfer authorized funding source to the financial institutions of the level receiving authorization.

12.3. Lower-level financial institutions open accounts at the State Treasury to receive authorized funding of the higher-level financial institutions.

12.4. Based on annual estimates assigned on the authorized funding, the amount of funding transferred of the higher-level financial institutions and the progress to implement expenditure tasks, the State Treasury makes payment to the units using authorized funding as prescribed in point 6 of Part IV of this Circular, if it is an authorization on the regular funding and under the procedure of capital allocation, if it is an authorization on basic construction investment capital. If the authorizations have a small capital volume, clear spending content, the financial institutions receiving authorization may use payment order to pay directly to the units using authorized funding.

12.5. During the payment for authorized funding, the financial institutions receiving authorization and the State Treasury must ensure to meet funding timely and fully; to control expenditures in accordance with the provisions on state budget expenditure management.

12.6. The financial institutions receiving authorization must report the receipt and use of quarter authorized funding and annual settlement with the authorizing financial institutions by the prescribed form. At the end of the year, authorized funding not used up must be returned to the authorizing agency.

13. Advances for estimates.

13.1. The cases advanced annual budget estimates include:

a) The national projects, works and basic construction works of Group A, which were eligible to implement under the provisions of the Regulations on investment management and construction that is underway, needs to be accelerated schedule;

b) A number of urgent, important tasks required performing according to the regime prescribed by the Government, the Prime Minister, but not being included in the estimates and the reserve sources are not satisfactory.

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13.3. The estimate advances are determined for the specific areas of the agencies, units to be advanced such as basic construction, education and training, administration, ... but the total advance for each field of each agency or unit should not exceed 20% of the estimates which has been allocated under such field or the inspection number of the budget expenditure estimate of the next year which has been notified that agency, unit. In case of advance after the competent authorities have assigned the inspection number of the budget expenditure estimate of the next year, then the total advance should not exceed 20% of the inspection number by each field.

 13.4. Minister of Finance is responsible for recovery of advance capital of the central budget; People's Committees are responsible for recovery of advances of the local budgets.

14. Opening of accounts to receive funding granted by state budget

14.1. The budget estimating units and organizations being supported regularly by the state budget must open accounts at the State Treasuries under the guidance of the Ministry of Finance; subject to the inspection of financial institutions and State Treasury in the process of payment, use of funds. Prohibit the budget using units to draw estimates to transfer into the deposit accounts, except for cases permitted by law. In case of being opened accounts at the State commercial banks to focus some revenues, it must manage and use in accordance with the law provisions.

14.2. The Central State Treasury shall specify the opening of accounts for the units.

15. In the budgetary execution process, if there are changes on revenues and expenditure tasks, it is implemented as follows:

15.1. Increased revenues (after deducting the rewards for the localities and the increased revenues compared with estimate from the revenues to be invested back to the units, localities according to numbers collected by regulations) and amount of expenditure savings compared with the assigned estimates, are used to reduce the budget deficit, increase debt payments, increase spending for investment and development, supplement financial reserve fund, increase the budget reserve as stipulated in Article 54 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government.

15.2. If reducing revenues compared with the approved estimates, it must be rearranged to reduce some respective expenses.

15.3. When occurring the unexpected works, such as expenses for prevention and fighting and overcoming consequences of natural disasters, fires, the important task of national defense, security and other urgent tasks of expenditure having not been allocated or having been allocated but not enough in the assigned estimates that after restructuring the expenses, the lower-level units or budgets have not met yet, it needs to report to the higher-level financial institutions and administrative agencies for settlement. The financial institutions inspect, review and if it is necessary to spend, report such expenditures to the authorities that are competent to decide (or decision as assigned) for using their budget reserves to handle as prescribed in Article 7 of the Decree No.60/2003/ND - CP dated June 06, 2003 by the Government.

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Upon the occurrence of temporary budget shortages because the revenues and loans (for the central budget) are gathered slowly or there are needs to be spent in the same time leading to a temporary imbalance of the budget funds, budget levels are allowed to handle as follows:

16.1. The central budget is advanced financial reserve fund of the central level, the rest of State Treasury under the decision of the Minister of Finance; if it is still missed, to be advanced from the Social Insurance Fund and other state financial funds under the agreement of the Ministry of Finance and Management Board of these funds.

In case the advance of the above funds was implemented but it is still missed, the Minister of Finance shall report to the Prime Minister for deciding to advance capital of the state bank of Vietnam.

16.2. Provincial-level budgets are advanced financial reserve funds of the provinces by decisions of the provincial-level People's Committees. In case of having used financial reserve funds of the provinces but not enough to cover the urgent needs that can not be delayed, then request the Ministry of Finance to consider increasing the schedule of granting additional number for budget balance or advance from the central budget (if central budget is available) or advance the central financial Reserve Fund.

16.3. District-level budgets, the communal-level budgets are advanced financial reserve fund of the province by decision of the provincial-level People's Committee. The consideration for the advance for the communal-level budgets, in addition to the proposal of the communal-level People's Committee, it must be based on the opinion of the Chairman of district People's Committee. Where the financial Reserve Fund of the province is not satisfactory, and then request the higher-level financial agency to speed the additional schedule or advance from the higher-level budget (if the higher-level budget is available).

16.4. The advances to handle temporary deficit must be returned in the budget year, except for special case permitted by National Assembly Standing Committee for advances from the State Bank.

17. Rewards for revenue collection in excess of estimates.

17.1. Rewards for revenue collection in excess of estimates for the revenues divided between the central budget and local budgets:

a) The annual consideration for reward for revenue collection in excess of estimates divided between the central budget and local budgets is made by the following principles:

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+ The revenue performed in other areas but accounted revenue in the locality where the consideration for reward is made.

+ The revenues decided by the competent authorities to spend on the specific targets.

- Based on the overall of divided revenues, not considered separately revenue.

- The bonus rate is calculated by percentage (%) of total revenues exceeded, but not more than 30% of increased revenues compared with the estimate and not exceeding the number of increased revenues compared with the rate implemented from the previous year.

- The rate of bonus for each province or city under central authority shall comply with the decision of the Prime Minister as assigning budget estimate.

* Example 1:

In province A, the revenue (central budget) from the divided revenues made in previous year is 500 billion VND. This year, the central budget revenue estimate assigned is 550 billion VND, the rate of bonus on the revenues exceeding estimates assigned by decision of the Prime Minister is 30%, performance reached as 600 billion VND. The rate of bonus for the province A is determined as follows:

- The reward in proportion: (600 billion VND- 550 billion VND) x 30% = 15 billion VND.

- The revenue increased compared with the previous year: 600 billion VND - 500 billion VND = 100 billion VND.

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* Example 2:

Still in the province A as mentioned above, if the previous year's result is 590 billion VND; allocated revenue estimates is 550 billion VND, results of performance is 600 billion VND.

- The reward in proportion: (600 billion VND- 550 billion VND) x 30% = 15 billion VND.

- The reward in excess of revenue compared with the previous year: 600 billion VND - 590 billion VND = 10 billion VND.

Reward is only equal to the rate of increased revenue compared with the previous year to be 10 billion VND.

* Example 3:

Still in the province A above, if the previous year's result is 610 billion VND; allocated revenue estimates is 550 billion VND, results of performance is 600 billion VND.

- The reward in proportion: (600 billion VND- 550 billion VND) x 30% = 15 billion VND.

- The revenue increased compared with the previous year: 600 billion VND - 610 billion VND = - 10 billion VND.

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b) Based on results of budget collection, remittance till December 31, the provinces and cities under central authority shall be responsible for synthesis of the revenues remitted actually into central budget from the revenues divided between the central budget and local budgets as prescribed in section a point 17.1 of part IV of this Circular to send to the Finance Ministry for used as the basis for consideration of reward. The above report is sent to the Ministry of Finance before January 31 of next year and must be certified by the provincial State Treasury. Beyond the above time limit, the Finance Ministry will not consider, spend bonuses to the provinces.

17.2. After receiving the decision to award revenue collection in excess of estimate of the Finance Ministry, based on the principle of consideration for reward, the objective to use the amount of reward for revenue collection in excess of estimate on the revenues divided between the central budget and local budgets provided for in clause 17.1 of Part IV of this Circular, the provincial-level People's Committee plans to use bonus sources and reports to the same-level people's council for decision to supplement basic construction investment capital for the economic - social infrastructure works, perform other important tasks and reward lower-level budgets.

When received bonuses from the provincial budget, lower-level People's Committee plans to use and submits to the People's Council for decision to supplement basic construction investment capital for the economic - social infrastructure works, and other important tasks.

17.3. The Ministry of Finance expenses from increased revenue source of the central budget to reward revenue collection in excess of estimates for the localities; the reward for revenue collection in excess of estimates from a certain year shall be accounted into the corresponding budget expenditure of that year. The localities received bonus, shall account into budget revenues of the awarded year, if it is used in the awarded year, account expenditure for the budget of that year, it is used in the next year, then spend to transfer budget source for use and account expenditure for the budget of next year; strictly forbidden the self-appropriation for rewards in any form.

18. Establishment, management and use of budget reserves

18.1. Central budget estimate and local budget estimates are arranged a reserve amount by 2-5% of total expenditures of each-level budget.

18.2. Budget reserve is used for the following tasks:

- Implementation of emergency measures to prevent natural disasters, fires, accidents on a large scale;

- Overcoming of the consequences of natural disasters, fires for state property damages; remedial assistance for the damages of the organizations and residents;

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- Support for lower-level budgets to handle the above tasks after the lower-level budgets has used reserves, a portion of their level financial reserves but having not met yet.

18.3. Competence to decide the use of reserves:

- For the central budget reserve: The Minister of Finance decides on the tasks of expenditure at the rate of 1 billion VND or less. For the tasks of expenditure at the rate of 1 billion VND or more, the Ministry of Finance shall preside over and consult the Ministry of Planning and Investment to submit to the Prime Minister for consideration and decision; if it is the task of expenditure on basic construction investment, supplement of State reserves, State credit support and capital contribution, joint venture, Ministry of Planning and Investment will shall preside over and consult the Ministry of Finance to submit to the Prime Minister for consideration and decision.

For the use of central budget reserves to implement policies, the important and urgent new regime decided by the National Assembly, National Assembly Standing Committee, the Government, the Prime Minister, the Minister of Finance shall organize the implementation, then sum up the results to report to the Prime Minister.

- For the local budget reserves: the financial institutions submit to the same-level People's Committees for deciding on use.

18.4. Process of expenditures from the budget reserves shall comply with the provisions of Point 6 and point 9 of Part IV of this Circular.

The Ministry of Finance shall synthesize the situation of using the central budget reserve to report to the Government for submitting to the National Assembly Standing Committee quarterly and report to the National Assembly at the latest session.

18.5. Local financial institutions shall synthesize the situation of using their level budget reserves to report to People's Committees at the same level for submitting to Standing People's Council quarterly and report to the People's Council at the latest session. For the communal level, the People's Committees report to the Presidents, Vice Presidents quarterly and report to the People's Councils at the latest session.

19. Establishment, management and use of financial reserves.

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19.2. In case of using the financial Reserve Fund due to the budget balance as prescribed at Point đ, Clause 3 of Article 58 of the Decree No.60/2003/ND-CP of June 06, 2003 of the Government, record budget revenue and expenditure for the expenditure tasks of the respective level budget.

19.3. The end of budget year, the provincial-level People's Committee makes report to send to the same-level People's Council and the Ministry of Finance on the situation of collection and expenditure of financial reserve fund of the province before January 31 of previous year.

20. Management of the state budget funds.

- State budget fund is all state funds, including loans on account of the state budget at all levels. Management of the state budget funds is the responsibility of the financial institutions and state treasuries at all levels.

- Based on the task of revenue collection and expenditure of annual state budget assigned and quarter budget estimate, the financial institutions coordinate with the State Treasury to set up norms of the state budget fund rest quarterly to ensure expenditure, payment for the state budget expenditures.

- The State Treasury is responsible for regularly reporting to the financial institutions of the fund rest of the budget. In case of necessity to ensure the source of payment, the financial institutions take the measures to handle temporary shortage as provided for in clause 16 of Part IV of this Circular.

21. Report regime.

21.1. The periodical report on the situation of implementation of budget revenue and expenditure, accounting report, settlement, and financial statements comply with the provisions of Article 61 of the State Budget Law and the report regimes prescribed by the Ministry of Finance.

21.2. The budget expenditure suspension of the organizations and individuals, units failing to comply fully and promptly the report regime is implemented as follows:

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- If the unit still fails to comply with the above notice, the financial institution makes decision to suspend budget expenditure for that unit, notify the same-level State Treasury to implement, and inform the higher-level management agency of the organization, unit being suspended expenditure for urging, reminding.

22. Responsibilities of agencies and individuals in the management of state budget expenditures are made in accordance with the provisions of Article 52 and Article 83 of the Decree No.60/2003/ND-CP dated June 06, 2003 of the Government

V. ACCOUNTING, AUDIT AND SETTLEMENT OF STATE BUDGET

1. Responsibilities of the agencies and units:

1.1. Estimate unit at all levels:

- Estimate units of level I are the units receiving directly the annual budget estimates assigned by the Prime Minister or the People's Committee. Estimate units of level I perform allocation, assignment of budget estimates to the subordinate units; are responsible before the State for the organization and implementation of accounting and budget settlement of their units and accounting work and settlement of the budget of the lower-level estimate units under provisions.

- Estimate units of level II are the subordinate estimating units of the level-I estimating units, to be assigned estimates by estimate units of level I and allocate estimates assigned to the estimate units of level III (where authorized by estimate units of level I), to be responsible for implementation of accounting work and budget settlement of their units and accounting work and settlement of the lower-level estimate units under provisions.

- The estimate units of level III are the units directly using budget, to be assigned estimates by estimate units of level I and level II, to be responsible for implementation of accounting work and budget settlement of their units and the subordinate budget using units (if any) under provisions.

- Subordinate units of the estimate units of level III funding are received funding to perform the specific works, when spending, must implement the work of accounting and settlement according to regulations.

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- The Ministry of Finance is responsible for directing, guiding, inspecting the accounting and settlement of the state budget, makes report of settlement of revenues and expenditures of the central budget and sums up, sets up the settlement of revenues and expenditures of State budget.

- The local financial agencies are responsible for directing the budget accounting work under their management and set up settlement of revenues and expenditures of their budgets, sum up reports of settlement of revenues and expenditures of the state budget in the area, spend local budget, settle the expenditure of funds authorized by higher level.

1.3. State Treasury:

State Treasuries at all levels are responsible for organizing the accounting of revenues and expenditures of state budget and periodically report on the implementation of budget revenues and expenditures under estimates assigned and state budget indexes to the same-level financial institutions. District-level State Treasuries, in addition to perform the accounting of revenues and expenditures of state budget in the districts, also perform accounting of revenues and expenditures of budgets of communes, wards and townships (referred to as communes) in the districts and send reports to the commune People's Committees as prescribed.

2. Organization of budget accounting, settlement apparatus.

Estimate unit, financial institutions of all levels and the State Treasury must organize the budget accounting and settlement in accordance with the provisions of law on accounting.

3. Accounting and settlement of the state budget.

3.1. Accounting and settlement of the state budget must be agreed on:

a) Receipt of revenues and expenditures of state budget;

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c) System of accounts, books and report forms; methods of accounting, making books; method of preparation, time of sending the reports;

d) Taxpayer number code, number codes of units using budget, codes of capital source of budget revenue and expenditure.

3.2. Accounting year by calendar year, beginning on January 01 to the end of December 31.

3.3. Accounting period prescribed as monthly, quarterly and year.

- Month is calculated from the first day to the end of the last day of the month;

- Quarter is calculated from the first day to the end of the last day of the quarter;

- Year is calculated from January 01 to the end of December 31.

4. Closing of the state budget accounting book.

The end of accounting period (monthly, quarterly, and yearly), the estimate units and budget at all levels must perform the work of closing accounting books. The year-end closing is implemented as follows:

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4.1.1. To review and compare the amounts payable to the budget and conduct procedures to remit immediately the payable amounts but not paid into the state budget. Prohibit the units to retain revenues of the state budget; in case the revenues are generated but not yet been conducted procedures to remit in the current budget which shall be remitted to the budget of next year, account and settle into the following year's budget.

4.1.2. Closely monitor the remaining expenditure estimates, the deposit account balance of the units in the State Treasury and cash balance at the units for actively spending in the last year days.

4.1.3. The budget expenditures allocated in the budget estimate of a certain year, then only be spent in that budget year. The budget expenditures of the previous year estimates which have not been made or not made completely, shall not be transferred to the next year to spend; in special cases, it is decided by the Minister of Finance (for the expenditures of the central budget) and Chairmen of People's Committees or the heads of financial institutions (for the expenditures of local authorities) shall be authorized to decide the continuity of spending, accounting and settlement shall be made as follows:

a) If being decided the expenditure from the budget of previous year, use remaining fund of the previous year to handle and account settlement in the budget expenditure of previous year (during the settlement adjustment).

b) If being decided the expenditure from the budget of the next year, the financial agency shall conduct procedures of expenditure to transfer source to the next year for continuity to spend and make the settlement of expenditure to transfer source into the previous year’s budget; when conducting the expenditure, the estimate units and budgets at all levels account and settle into the next year's budget.

4.1.4. The items advanced funding in the estimate for expenditure to the end of December 31 which have not got enough procedures for payment, shall be continued to be made payment during the settlement adjustment and settled in the previous year. For advance of basic construction investment capital, it shall comply with separate regulations of the Minister of Finance.

If the settlement adjustment period is over but it still has not got enough procedures for payment, the units using budget must report to the governing agencies (together with relevant documents) for these agencies to synthesize and recommend the financial institutions at the same level to permit the transfer of previous year advance to advance of next year; if it is approved, then account and settle into budget of next year, if it is not approved, the State Treasury shall recover the advanced amount by the way of subtracting the corresponding items of expenditures of the units’ budget estimates of the next year and if the next year’s estimates do not included those items of expenditures or included but less than the amount of advance required to be recovered, the State Treasury shall notify the same-level financial institutions for handling.

4.1.5. The amounts temporarily collected, kept must be considered and treated as follows:

a) If the competent authorities made decisions on reimbursing the subjects to be temporarily collected or temporarily kept or remittance into the state budget but the units have not yet paid to the subjects or not remitted into the state budget, it must conduct procedures to pay to the subjects or remit into the state budget in the current budget year.

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4.1.6. At the end of the year, the estimating units must hold the inventory in accordance with regime of state accounting; based on the inventory records, accountants of the units shall process as follows:

a) Inventory goods and materials shall be settled in the previous year budget’s expenditures, if it is still used for the next year, the units must organize to monitor closely and separately report; in case it is not used for the next year, the units must establish the liquidation councils for sale and remitting the proceeds into the state budget. For the non-business units with income, proceeds from asset liquidation are permitted to keep in the units for the investment to enhance material facilities, renovate equipment in accordance with the Government’s provisions and it must have separate reports.

b) Cash balance of the estimate units to December 31 of the state budget shall be returned to the budget and accounted decrease of the budget expenditure of the current year, except for items payable as prescribed but not yet spent (salaries, allowances, benefits to the subjects according to the provisions and students’ scholarships). To ensure the estimate units to have cash for spending in the first days of year, the estimate units must carry out procedures with the State Treasury for the cash advance of next year funds.

4.1.7. If the units allowed opening deposit accounts at the State Treasury, to the end of December 31 to have the deposit account balances derived from the budget, they shall be required to return to the state budget. Where the above-mentioned deposit is funding to perform the expenditure duties in the estimates, for objective reasons, it has not promptly made payment and the units conduct the mechanism of lump-sum expenditure, the units makes written request to transfer the balances of deposit accounts, together with relevant documents for a detailed explanation of the remaining funds on accounts (certified by the State Treasury), send to the financial institutions at the same level for considering to transfer to the next year for continuity to spend.

The estimate units of a certain level shall be considered for transfer of deposit account balances by the financial institutions of that level. The estimate units of the central budget shall comply with the following provisions:

a) The Ministry of Finance shall consider the transfer of deposit account balances for the estimate units based in the city of Hanoi and other units of the Ministry of Defense, Ministry of Public Security.

b) The Ministry of Finance authorizes the Departments of Finance - Pricing of the provinces and centrally-run cities to consider transfer of deposit account balances of the central budget estimating units based in the provinces and cities (except for the central units based in the city of Hanoi and other units of the Ministry of Defense, Ministry of Public Security) by the principles, procedures and records specified in this Circular.

State Treasuries are not allowed to transfer the deposit account balances and funding account balances authorized without consulting the competent financial institutions. For funding account balances authorized by the central budget to 31 December, the State Treasuries remit to the central budget and account decrease of central budget expenditure; Central State Treasury shall synthesize and report to the Ministry of Finance.

4.1.8. Time limit for review to transfer balances of deposit accounts for the units starts from January 01 to the end of working hours of the day of January 10 of next year. Beyond that time limit, the State Treasuries transfer the deposit account balances of the units into state budget and accounts decrease of state budget expenditures.

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4.2. For the financial institutions and state treasuries at all levels:

4.2.1. Deadline for central budget expenditure of the budget year is the end of working hours of the day of December 28. Deadline for expenditure of local budgets of the budget year shall be defined by the local financial institutions but must be ensured that the units using budget can spend under the regulations before December 31.

4.2.2. The financial institutions shall coordinate with the State Treasuries at the same level to implement:

a) To review and collate all the revenues and expenditures of state budget from January 01 to the end of December 31 to ensure the revenues and expenditures of state budget are accounted fully, accurately and in compliance with State budget index.

b) To inspect the performance of division by percentage (%) for the revenues generated in their respective areas for budgets at all levels in conformity with the decentralization of State budget.

c) To examine, closely monitor the expenses of the estimate units.

d) To make payment completely the debts, loans and advances, temporary collection, keeping, the amounts that have not been made payment must have the decisions of the competent authorities and are processed under the provisions of Point 4.1, Part V of the this Circular.

đ) To review the certification and transfer of the balances of deposit accounts at the end of December 31 for the estimate units as prescribed.

5. Adjustment of the budget settlement.

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a) To account the revenues and expenditures of state budget generated from the December 31 and earlier, but its documents are being circulated;

b) To account spending of budget for the advanced amounts having sufficient payment procedures;

c) To account the amounts recorded revenues and expenditures of foreign capital, the budget expenditures of the spending task of the previous year if it is decided by the competent authority for the continuity to spend on the next budget year;

d) To collate and adjust the errors in the accounting process;

đ) To spend on source transfer from the previous budget year to the next budget year following the Decision of the Minister of Finance (for central budget) and Chairmen of People's Committees (for the local budgets).

5.2. Settlement adjustment period is specified as follows:

- End of January 31 of next year for the communal-level budget.

- End of February 28 of next year for the district-level budget.

- End of March 31 of next year for the provincial-level budget.

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6. Accounting reports of revenues and expenditures of state budget.

6.1. The estimate units at all levels must make accounting report according to the state accounting regime and other legal documents on accounting and statistics.

6.2. State Treasuries shall account revenues and expenditures of state budget as stipulated in Point 1.3 of Part V of this Circular; ensure the proper accounting of budget year, budget level and state budget index.

- Daily report the spending, entering of the state budget funds and the local budget funds to the People's Committees, financial institutions, collection agencies at the same level and the superior state treasury. Every day, the central State Treasury synthesizes and reports to the Ministry of Finance.

- Monthly, report the revenues and expenditures of state budget to the People's Committees, financial institutions, collection agencies at the same level (the budget revenue) and the superior State Treasury. The Central State Treasury synthesizes revenues and expenditures of state budget, the central budget and local budgets to report to the Finance Ministry.

- The forms and the time limit for reporting are done by the Finance Ministry's regulations.

7. State budget settlement.

7.1. Principles for making report on the state budget settlement:

7.1.1. Settlement report data must be accurate, truthful, or complete. The contents of the budget settlement reports must comply with the contents in the assigned estimates (or permitted by the competent agencies) and detailed by the State Budget Index. Heads of the units using budget must be responsible before law for the accuracy, truthfulness, completeness; be responsible for the revenues and expenditures, accounting, settlements of budget for the wrong regime.

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a) Account balance sheet at the end of the day of December 31 and the account balance sheet after the end of settlement adjustment period.

b) Report on explaining the year settlement; the settlement explanation must be shown clearly the reasons of satisfaction or non-satisfaction, or exceeding the assigned estimates for each criterion and recommendations, if any.

7.1.3. Annual settlement report, sent to the competent authorities for evaluation and approval must be certified by the State Treasury at the same level on total and detail.

7.1.4. Report of the budget settlement of the estimate units and of the local authorities shall not be settled expenditures more than revenues.

7.1.5. The lower-levels do not settle the authorized funds of the higher-level budgets and report settlement of their budgets.

7.2. Order of formation, submission, and approval of the reports of revenues and expenditures of annual state budget for the estimate units is defined as follows:

7.2.1. After the end of the closing of accounting books at the end of the day of December 31, data on the accounting books of the units must ensure balance and consistency with the receipts of revenues and expenditures of the units’ budget and data of the financial institutions, the State Treasury for total and detail; on that basis, the estimate units conduct the formation of annual settlement report.

7.2.2. Apart from the annual settlement report forms in accordance with provisions of the Minister of Finance, the estimate units must also attach the detailed explanation report of the types of inventory goods, materials, debts, loans and advances, temporary collection, keeping, cash balance, the balance of deposit accounts of the estimate units which has been processed under the provisions of Point 4.1 of Part V of this Circular for the higher-level governing agency (or the same-level financial institutions) to consider before issuing the notices to approve (or evaluation) the annual settlement for the units. The review and evaluation of the annual settlement shall comply with the provisions of Article 73 and Article 74 of the Decree No.60/2003/ND-CP of June 06, 2003 by the Government.

7.2.3. After receiving reports on the settlement of the lower-level estimate units, heads of the higher-level estimate units are responsible for reviewing and approving the settlements and notifying the results of review for estimate approval to the lower-level estimate units. Within 10 days after receiving notice on the results of estimate approval, the lower-level estimate units must be completed the requirements in the notice of review for estimate approval. Where the lower-level estimate units have opinions inconsistent with the notice of estimate approval of the higher-level estimate units, they must send written requests to the further higher-level unit for consideration and decision. Where the estimate units of level II have the opinions inconsistent with the notice of estimate approval made by the heads of level-I estimate units, they must send documents to financial institutions (the same level with the estimate units of level I) for consideration and decision. While pending the opinion of the decision made by the competent authority, the lower-level estimate units must comply with the notice of estimate approval made by higher-level estimate units.

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Where the estimate units of level I have opinion inconsistent with the notice of the settlement comment of the financial institutions, they must submit to the same-level People's Committees (if they are the estimate units of local levels) or the Prime Minister (if they are the estimate units of central level) for consideration and decision. While pending the decision opinion of the same-level People's Committees and the Prime Minister, all financial institutions’ decisions must be enforced.

7.2.5. Where the level-I estimate unit is simultaneous as the budget using unit, the financial institution approves the settlement and announces the results of settlement approval to the estimate unit of level I.

7.2.6. For the basic construction works, the programs of national projects, when ending the budget year, the investor makes settlement report on implementation of investment capital in year by each work, project and sends to the State Treasuries and the financial institutions at the same level. The approval and evaluation of basic construction investment capital settlement are under separate regulations of the Minister of Finance.

7.3. The order of formation, evaluation, approval and sending of the report on settlement of revenues and expenditures of annual state budget of the budgets at all authority levels are defined as follows:

7.3.1. Forms of annual settlement report made by the lower-level budget to send to the higher-level financial institutions according to the system of settlement forms prescribed.

7.3.2. The commune finance department is responsible for making report on the settlement of revenues and expenditures of the communal-level budget (according to system of forms prescribed in the Circular of the Ministry of Finance on the management of revenues and expenditures of communal-level budget and other financial activities of communes, wards and townships) to submit to the communal-level People's Committee for considering and sending to the district financial department and at the same time submitting to the communal-level People's Council for approval. Where the annual settlement report of the commune approved by communal-level People's Council has changes compared to the annual settlement report sent by the communal-level People's Committee to the district finance department, then the communal-level People's Committee sends additional report to the district finance department. After the communal-level People's Council approved, within 5 days, the commune financial department shall send the settlement reports to the following agencies:

+ 01 report sent to the communal-level People's Council;

+ 01 report sent to the communal-level People's Committee;

+ 01 report sent to the district Department of Finance;

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At the same time, send to the district State Treasury the Resolution approving the settlement of the communal-level People's Council.

7.3.3. District Department of Finance is responsible for evaluating the settlement of revenues and expenditures of communal-level budget; setting up the settlement of revenues and expenditures of the district budget; summing up and making reports on the state budget revenue collection in the district and the settlement of revenues and expenditures of district budget including the settlement of revenues and expenditures of district-level budget and the settlement of revenues and expenditures of communal-level budget and submitting to the district-level People's Committee for considering and sending to the Department of Finance - Pricing, and submitting to the district-level People's Council for approval. Where the annual settlement report of the district approved by district-level People's Council has changes compared to the annual settlement report sent by the district-level People's Committee to the Department of Finance - Pricing, then the district-level People's Committee sends additional report to the Department of Finance - Pricing. After the district-level People's Council approved, within 5 days, the district-level financial department shall send the settlement reports to the following agencies:

+ 01 report sent to the district-level People's Council;

+ 01 report sent to the district-level People's Committee;

+ 01 report sent to the Department of Finance - Pricing;

+ 01 report archived at the district-level Finance department.

At the same time, send to the district State Treasury the Resolution approving the settlement of the district-level People's Council.

7.3.4. Department of Finance - Pricing is responsible for evaluating the settlement of revenues of state budget generated in the district; the settlement of revenues and expenditures of the district budget; making the settlement of revenues and expenditures of the provincial-level budget; summing up and making reports on the state budget revenue collection in the province and reporting the settlement of revenues and expenditures of local budgets including the settlement of revenues and expenditures of provincial-level budget and the settlement of revenues and expenditures of district-level budget; settlement of revenues and expenditures of communal-level budget and submitting to the provincial-level People's Committee for considering and sending to the Ministry of Finance, and submitting to the provincial-level People's Council for approval.

Where the annual settlement report of the provincial budget approved by provincial-level People's Council has changes compared to the annual settlement report sent by the provincial-level People's Committee to the Ministry of Finance, then the provincial-level People's Committee sends additional report to the Ministry of Finance. After the provincial-level People's Council approved, within 5 days, the provincial-level financial department shall send the settlement reports to the following agencies:

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+ 01 report sent to the provincial -level People's Committee;

+ 01 report sent to the Ministry of Finance;

+01 report sent to the state Audit;

+ 01 report archived at the provincial-level Department of Finance - Pricing.

At the same time, send to the provincial-level State Treasury the Resolution approving the settlement of the provincial-level People's Council.

7.3.5. The Ministry of Finance is responsible for evaluating the settlement of state budget revenues in the provinces, the settlements of revenues and expenditures of local budgets and the settlements of revenue and expenditure of budgets of the ministries, ministerial-level agencies, the Governmental agencies and other central agencies; making reports on settlements of revenues and expenditures of the central budgets, summing up to make the report on settlement of revenues and expenditures of state budget to submit to the Government for consideration to submit the National Assembly for ratification; and c/c to the State audit agency.

7.3.6. The collecting agencies shall organize, guide the units, organizations and individuals that are obliged to pay for state budget to make receipts of the state budget revenue collection in accordance with the prescribed form and the State Budget Index; make reports state revenues monthly, quarterly and report on settlement of the annual state budget revenues in accordance with the regulations.

7.3.7. The State Treasury is responsible for accounting revenues and expenditures of state budget by the state budget index to ensure that the revenues, expenditure of state budget incurred shall be accounted accurately, truthfully and timely time and completely. Monthly, quarterly and annually make reports to implement estimates of budget revenues and expenditures to the financial institutions and other relevant agencies in accordance with provisions of the Ministry of Finance.

7.3.8. The evaluation of the annual settlement reports shall comply with the provisions of Article 74 of the Decree No.60/2003/ND-CP of June 6, 2003 by the Government.

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7.4.1. Quarterly accounting reports:

a) Quarterly reports of the level-III accounting unit established to send to the level-II and level I accounting units in accordance with provisions at the administrative accounting regime. The level-I accounting unit established to send to the financial institutions no later than 25 days after the end of the quarter.

b) Quarterly reports of budgets at all authority levels:

- For the communal-level budget, the district State Treasury established to send to the communal-level finance department, District Department of Finance.

- For the district-level budget, the district State Treasury established to send to District Department of Finance, Department of Finance - Pricing.

- For budgets of provinces and cities under central authority, the provincial-level State Treasury established to send to the Department of Finance - Pricing, Ministry of Finance.

7.4.2. Annual settlement report:

a) For the estimate unit: After approved the annual settlement reports of the subordinate units, the level-I accounting unit of the central budget sums up to send to the Ministry of Finance no later than October 01 of next year, the time to send reports on the settlement of the level-II and III estimate units is assigned to the level-I estimate unit to prescribe but must ensure time limit for the level I estimate unit to send settlement reports to the Finance Ministry in accordance with above provisions, and for the estimate units of the local budget, the provincial-level People's Committees shall specify to ensure the deadline to send reports of settlement of local budgets in accordance with Article 67 of the Law on State Budget.

b) For the local budgets: After evaluated the settlement report of the subordinate units and lower-level budget, the Department of Finance - Pricing synthesizes to submit to the provincial-level People's Committee for submitting to the same-level People's Council and submitting to the Ministry of Finance no later than October 01 of next year, and for lower-level budget, the provincial-level People's Committees shall specify but must ensure the time limit to approve the settlement provided for in Article 67 of the Law on State Budget.

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8. Handling of the budget balance.

8.1. The central budget balance is the difference between total revenues of central budget and loans for offsetting deficit more than the total central budget expenditures, local budget balance is the difference between total local budget revenues more than the total local budget expenditures; budget expenditures include the payments in the settlement adjustment period, the expenditures for transferring source to the next year to perform the expenditure tasks decided by the competent authorities for continuity to be implemented in next year.

8.2. The budget balance is treated as follows:

a) The balance of the central budget, provincial-level budget is transferred fifty percent (50%) into the financial reserve fund, fifty percent (50%) into budget revenue of next year. The financial reserve fund with sufficient financial limit prescribed in Article 58 of the Decree No.60/2003/ND- CP dated June 06, 2003 of the Government is transferred all to the budget revenue of next year.

b) The balance of the district-level budget and communal-level budget is transferred to budget revenue of next year (100%).

9. Authorized funding settlement report.

9.1. Unit directly using funding authorized by the higher-level budget must make annual settlement reports in the prescribed form and send to the financial institution receiving authorization and specialized management agency at the same level. The financial institution received authorization presides over and coordinates with the specialized management agencies at the same level to review for approving authorized funding settlement report of the unit directly using the authorized funding and sums up, makes authorized funding settlement report. Authorized funding settlement report shall be made in 05 copies:

- 01 copy sent to the same-level People's Committee;

- 01 copy sent to the authorizing financial institution;

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- 01 for archiving at the financial institution received authorization;

- 01 copy sent to the specialized management agency at the same level.

9.2. The authorizing financial institutions preside over and coordinate with the specialized management agencies at the same level for verification and review of authorized funding settlement of the financial institutions received authorization and include them into the budget expenditure settlement of the authorizing level.

10. Inspection of the accounting and settlement of the state budget.

10.1. The financial institutions, agencies of budget revenues collection, the State Treasury, the estimate units at all levels according to assigned function, duties shall implement the regime of accounting inspection regularly, periodically for the units and individuals that are obliged to collect to remit into budget, budget using units at levels. During the accounting inspection, approval and evaluation of settlement, if it detects the revenues of organizations and individuals that have been paid into the state budget not being collected in compliance with regulations of law, it must refund from the state budget to the organizations, individuals and account decrease of budget revenues. The expenses not being conducted in compliance with regulations prescribed by law must be immediately recovered for the state budget and account decrease of budget expenditures. Where the state budget settlement ratified by the National Assembly, the People's Council, then account budget expenditure (for the refunds) or revenues (for the amounts required to be recovered).

10.2. All the estimate units and the budget levels must strictly implement the regulations on accounting and settlement of state budget, set the state budget settlement according to the right form and prescribed time limit . If the units make late payment, in addition to the subject of administrative sanctions in the field of accounting and statistics as prescribed; the financial institutions shall temporarily suspend and request the State Treasury at the same level to temporarily suspend the grant of funding until the units submit the annual settlement reports, except for some urgent expenditures such as salaries, allowances, subsidies, student scholarships.

10.3. The audit of the annual settlement of the estimate units and the budgets at all levels shall be implemented by the State Audit agency in accordance with the provisions of Article 66 of the State Budget Law and Article 78 of the Decree No.60/2003/ND-CP dated June 06, 2003 by the Government. Upon receiving the recommendations of the State audit agency, the competent agencies must consider and handle in accordance with the law before the National Assembly ratifies the state budget settlement, the People's Council ratifies local budget settlement and informs the State audit agency.

VI. ORGANIZATION OF IMPLEMENTATION

This Circular shall be effective and uniformly implemented throughout the country in fiscal year 2004 and replaces the Circular No.103/1998/TT-BTC dated 18/07/1998 of the Ministry of Finance guiding the implementation of the distribution, formation, execution, and settlement of the state budget. The documents, regulations issued previously which are contrary to the provisions of this Circular is no longer effective

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FOR MINISTER OF FINANCE
DEPUTY MINISTER




Tran Van Ta

Thông tư 59/2003/TT-BTC hướng dẫn Nghị định 60/2003/NĐ-CP hướng dẫn thi hành Luật Ngân sách Nhà nước do Bộ Tài chính ban hành