Vietnam: Decentralization of revenue sources and expenditure tasks for local budgets in 2011

Decentralization of revenue sources and expenditure tasks for local budgets in 2011 (Illustration)

Article 1 Circular 202/2010/TT-BTC of the Ministry of Finance of Vietnam stipulates the planning of revenue sources and expenditure responsibilities for the local budgets in 2011 as follows:

- Based on the sources of revenue and expenditure responsibilities allocated to local budgets as stipulated by the State Budget Law, the provincial People's Committee shall submit to the same level People's Council for the decision on the allocation of revenue sources and expenditure responsibilities among the various levels of local government in accordance with the actual situation in the locality for the new budget stabilization period. Specifically, the allocation of revenue sources and the distribution of various revenues among the levels of local government budgets shall be implemented according to the provisions in Circular No. 188/2010/TT-BTC dated November 22, 2010, of the Ministry of Finance.

- The period of local budget stabilization is 5 years, from 2011 to the end of 2015. During this period, the percentage ratio (%) of revenue sharing between the central and local budgets shall be maintained. For localities receiving balancing supplements from the central budget, the annual budget estimates by the Government of Vietnam will propose to the National Assembly to support part of the funding based on the central budget's capacity. Depending on the local budget capacity and the local reality, the provincial People's Committee shall propose to the same level People's Council to enact the norms for local budget expenditure allocation as a basis for determining the percentage ratio (%) of revenue sharing between the levels of local government budgets and the balancing supplement from the higher-level budget to the lower-level budget. Simultaneously, maintain the percentage ratio (%) of revenue sharing and balancing supplement (if any) from the higher-level budget to the lower-level budget for the new budget stabilization period.

- Continue implementing the mechanism of balancing the revenue from land levy in the local budget for investing in socio-economic infrastructure construction and utilizing a part of this revenue for surveying, creating land cadastral records, and issuing land use right certificates. Localities shall continue to prioritize funding for the surveying, creation of land cadastral records, and issuance of land use right certificates in 2011. Additionally, use 30% to 50% of the revenue from land levy and land rent to establish a Land Development Fund in conformity with Decree No. 69/2009/ND-CP dated August 13, 2009, of the Government of Vietnam on amending regulations on land use planning, land allocation, land retrieval, compensation, and resettlement, Decision No. 40/2010/QD-TTg dated May 12, 2010, of the Prime Minister of the Government of Vietnam on promulgating the model regulation on management and use of the Land Development Fund.

- Continue implementing Resolution No. 68/2006/QH11 dated October 31, 2006, of the National Assembly, where revenue from lotteries is not included in the balance of local budget revenue and expenditure but managed through the state budget; based on the lottery revenue capacity in 2010 and the economic growth plan in 2011, the provincial People's Committee shall propose to the same level People's Council to allocate the lottery revenue to invest in local social welfare projects, according to the principles in Document No. 1085/VPCP-KTTH dated February 22, 2010, of the Government Office and Document No. 1797/BKH-KTDP< dated March 22, 2010, of the Ministry of Planning and Investment on the allocation and use of lottery revenue in 2010 and subsequent years.

More details can be found in: Circular 202/2010/TT-BTC of the Ministry of Finance of Vietnam, effective from January 1, 2011.

Nguyen Phu

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