Circular 84/2024/TT-BTC amending the entries and sub-entries of Circular 324 on the state budget classification system promulgated in Vietnam?

Circular 84/2024/TT-BTC amending the entries and sub-entries of Circular 324 on the state budget classification system promulgated in Vietnam?

On November 26, 2024, the Ministry of Finance issued Circular No. 84/2024/TT-BTC (effective from January 10, 2025)...Download amending and supplementing certain articles of Circular 324/2016/TT-BTC which regulates the state budget classification system, as further amended by Circular 93/2019/TT-BTC and Circular 51/2022/TT-BTC of the Ministry of Finance.

The main objective of this amendment is to improve flexibility, efficiency, and better alignment with the requirements of state budget management in the new context. Some entries and sub-entries are changed to match the current budget revenue and expenditure practices. Furthermore, these adjustments aim to ensure a more comprehensive and clear reflection of the origin and purpose of budget usage.

See Circular No. 84/2024/TT-BTC...Download

Circular 84/2024/TT-BTC amending the entries and sub-entries of Circular 324 on the state budget classification system promulgated in Vietnam? (Image from the Internet)

Does the state budget include taxes paid by enterprises in Vietnam?

According to Article 2 of Decree 163/2016/ND-CP, the state budget revenues are specified as follows:

State Budget Revenues

1. Taxes paid by organizations and individuals in accordance with the tax laws.

2. Fees paid by organizations and individuals as prescribed by law.

3. Charges collected from service activities conducted by state agencies; if the operational costs are allocated, they may be deducted.

4. Charges collected from service activities conducted by public service providers and state enterprises, after deducting the portion allocated to offset costs as prescribed by law.

5. Contributions to the state budget from the economic activities of the State, including:

a) Profits shared with the host country and other revenues from oil and gas exploration and extraction activities;

b) Recoveries of state-invested capital at economic organizations;

c) Dividend and profit shares in joint-stock companies, limited liability companies with two or more members having state capital contributions;

...

Thus, the state budget includes taxes paid by businesses and individuals as prescribed by the tax laws.

What are the principles of balancing the state budget in Vietnam?

According to Article 7 of the Law on State Budget 2015, the principles of balancing the state budget are as follows:

- All revenue from taxes, fees, charges, and other lawful sources shall be fully incorporated into the state budget balance, based on the principle of not being linked to specific expenditure tasks.

In cases where revenue needs to be linked to specific expenditure tasks as prescribed by law, corresponding allocations may be arranged in the budget estimates to execute these tasks. The issuance of state budget revenue policies must ensure the medium-term, long-term budget balance and fulfill the commitments related to international integration.

- The state budget is balanced based on the principle that total tax, fee, and charge revenue must exceed total recurrent expenditure and contribute to an increasing accumulation for development investment; if there is a budget deficit, the deficit must be smaller than the development investment expenditure, moving towards balanced budget revenues and expenditures; in special cases, the Government of Vietnam presents it to the National Assembly for consideration and decision.

In case of a budget surplus, it shall be used to repay principal and interest on state budget loans.

- Borrowing to offset state budget deficits shall only be used for development investment, not for regular expenditures.

Is the level of additional funding for budget balancing a basis for preparing the annual state budget estimate in Vietnam?

According to Article 41 of the Law on State Budget 2015, the basis for preparing the annual state budget estimate is as follows:

Basis for Preparing the Annual State Budget Estimate

1. Tasks for socio-economic development and ensuring national defense, security, foreign affairs, and gender equality.

2. Specific tasks of ministries, ministerial-level agencies, agencies under the Government of Vietnam, other central agencies, organizations, and units in localities.

3. Law provisions on taxes, fees, charges, and state budget revenue policies; budget allocation criteria, standards, and levels of state budget expenditure.

4. Revenue source division, budgeting assignments, and percentage (%) distribution for divisible revenues and levels of supplementary budget balance from higher-level budgets to lower-level budgets.

5. Legal documents from competent state agencies guiding the development of socio-economic development plans and state budget estimates for the following year.

6. Five-year financial plans, three-year financial-state budget plans, mid-term public investment plans sourced from the state budget.

7. The previous year's state budget implementation.

8. The notification of budget revenue and expenditure estimates to relevant levels, agencies, organizations, and units.

Thus, the level of additional funding for budget balancing from higher-level budgets to lower-level budgets is one of the bases for preparing the annual state budget estimate.