Vietnam: Decentralization of revenue sources and spending tasks for local budgets in 2012

According to Article 1 of the Circular No. 177/2011/TT-BTC of the Ministry of Finance of Vietnam, decentralization of revenue sources and spending tasks for local budgets in 2012 is prescribed as follows:

- 2012 is the second year in the period of budget stability between the central budget and the local budget (2011 - 2015); continue to stabilize the percentage (%) of revenue distribution between the central budget and the local budget according to the level decided by the National Assembly Standing Committee in 2011, for the balance supplement (if yes), the additional central budget will increase according to the level decided by the National Assembly and supplement the local budget to implement wage reform up to the minimum salary of VND 830,000/month and as assigned by the Prime Minister for each locality in Decision No. 2113/QD-TTg dated November 28, 2011. Concurrently, from January 01, 2012, to implement the Law on Environmental Protection Tax and the Law on Non-agricultural Land Use Tax, in order to be consistent with the current budget decentralization, determine the environmental protection tax as the revenue to be divided between the central budget and the local budget; non-agricultural land use tax is 100% local budget revenue. Particularly, the value-added tax revenue of Dung Quat Oil Refinery has increased and special tax due to the transfer of revenue from import-export activities to domestic consumption according to the Agreement signed between the Government of the Socialist Republic of Vietnam and the Socialist Republic of Vietnam and the Government of the Russian Federation define 100% of the central budget revenue.

- The decentralization of revenue sources, spending tasks between local government budgets, percentage (%) of revenue distribution between local budget levels and the balance supplement from the superior budget to the subordinate budget, in addition to stably implementing in accordance with the Resolution of the People's Council and the decision of the People's Committee on the budget in the period of stability, based on the decentralization mechanism of some new revenue sources in 2012 mentioned above, the People's Committees of provinces shall submit to the People's Councils of the same level for decision the allocation of revenue sources among the budgets of all levels of the local administration in accordance with the actual situation in the locality. Concurrently, the provincial budget is supplemented and balanced to implement salary reform according to the Resolution of the Provincial People's Council and the decision of the People's Committee of the same level.

- Continue to implement the mechanism to balance land use levy revenues in the balance of local budgets for investment in construction of socio-economic infrastructure and use at least 10% of this revenue to carry out measurements, make database of cadastral records and issue land use right certificates. Localities continue to focus on allocating funds to carry out measurements, establish a database of cadastral records and issue land use right certificates in 2012. Concurrently, use 30% to 50% of land use levy and land rental revenue to establish a land development fund in accordance with the provisions of Decree No. 69/2009/NĐ-CP dated August 13, 2009 of Vietnam’s Government additionally providing for land use planning, land prices, land recovery, compensation, support and resettlement, Decision No.  40/2010/QĐ-TTg dated May 12, 2010 of the Prime Minister promulgating Regulations on Management and Use of the Land Development Fund.

- Continue to implement Resolution No. 68/2006/QH11 dated October 31, 2006 of the National Assembly, lottery revenues are not included in the balance of local budget revenues and expenditures but are managed through the state budget. Provincial People's Committees shall strengthen monitoring, inspection and supervision over the business activities of lottery companies to ensure compliance with regulations of law on lottery business and market control measures of the Ministry of Finance; concurrently, based on the possibility of collecting lottery numbers in 2011 and the economic growth plan in 2012, provincial-level People's Committees shall request the People's Councils of the same level to allocate lottery resources to invest in local social welfare works under the direction of the Prime Minister and the guidance of the Ministry of Planning and Investment and the Ministry of Finance.

View more details at the Circular No. 177/2011/TT-BTC of the Ministry of Finance of Vietnam, effective from January 01, 2012.

Le Vy

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